Last summer I started hearing quite a lot of buzz about a digital currency called Bitcoins. Ultimately, my research led me to the decision to purchase a small amount of Bitcoins. I made my purchase when Bitcoins were valued at just $12. Today, while writing this article, the value has jumped to more than $100. I did not make my purchase as an "investment" but am very excited to see this dramatic rise in value.
What are Bitcoins?
Bitcoins are a digital currency that is decentralized, meaning that there is no controlling entity or government involved. The currency got its start about three years ago and began with a starting value of just a few cents. Even with the most recent spike in value, many still expect the Bitcoin to go much higher.
Initially, I really liked the idea of a digital currency alternative to the US dollar, but I was skeptical. For those of you that are regular readers, you know that I am not a gloom and doomer, but continue to have rising concerns over the United States' national debt. I felt that it was prudent to begin to diversify by putting a small amount of money in Bitcoins, and at this point I am happy I did.
What Can You Do With A Bitcoin?
You can spend your bitcoins at a very large and growing number of retail establishments (we are even planning to begin accepting Bitcoins for our products at ChristianMoney.com). You can sell your Bitcoins and convert them back to dollars through a Bitcoin exchange. There is also word that a Bitcoin debit card is coming soon that will allow you to use Bitcoins anywhere that accepts Visa or MasterCard and even Bitcoin ATMs.
Other Benefits Of Bitcoins
- 100% Anonymous
- Can Not Be Frozen Or Taken By Creditors Or Any Government Agency
- Can Be Used For Transactions Anywhere In The World
What Did Events In Cyprus Have To Do With The Rise In Value Of Bitcoins?
Cyprus, a small Mediterranean island and member of the European Union(EU), just experienced an extremely unique event. In order for the country to remain solvent, it cooperated with the EU in confiscating millions of Euros directly from its own citizens' bank accounts. While some might conjecture that this could never happen in the U.S., the truth is that it already has. Members of the EU are unable to print their own money. In order for the government to get its hands on more money it needed to take it from its citizens in the form of a massive tax on bank accounts.
Watch CNBC commentators discussing how events in Cyprus were linked to the spike in value of the Bitcoin.
The method here in the U.S. is more subtle since our government can print money. The dollars you have in your wallet or bank account remain there, but the value continues to whittle away as more and more money is put into circulation. You most likely see this every day as you buy gas or make a trip to the grocery store.
There is no doubt that many in Cyprus began to buy Bitcoins as a means of preserving their funds and keeping them out of the banking system. Since there is a finite number of Bitcoins available it is simple supply and demand. *** Max Keiser (video below) believes that the Bitcoin may go over $100,000 in value.
How Can You Get Involved?
I will be very honest with you that there is a learning curve to getting started buying Bitcoins, and the process is likely different than any other financial transaction you may have been involved with. For this reason, ChristianMoney.com has produced a 45 minute that you can rent and watch online at Amazon.com for just $2 - Bitcoin Video. The video takes you through the process on a step by step basis and makes it easy for anyone to get started with Bitcoins.
If you want to get more information and really become a Bitcoin fanatic, check out this Bitcoin discussion page on Reddit. My advice is to start small, put $20 in and get comfortable with the process. I don't know where we go from here on the value of the Bitcoin. It could drop like a rock but then again.... who knows?