In the last few months I have watched bitcoin’s value rise exponentially. I had no idea exactly what bitcoin was and never even heard of crypto currency a few months ago. But with the particular recent government and media attention crypto currencies have received, they have become everyone’s attention.
Crypto currency or more simply digital money is getting acceptance quickly all over the world as it can make transactions quicker and cheaper. These transactions are secured by cryptography and each transaction has its own personal or private key. With its rise in value and popularity everyone wants an item of the action. There are two main ways to make money with bitcoin.
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The first is a pretty straightforward method of purchasing the coin as an investment and hope that its value increases. The second reason is the process of “mining” bitcoins. Once a transaction has occurred they are then validated over the network by “miners” using complicated algorithms. As a reward for his or her work they receive transaction fees and/or freshly minted bitcoins!
Through an investing standpoint there is a huge risk/reward factor as this currency is relatively new and has no intrinsic value causing volatility and big cost changes. A positive fact is that there is plenty of money invested in this and companies are signing on to use this currency and we have no idea when its value goes back to zero!
“Mining” also has a huge risk/reward factor. In the beginning of bitcoin, you used to be able to “mine” with the ordinary laptop or home computer. Great as more people are doing it the difficulty and power needed to “mine” increases. Bitcoins have a maximum amount that can be minted (21 million). And as we obtain closer and closer to 21 mil the amount of bitcoin rewarded for each successful “mine” gets smaller and smaller sized. Now “miners” looking to be profitable have to invest in complicated high tech exploration rigs and there is still no guarantee they will be profitable or even create their costs back.
There is a 3rd and safer option, though. In any sudden happening that promises riches the most lucrative venture is offering the tool that helps produce these riches. For example , in a gold hurry it would be the shovel and in “mining” for bitcoin it would be mining rigs or powerful graphic cards. If you possibly can produce these or even get your hands on some cheap you would make a considerable income flipping them. Unfortunately, only a choose few have the luxury of choosing this option.
With people flocking towards the riches dangling in front of them the scam artists are having a field day as well. Read articles, browse the forums, view the bitcoin market, and research your costs and ROI just before even considering investing anything. I think, you should do this for a few weeks before putting any money into play. It is really an extremely volatile market and an even riskier investment.