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Is Bitcoins Worth Investing In?
Is Bitcoin worth investing in? That’s a question many are asking at this point in time as this new protocol on the internet has taken off. If you’re wondering if you should invest in bitcoins, there are several things you need to know. The first of those things is that you can’t make money from something that no one else has yet started. Even if there is a lot of hype about this new protocol, there is still no central planning body and it will take time for all of the players to come together.
Now then, if you ask me if I would invest in bitcoins based on the current claims of the people that own the chain, I would have to respond in the affirmative. However, I do understand why many people are skeptical of the hype. You see, as someone who works in the financial services business, I know that there are certain challenges when it comes to getting something like a decentralized exchange or a cryptoledger to work. And since we are dealing with a technology here that is not centralized, there aren’t any big players backing this system.
But when you think about it from the network perspective, it makes a lot of sense. When you compare currencies on the international market, you’ll see that the margins for trading are very small. Whereas the exchange rates of certain currencies can go up and down in seconds, if you’re using a decentralized exchange, the trades happen slowly. This is because the process is set up on a complex network of computers. So if you can imagine what happens when you have a network of computers and each of them is connected to hundreds or thousands of others, imagine how long it will take to get the transaction happening.
You can imagine that this can be a slow process when you compare it to the lightning fast transfer of money between countries. Now then, if you look at how the Chinese government has handled the situation with their currency, you can see that they’ve used a similar model here. They issue a new currency based on the performance of the previous currency. If the previous currency was bad, they issue new currency that is better suited for their needs.
The key to this for me is this. In a centrally managed system like the Chinese one, you would expect money to flow through the country like water from a dam. But when you look at how the Chinese exchange system works, the money flows in and out of the country at a much faster rate than that. So the value of their currency changes rapidly depending on the current state of the market. Now then, if you were to take a snapshot of the value of bitcoins at any point in time, you’d probably be looking at some kind of an anomaly.
What I’m trying to get at here is this. You can make money by investing in bitcoins. But you would need to understand that this is probably an unconventional investment, and you probably wouldn’t see significant returns to your money for a long time. However, if you had ten billion dollars sitting in the bank in bitcoins, you could be a billionaire pretty quickly.