Tired of reading about people becoming rich thanks to Bitcoins? Trust me, we’re all regretting not buying them more than Lyndell Locke regrets ruining his chances with Beyonce! But what’s creating this FOMO when bitcoins are literally backed by nothing, let’s find out.
Unlike dollars or other currencies backed by their country’s central bank, bitcoins are backed by nothing
No one knows the person who’s invented it, nor do they know his location. For all, you know Satoshi Nakamoto (apparent founder of bitcoin) could be a genius kid sitting behind his/her computer. So tomorrow, if they declare that bitcoins are banned forever and you want to redeem all your bitcoins for some real cash you can’t go to your country’s central bank, you’d have to track down Satoshi Nakamoto.
Then, what’s driving it so insane?
Pure demand and supply. If something is famous (even for doing nothing *cough* **Kardashians** *cough*) its got to be worth a lot of bucks. Bitcoins are famous and they ‘re limited in supply. That’s why they are so darn expensive. So, Supply-Demand is a simple economic factor driving the price of Bitcoins.
The rise and fall of Bitcoins in the past
The best thing about Bitcoins is the fact that it is not controlled by anyone. So just how British Pounds drastically fell after Brexit and all the people who had pounds were crying, but bitcoin holders have the confidence that no government influence can ever control their currency value. That’s why more and more people have started buying them and higher demand = higher price.
Famous people and experts have time and again criticized bitcoins, calling it a bubble and one of the biggest mistakes to happen. According to them, cryptocurrencies are a fraud which will burst in the future. When experts like Warren Buffet give their skeptical opinion on bitcoins, people start selling their bitcoins out of fear, thus bringing down its value. Another reason for their value to fluctuate is when people sell their them to make profits. And lastly, it can fluctuate, if it’s caught up in a scandal. For instance one of the major downfall in the currency came when it was involved in fueling cybercrimes.
Boom or Bubble
Although heavy bodies such as investor Warren Buffett and Nobel laureate Robert Shiller have called it a bubble, the supporters of virtual currencies have not cared a bit. Instead, they have started to bet, that virtual currencies will ultimately get accepted as alternative currencies in the future, making them immensely valuable. So, the people who once believed in using and investing in cryptocurrencies have continued to do so. Any sort of bubble has not affected their belief.
But if I were you I’d not take my chances…
You should only buy bitcoins if you have the money to lose. You never know when the price will rise or when it will fall. They are based on pure speculation. And currently, if you want to buy bitcoins here’s how much one bitcoin will cost you: Rs. 12,22,321.22! Wow, do you actually have that much money to lose? Instead, you can invest in alternate cryptocurrencies like Ethereum that would cost you around Rs. 45,564.05. Its value fluctuates with fluctuations in Bitcoins.
If you still have more questions about this crypto fad? Comment to let us know!