In my blog post 2 years ago, I shared how I lost my life earnings from coinsera website in which I loss my life earnings. But I guess, there's always a silver lining from all of this because God made me understand further how bitcoin works.
In this post I also give a brief overview of Bitcoin as an alternative currency (cryptocurrency)
Disclaimer: The information that I will provide here are my honest opinions only. For further reference, you can also visit coindesk.com and cointelegraph.com, as these are the sites of my choice for bitcoin news or updates.
I. Bitcoin Overview.
My greatest life regret is way back 2015, I used my SSS loan to purchase 1 Bitcoin from coins.ph, which was valued then as P10,000.00. I used to invest this 1 bitcoin to coinsera when eventually it turned into a scam. Fast forward today, 1 BTC is now priced at around P200,000.00! Imagine that should I have left this 1 BTC sitting on my coins.ph, I could have grown P190,000.00 richer by now. But I guess it's still not late, better late than never, I guess.
I will try my best to compress some bitcoin concepts here.
What is Bitcoin?
Cryptocurrency / Digital Currency online currency that has no physical form and it's value depends on the people who trusts or believes in it (very similar to stocks whose value depends on people's outlook and investment on them), there's no physical form for it unlike the paper bills and will only show as balances on your wallet (like stock purchases).
Produced by Bitcoin Mining bitcoin send/receive transactions are being verified by computers around the world running a special program (called bitcoin miners). Literally, bitcoins are produced out of thin air as an incentive for the miners to continue verifying these transactions as there's no central record-keeping body that does all of this, making it a decentralized currency. For me, it's very similar to the concept of internet, in which data is shared using multiple computers.
Advantages of Bitcoin
1. No Central Authority - Unlike traditional banks, everyone has access to all bitcoin transactions (called blockchain).
Globally Accepted Currency very similar to US Dollars, can be used to pay for goods or services that accepts bitcoins. In fact, there are also Bitcoin ATMs set up in some parts of the world to cater the rising bitcoin adoption. Some of the top websites like Apple or Expedia currently accept Bitcoin as a method of payment. It can also be used to provide financial assistance to people who are unbanked especially in growing economies.
Projected as gold, as there are only 21 million bitcoins that can ever be produced in circulation and as the number of bitcoins that can be rewarded to bitcoin miners halve for a certain number of time or transaction, bitcoin value tends to increase thru time. Other than investing in traditional methods, I believe investing in bitcoins is a great way to prepare for the future as it counteracts our fiat money's high inflation.
3. Almost Anonymous
What can be only seen by the public are how much bitcoins are sent or received across wallets but these wallets doesn't link to the owner of the wallet.
4. Unbelievably High Growth Rate
As shown on the graph above, Bitcoin has grown to almost 700% as of last year, in which no bank product or any financial instrument could ever come close, making it a viable passive income earning option.
5. Accounts Cannot be Frozen
Countries experiencing financial crisis used turn into bitcoins to keep their money when banks impose withdrawal limits.
6. Transactions are Secure
not only because these are verified by bitcoin miners but the math behind here is crazy to discuss here but because of this system in place, double spending or illegitimate transactions can easily be spotted or can't be completed.
Disadvantages of Bitcoin
1. No PDIC Insurance/Backup Needed - It's the wallet owner's responsibility to make sure that bitcoin wallets are properly backed up, as they say, "The one who has access to the keys has the access to the funds." Most of the wallets today can now be accessed online so the risk of losing the wallets are minimized. But in case you lost your device, having a record of your wallet keys will make it easier for you to re-gain access to your funds. Having two-factor authentication enabled on these wallets is also suggested to increase encryption security.
2. Highly Volatile
Bitcoin value can fluctuate or become stagnant over time. So like any other investments, this is meant for long-term, not for short-term earning, unless you are also a skilled trader.
3. Hacker Magnet - as transactions and wallet balances can be viewed by public, wallets containing insane amounts of Bitcoins are being targeted by hackers. Bitcoin is also used as a ransom currency by hackers where they will demand funds in return for restoration of the files/sites they hack. Some bitcoin exchanges have shut down because of hacking incidents such as MtGox.
4. Government Regulation
Is it good or bad thing? Too much of it can prevent it's growth, too less of it can create an environment for money laundering or its misuse on black market due to its anonymous nature.
To sum it all, I guess how you beneficial or harmful bitcoin can be depends on how you make use of it, just like all other things. But one thing is for sure, Bitcoin is a thing. It may not be completely adopted at this point, but I'm certain that a lot already have made a fortune just by simply believing and investing in this technology. There are a lot of bitcoin stories you can indulge yourself over the internet and the question here what you will do next, or will you also just time the bitcoin market?
A video introduction about bitcoin was provided here