Bitcoin and cryptocurrency has been around for several years, yet there are still many people who question the cryptocurrency. Is it safe to use? Should we invest in it? Why do we seem to hear so much negative press about it? The currency has had its share of difficulties since its introduction. Yet many financial experts suggest that it could be more beneficial to us here in the United States, and around the world when compared to fiat currency.
Bitcoin vs. Fiat Currency: The Problem with Fiat Currency Around the World
While fiat currency may be the norm here in the United States, dozens of other countries have already stopped using it as their main source of money.
Which is a very good thing!
In the U.S. we’re currently in the Mercantilist paradigm, where a group of bureaucrats manages our currency. This is also known as the Soft Money paradigm where man rules our money.
Fiat currency is backed by the government who issued it. The U.S. dollar and other major world currencies are all fiat currency. This is different from money whose value stems from a physical good, such as precious metals. They are known as commodity currencies.
Several governments across the world have now done away with this paradigm and fiat currency. Instead of managing their economic system by changing up their currencies, they came up with a simple fixed-value system. The value of the currency is X. There is no discretionary element, which makes it the Hard Money paradigm where the Rule of Law is in charge.
But what is X?
Years ago, “X” was gold, and we used the gold standard system where gold was the standard of value. For example, “X” or a “dollar” was once worth 23.2 troy grains of gold.
Today, several countries have come to the same arrangement with their currencies, but instead, they use the Euro as “X” instead of using gold.
One country that could benefit from a positive change in currency and how its managed is Venezuela.
The country may have reached its breaking point as political tension is on the rise, affecting everything from residents getting the essentials they need to the overall economy.
Inflation should reach 700% by the end of the year while the country’s economy remains stuck with nonsensical currency controls. In January, it took 3,000 bolivars to purchase one U.S Dollar.
Now, it takes 8,000!
Their fiat currency is currently free falling as protests are on the rise and the economy is spiraling out of control. Residents are experiencing shortages in food and medicine, and the bolivar keeps losing value every day.
The failing economy in Venezuela is one of the main reasons why the country is turning to Bitcoin mining.
Thousands of residents have started to use the cryptocurrency to survive. Venezuelans have started using Bitcoins to pay for their resources such as electricity, food and to purchase vital necessities. Some have been able to earn as much as $500 bitcoins a month, which they consider to be a small fortune these days.
Several other countries have started using Bitcoin to improve their unstable financial systems. In Zimbabwe, the collapse of their formal financial system made Bitcoin a reliable alternative. Japan has recently accepted Bitcoin as a legal form of payment for retail markets, and the Russian government recently met with the developers of Ethereum in hopes to start using cryptocurrencies as soon as 2018.
Could Bitcoin save our economy during the next monetary crisis?
Financial experts claim that we should prepare for a financial hit that will be far worse than the one we faced in 2008 here in the U.S.
Whether that is true or not, their advice to invest in gold, silver, and Bitcoins could be beneficial.
Back in 2008, when we faced a global financial crisis that forced several countries into recession, Greece was one of the countries hit hardest. They had major debts and spent years receiving bail-outs by the European Central Bank.
Eventually, their negotiations on bailouts came to a halt. They faced an ultimatum to stay with the euro or exit completely. At that time, their government attempted to run the banks which caused consumers to empty out their accounts.
Bitcoin, however, could be a great alternative for fiat currency and for situations like the Greece recession. The main reason is that Bitcoin isn’t controlled by any middleman or bank. Plus, it’s easier to obtain than other forms of fiat currencies.
What is Bitcoin?
Bitcoin is a type of digital currency where transactions go through without the use of a middleman, which means there are no banks involved. There are also no transaction fees and users do not need to provide their personal information when transferring funds.
The currency was created by an individual who went by the alias of Satoshi Nakamoto in 2009. Since there are no fees involved, Bitcoin is becoming popular among merchants. We can now use Bitcoins to purchase everything from a trip to the beauty salon to ordering Chinese food.
Why are so many merchants interested in Bitcoins?
Using Bitcoins allows consumers to buy merchandise anonymously. And merchants are interested in allowing their customers every payment option imaginable, which can help their profits.
Bitcoin is also the preferred choice for many business owners when they need to make international payments. That’s because they are easy to use, and bitcoins aren’t tied to any country and there are no strict regulations involved.
Small businesses can benefit from this form of currency because there are no credit card fees involved. And, many investors have purchased thousands in Bitcoins, hoping that they will one day go up in value.
There are a few ways to acquire Bitcoins.
You can purchase them through bitcoin exchanges. These are marketplaces that allow you to buy or sell your bitcoins using several types of currencies.
You may also transfer bitcoins from one person to another by using one of the many mobile apps available, or by using a PC. The process is very similar to transferring cash digitally from a bank account or Paypal.
Another way to obtain bitcoins is through mining. Many people may wonder what is bitcoin mining since it sounds like a puzzling concept. But it isn’t that difficult to understand. Individuals compete to “mine” bitcoins using their computer to solve complex arithmetic problems. This is how bitcoins are made. Currently, winners are rewarded with 25 bitcoins by answering math problems every 10 minutes.
Another common question about this digital currency is how do you keep track and own bitcoins?
Bitcoins remain in a digital wallet that either exists on your personal computer or in the cloud. The wallet works like a digital bank account. It allows users to send to receive bitcoins, pay for goods and services, or save their bitcoins. However, unlike a bank account, the FDIC does not ensure your bitcoin wallet.
Why You Should Invest in Bitcoin Now
To invest in Bitcoin, you must buy the currency and hope that it will appreciate. To be successful with this, you will need to decide if the current time is the best time to invest. You determine this considering if the price will continue to be on the rise.
In early 2017, Bitcoin exceeded past $1000 and seems to be on the rise. This caused millions of people to gain an interest in Bitcoin investing.
At the time of writing this article Bitcoin is currently priced at $4,300.00 USD!
The first thing to keep in mind is that Bitcoin isn’t a stock, it’s a currency. Therefore, you are purchasing the actual currency when you invest in Bitcoins. However, There are several more ways to invest with Bitcoin.
When thinking about Bitcoin investing you must question whether you want to invest by purchasing the currency, or in a company related to the cryptocurrency. If you choose to purchase Bitcoins, this is known as Buying & Holding. And there are a few things to remember if you choose to do this.
When purchasing and saving Bitcoins,
- Never invest more than you can afford to give up
- After purchasing Bitcoins, transfer them into your online wallet and don’t leave them in the exchange
- Be sure to only buy Bitcoins from an exchange with a good reputation
- Purchase Bitcoins through cost averaging. This means you don’t buy all your cryptocurrency in one transaction. Instead, commit to buying a certain amount each week or month. This will give you an average cost over time.
Another way of investing in Bitcoin is Buy and Trade in order to increase your Bitcoin. This process is more effective in growing your bitcoin overtime. So if you don’t have the full price of Bitcoins going rate, you can buy portions of a bitcoin and increase your coin in the trade. You will make more money trading and using that profit to buy more bitcoin.
This is the system that I personally use.
Investing in this digital currency can be a tricky process. You not only have to think about how to invest but when the best time is to invest. New and experienced investors alike should do some research on what is currently going on with Bitcoin, as well as learn about the benefits and disadvantages of investing in cryptocurrency.
It’s very clear that more countries will begin to use Bitcoin or any other form of cryptocurrency as a form of payment in the years to come.
Acceptance for Bitcoins here in the United States as a payment method for various online stores and retailers is on the rise.
Could Bitcoin be the innovative change that we need to rescue our nation’s economy from the fall of fiat currencies? That is a question that can only be answered by the continued use of the product, allowing us to learn more about its advantages and how we can improve bitcoin’s disadvantages.
Bitcoin is now predicted by the experts to get up to 50k in value! There is no questions that the average person in this global economy should have some Bitcoin in their financial portfolio.
It’s not too late to increase your wealth with Bitcoin.
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