People all over the world are talking about something no one can see. Bitcoin hit the $11,000 mark this week and some analysts believe it will eventually reach $200,000, maybe as early as next year.
That’s hard to believe, especially for the millions of people who have no idea what a Bitcoin is and what it’s used for.
When I did my first news story on Bitcoin in 2012 the price was hovering around $40 and here’s what I said: “some experts believe the value of Bitcoin will go up; others think that one day they’ll be worth about the same as a wooden nickel.”
If I had purchased just $1,000 of Bitcoin at the time, it would be worth over $800,000.
So what is a Bitcoin? Austin Alexander of Kraken Bitcoin Exchange explains it this way: “Bitcoin is a unit, a currency that you can use on the network. I can send you Bitcoin for goods and services rendered. I can do that instantly. We don’t have to be next to each other; we can be anywhere in the world.”
There is no physical coin or bill; Bitcoin is stored in virtual wallets on the Internet. When someone buys something and pays for it with Bitcoin, the Bitcoin is transferred to the seller’s virtual wallet.
Exchanges and purchases are anonymous and untraceable. For that reason, through its existence Bitcoin has been used for transactions on the dark web where people buy and sell illegal drugs, stolen credit cards, weapons and illegal pornography.
Some reputable online retailers accept Bitcoin as payment such as Overstock.com. People can also purchase eGift cards that can be used at many retailers.
Where does Bitcoin come from? This is where it gets harder to explain.
Bitcoin is mined with super-computers capable of solving virtually impossible math equations that uphold the integrity of the currency. Companies that own and operate those computers earn approximately 25 Bitcoin for each equation solved. That price may have been adjusted in recent months as there are fewer Bitcoin available.
The inventors of Bitcoin established a cap of 21-million Bitcoin and no more will be created, which is responsible for driving up the price of each Bitcoin. As more people hear and understand the virtual currency that value is expected to rise exponentially.
Bitcoin is independent of any bank or country. Those who invested early and are believers in the internet currency tell me part of the attraction is that Bitcoin will survive even if governments and banks collapse.
If you’re interested in investing in Bitcoin you can do that online at www.Bitcoin.org or through a Bitcoin exchange such as www.kraken.com You may be able to find Bitcoin ATMs nearby where you can make purchases and have the Bitcoin deposited into your virtual wallet.
To cash-in or sell Bitcoin it must be done online and once the sale is confirmed, the cash value of the Bitcoin will be distributed in real dollars to a bank account.
Lucky people who saw the future of Bitcoin in 2012 have made millions of dollars. A $10,000 investment in 2012 would be worth $7.6 million today.