Bitcoin keeps breaking records, reaching an unbelievable increase compared to the past 5 years. This increasing trend in Asia at the moment can be explained by speculation and the hyper-demand – people buy and sell bitcoins rather than spend real cash or buy concrete stuff. This kind of scenario with bitcoins is familiar and it takes caution and knowledge in order to be successful and avoid the dramatic crash outcome. Before we explain this bitcoin booming trend, first we need to go through bitcoin basics and show how the bitcoin works.
What is bitcoin?
Bitcoin is believed to bring a radical transformation of the global financial system. It presents both a payment system and digital currency. It is used for payment without a third-party (bank, broker, government). This virtual currency is simply an entry in a digital ledger, and people buy and sell bitcoins the same way as in the stock market.This digital ledger is commonly maintained, and all transactions get recorded. Since it‘s not controlled by a central authority, personal information is kept a secret, and there is no shutting down of accounts. Also, anyone can open it and spend as much bitcoins as he wishes to.
What determines the bitcoin value?
The value of bitcoin is not the same as the bitcoin price that represents a monetary cost. The value of bitcoin is determined by many factors like science, technology, social aspect. Bitcoins don‘t have physical properties like money, but on the other hand, they have all the characteristics of money. They are:
Bitcoin value is measured by the growing base of users, startups, and traders, and it comes from those people who accept them as payment.
What determines the bitcoin price?
It is directly conditioned by supply and demand. If the demand increases so does the price and vice versa. Since there is a scarce number of bitcoins, they are created at a predictable rate and the demand must keep up with the inflation in order to keep the price strong. The price of bitcoin is volatile since the amount of money circulating is not huge, and therefore it can not significantly move the market price. The bitcoin price chart shows the latest and the most accurate bitcoin price and the direction where they will go in the future. In order to predict the price development, fundamental and technical analyses must be conveyed.
How to buy bitcoin?
After learning some basics, now you have to be explained how to get bitcoins. There are 2 ways to get them – from exchanges or from marketplaces. You can get them by paying cash, with debit cards or other cryptocurrencies. When you buy them you need to store them someplace. You have to get a wallet which is similar to a bank account. Depending on the level of security you can choose among:
• software wallet
• online wallet
• vault secure wallet.
A good trader must choose the best exchange and wallet for his business if he wants to participate in regular trading and speculation. However, beware of the risks you take since exchanges and wallets are not equally protected as banks are.
What is cryptocurrency?
It‘s basically digital money that works as a medium of exchange that is based on cryptography where network or peers enable secure transactions. Bitcoin cryptocurrency was the first successfully launched cryptocurrency that invented the way to issue new bitcoins, keep track of the transactions and prevent double-spending without the control of central authority.
What are the advantages of bitcoins?
One of the advantages of the bitcoin market is that it avoids regulations and authorities. While European countries closed their financial borders, bitcoin market offered market space for financial freedom. Investors are motivated by the opportunity to get high returns and bitcoin stands out as liquid and long-running. However, regulators and authorities make a constant effort to halt the market‘s development.
Bitcoin became so popular that it is widely considered a new asset class and investors create a million dollar hedge funds to get them. For example, financial instability in Brazil and US led to the drops of their currency, and in these times of instability, bitcoins are observed as something precious. In addition, bitcoin benefits from other digital currencies. It‘s possible to buy these currencies with dollars, but bitcoins are still the easiest digital currency to get to. So people buy bitcoins to invest in more tempting currencies.
Japan has introduced regulations that observe bitcoin as a part of the banking system, and the bitcoin rush was therefore easily predictable. Also, a big drop of bitcoin vs dollar and Chinese exchange has made the investment less risky. Asian investment, in general, causes the increase of bitcoin.
There are many good reasons for the bitcoin hype, but also for caution since there is only a few traders who own a large amount and understand the way this cryptocurrency works.
Bitcoin market is not for everybody. Trades imply volatile exchange rates and frantic buying of this virtual currency can bring the investors to serious drama. Also, bitcoin vs money exchange involves scams. And these scams get more frequent as the stakes become higher.
What is the Bitcoin price prediction for 2017 ?
Relevant bitcoin charts show the growing trend for 2017.
– there is a 10% rise of bitcoins in the last year,
– major bitcoin exchanges notify higher trading volume in the last year,
– there is a greater number of transactions in the last year.
The bitcoin economy has grown and matured over the years. The analysts say that cryptocurrencies are here to stay although they have a bad reputation. Bitcoin forecast shows that it might reach $100 000 in 10 years, which presents more than 3% rise in comparison to the latest record high. This market is still young and there is a lot of space for it to develop and improve. Better wallets, easier ways to buy and use bitcoins will certainly affect their better acceptance. However, investors should be cautious! They must be aware of the parabolic rise, which is not good. Healthy correction to steady rise and cooling off emotions is necessary if they want to seize the rewarding opportunity and avoid the dramatic scenario.