The latest financial rage - you guessed it - is Bitcoin. It is the conversation of young and old, rich and those desiring to get rich. For most of us, it seems Bitcoin has only been around for the last couple of years. But in fact, the ledger start date was Jan. 3, 2009 with founder Satoshi Nakamoto. Nakamoto is the name used as a pseudonym for the person or persons who developed Bitcoin, the Bitcoin white paper and created its implementation. As part of the implementation, Nakamoto also devised the first blockchain database. But like most big discoveries, only the people in the know paid attention - that is until now. Why now?
Bitcoin is taking on a fire of its own since multi-billionaires, like Elon Musk, have told users that Bitcoin is a “good thing.” Well respected companies are joining the revolution. But really, what does this mean for me, the common consumer? I decided to reach out to the experts, people who have been sitting and anticipating the Bitcoin boom, to find out. Here is what they have to say.
So what is Bitcoin?
Bitcoin Investors: Bitcoin is a decentralized digital currency without a central bank or single administrator. It can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries.
How did you first arrive at investing in Bitcoin?
Investors: After much research, it was determined that even a modest investment in cryptocurrencies, including Bitcoin, can produce huge upside potential - as much as 300 - 2400%
Reporter: What does it mean that there is a limited supply of bitcoins?
Bitcoin Investors: There are only 21 million available bitcoins that can be mined. It is finite. Currently there are about 19 million in circulation. This is in contrast to the monetary system we use that is constantly devalued because of continually printing more dollars. This follows the economic rule of supply and demand.
Reporter: What does mining mean?
Bitcoin Investors: Mining is verifying transactions and recording it in a public distributed ledger called a blocchain. In exchange, miners are paid in bitcoin.
Reporter: What have been the trends of Bitcoin?
Bitcoin Investors: Bitcoin has been a roller coaster ride. Miners and investors have seen the highs and lows with the hopes that it will explode in the next year. This is common for a new asset class. The “S” curve shows that it takes 10 years for 10% of the population to adapt to new technology. In this decade, 90% of the population will adopt the technology. Just like the iPhone and electric cars, Bitcoin is there!
Reporter: Have we ever had in our economy anything that we can compare Bitcoin to?
Bitcoin Investors: Nothing compares to Bitcoin. This is one-of-a-kind game-changer due to its scarcity and peer-to-peer exchange from anywhere around the world.
Reporter: How safe is Bitcoin?
Bitcoin Investors: Perfect question. This is the other key game changer about Bitcoin. It is totally secure. The difference is, as we have seen numerous companies being hacked in the last few years and the hackers stealing our personal information, Bitcoin is spread among hundreds of computers securing it from hackers. It would be near impossible to hack all the hundreds of computers at the same time to achieve the information to extort personal information from the network.
Reporter: What does the IRS think of Bitcoin?
Bitcoin Investors: The IRS does acknowledge Bitcoin as property and therefore it is taxable.
Reporter: How do I invest in Bitcoin?
Bitcoin Investors: You may need to first sign up with an exchange such as Coinbase or a Wallet such as ABRA. Through your regular brokerage account there are a couple of on-ramps to buy Bitcoin. But like any major investments, the smart investor does their own research and their own homework before investing in anything.
Reporter: Can I get out at any time?
Bitcoin Investors: Yes, you can, but if you’re not invested for at least a year you will have to pay capital gain taxes. Long term investment provides a better tax advantage.
Bitcoin is the new future. Do your own research and talk to your individual money managers. I for one, never put all my eggs in one basket. But the financial opportunities that Bitcoin opens may be on the horizon of investing and it may fit well into your retirement portfolio. Do your homework...happy investing.
– Christina Dalton