Bitcoin reached up to $266 a pop on Thursday before it plummeted down to just $123. The Tokyo-based Bitcoin trading company Mt. Gox temporarily shut down following a spike in the traffic to their site causing some lags and interruptions in their services. The company announced it would leave the market to cool down before resuming their services and they assured traders that the lags weren’t caused by distributed denial-of-services (DDoS) attacks in their network.
A Bitcoin’s current trading price is way higher than it was first created in 2009. Then, a Bitcoin was worth $5 to $10 but it started to find good trading traction in less than a year after it was created. Economists and business-oriented people, however, are skeptical about the math-based currency’s future primarily because it is not backed by the government or the Central Bank. Thus, despite its popularity today, it doesn’t have an intrinsic value like the fiat dollar billions of people are using as their primary currency to trade.
If you’re thinking of going into the Bitcoin trading, here are some basic information you need to know first:
- Bitcoin is a digital currency that is based on an open-sourced, peer-to-peer Internet Protocol. It was developed and introduced in 2009 by a developer that goes by the pseudo name of Satoshi Nakamoto.
- Its price is volatile and could rise and fall in a short span of time. It may be tempting to become one of the people who are currently into the rush of trading but there is no certainty on a Bitcoin’s price just yet.
- There is no anonymity in Bitcoin market that is why users are advised to create new addresses each time they receive money. Transactions are stored publicly and permanently on the network so everyone can see the balance of any Bitcoin address.
- After 4 years since its introduction into the market, the digital currency is still in its experimental stage and people behind it have all privileges to shut it down. But as usage grows, it becomes less experimental.
- Its future is yet unpredictable. While millions of users are now engaged to mining Bitcoins to become millionaires, the future is still uncertain for them. No one could actually predict what would become of Bitcoins 10 years from now.
- Transactions and payments are irreversible but can be refunded. This is one of the risks of using Bitcoins so users are advised to transact with organizations with good reputation and trustworthy. The good thing about it is that it can detect typos and wouldn’t allow the user to send money to an invalid address.
Unless the government would back the use of Bitcoins, there is no certainty what the future would bring. But that is unlikely to happen, too, because it would go against the very principle to make the currency “decentralized.” There is scarcity of Bitcoins today and that’s what made it expensive. There are, however, people who claimed to have earned their first millions of Bitcoins.