Illustrated by Ammiel Mendoza.
If you’re anything like me, you probably don’t “get” Bitcoin in any real sense. Invented in 2009 by an anonymous person using the alias Satoshi Nakamoto, Bitcoins are a new cryptocurrency that aim to cut out the middleman by allowing consumers to complete transactions anonymously and without banks. Still confused? Yeah, me too.
There are plenty of lengthy explanations of what exactly Bitcoin is, but either I’ve got the mental capacity of a 5-year-old or this is actually way more complicated than we initially thought. The general idea is that you purchase bitcoins with real money and then use them at a number of online merchants who now accept them for everything from merchandise to web hosting services and more. All of this is done without hidden fees and without having to prove your identity (or even give one at all).
If that seems kinda shady to you, you’re not alone. Because digital currencies are such a new thing, they’re still largely unregulated, making the use and exchange of Bitcoins a field day for the less than honest among us. Plus, I’m not sure anyone is going to feel comfortable trading in a currency they don’t fully comprehend.
That said, it’s worth considering investing in Bitcoin, if only for its potential in the global financial market. But, will it really make that much of a splash? After all, Bitcoin is over four years old and has only recently garnered major news headlines after falling from $30 to $2 — a sign of sure economic boom. So, should you shell out some cash for your piece of the pie? Not necessarily, according to Forbes: "Buying Bitcoins while their price is so bubbly is nothing more than a gamble. Investing in other online currencies, or in companies that can help the Bitcoin economy develop, looks like a sensible use of a venture capitalist’s money."
The key seems to be in backing the companies that support digital currency in all its forms rather than one of the niche products within the market. After all, Bitcoin could yet go bust, but as consumers around the world aim to switch even their money to digital replacements, such companies will spring up like wildfire, making your investment in the industry as a whole much more valuable.
Until then, I’ll still be trying to figure out what exactly Bitcoin is…