Why Are Bitcoins So Popular? Bitcoin Real Estate Investing?
Whether you’re thinking “Bitwhat?” or “I’ve been bitcoining for years...” digital currencies are a hot topic with consumers, investors and the media. But what is a bitcoin? And how does it work? Bitcoin is a type of cryptocurrency – a digital currency (meaning there’s nothing to hold in your hand) that circulates without a central repository such as the Federal Reserve. Of the 690 cryptocurrencies that exist—with a total market cap at about $8.5 billion—bitcoin is by far the largest and best known in the marketplace.
Users typically purchase bitcoins with physical currency (Dollars, Yen, Euros, etc.), then use their bitcoins to purchase products or services, or to invest. Bitcoin transactions are recorded in the blockchain (the decentralized public ledger of all bitcoin transactions) that is safeguarded against tampering.
That’s the short answer. The trickier question is: how important is digital currency to the future? And if you don’t use bitcoins today, will you be left behind? We’re bitcoin users here at Brelion for a reason: we know the importance of trying out new technologies before we implement them for our users. Here’s what we know, and what we’ve experienced first-hand.
BITCOIN: WHY NOW?
The Internet is designed to connect people without the limitations of borders. Digital currencies like bitcoin take this one step further – allowing people to make transactions anywhere without the barrier of national currencies. A bitcoin owned by a user in Japan is worth the same as a bitcoin owned by a someone in the U.S. With international borders being both blurred – and reinforced – the need for a “borderless” currency is greater than ever. And bitcoin is the first major alternative currency to gain acceptance in the modern era, with millions of everyday people investing or transacting via startups. In fact, venture capitalists have invested over a billion dollars in bitcoin (CNN).
THE PROS OF USING BITCOIN
In our experience, cryptocurrencies can save everyday people – not just tech-savvy users – considerable money, time, and worry over their purchases and identities. Some of the advantages of bitcoin include:
- Enhanced Personal Security: Bitcoin protects against identity theft by maintaining personal anonymity of all its users.
- No Borders: Bitcoin does not recognize international borders. In other words, if you use bitcoins abroad, you need not exchange your home currency for another country’s. Bitcoin users can send and receive money from anywhere in the world at any time. You no longer have to worry about borders, bank closings, or other restrictions to accessing money or making purchases.
- No Third-party Interruptions: Bitcoin’s cryptographically secure peer-to-peer trading system prevents governments, banks, other financial intermediaries, or other bitcoin users from interrupting or manipulating transactions or freezing bitcoin accounts.
- Low Transaction Fees: Transaction fees are kept low as a result of bitcoin bypassing intermediary institutions.
- Low Inflation Risk: Bitcoin is gradually minted at decreasing fixed rates, creating a moderate and favorable amount of deflation for as long as new bitcoins are minted.
- No Money Is Withdrawn: With bitcoin, you send bitcoins out, but no money is withdrawn from your bank account. Hence there are no hidden fees associated with transfers.
- Easy to Carry: You could hypothetically fit a billion bitcoins on a USB drive. Try fitting that many dollars in your pocket...
DISADVANTAGES OF USING BITCOIN
Like many tech revolutions before it, bitcoins have had their share of bad press and confused consumers. A few issues have arisen, including:
- Slow Transaction Processing: The bitcoin network handles less than two transactions per second. VISA can process thousands of transactions in that same second.
- Price Fluctuations: The market value of bitcoins has fluctuated dramatically in the past few years. Its price in dollars lost two-thirds of its value after climbing 8,500 percent in the first eleven months of 2013. (HuffingtonPost) This volatility is mainly attributed to growing demand of bitcoins against a limited supply, as well as current events that affect digital currencies. For example, when the British voted in favor of leaving the European Union the price of bitcoins jumped up but the Dow went down. Many experts predict that the price volatility will relax as more businesses and traders use bitcoin. (Bitcoin.org)
- Lack of Regulation and Oversight: Other bitcoin controversies have stemmed from political disputes and even some criminal behavior involving people purchasing illegal items anonymously with bitcoins. These issues have led some to suggest that bitcoin has become a “victim of its own success.”
Ultimately, bitcoin’s biggest challenge is image-related: While its technology-based algorithms and modern computation can potentially be faster, more secure, more transparent, and less expensive, many people find existing financial services—credit cards, bank accounts, Venmo, cash, etc.— to be fast, secure, transparent, and inexpensive enough. (Forbes) Bitcoin has yet to significantly challenge the strength of the dollar in most types of exchange; the dollar’s biggest asset – public faith – is Bitcoin’s biggest liability.
THE FUTURE OF BITCOIN
Despite these challenges, Bitcoin has shown remarkable resilience over the years. It continues to reshape transactions and finance on and offline, with more and more people drawn to its advantages: safe transactions and low costs without regulatory bureaucracy. Moreover, its behind-the-scenes trading technology has the unprecedented power to fortify all kinds of transactions and services across a multitude of industries. The more people learn about bitcoin, the more they will want to try it out to not only make purchases, but also to invest in securities such as real estate. Could Bitcoin be used to make crowd investments in the near future? Yes - we are doing it at Brelion https://brelion.com/home/bitcoins
On a personal note, I have bought and sold bitcoins, loaned bitcoins to others and collected interest on bitcoins. I sold my iPhone on a bitcoin market place OpenBazar similar to eBay and the transaction was pretty seamless. I’m a techy and alternative investment strategist with an unquenchable thirst for new technology, to me; bitcoin not only make sense but also is the future. It may take awhile for mainstream society to catch up with me but I’m confident it will happen and probably sooner than you think.