The bitcoin and cryptocurrency market means different things to different people What’s next or crypto price in the market.
What is bitcoin?
Bitcoin is a digital currency that operates without a central bank and allows people to transfer money directly from one user to another user, with anonymity, without using a credit card or other financial system. The digital coins or tokens are created by users who use special “mining” computers to solve complex math problems and “mine” a set of currency using the cryptographic algorithm. The “miners” are rewarded with bitcoins or other cryptocurrencies for solving the math problems. Not only can bitcoins be used as a currency, they can also be used to store value. How do bitcoins get created and how do you buy them? There are currently about 16 million bitcoins in existence.
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What is cryptocurrency?
All cryptocurrencies are different. With some, you do not need to download an app to use it; you simply send cash via a special computer code. Bitcoin is one such cryptocurrency, which acts like cash. While Bitcoin isn’t perfect and isn’t controlled by a central authority, it’s the world’s most popular cryptocurrency. In theory, it’s decentralized so there’s no bank or government to regulate and/or punish for a bad transaction. What’s more, Bitcoin is very easy to use because there are lots of apps that do all the transaction “heavy lifting” for you, like paying bills or buying a flight. That’s another thing that makes Bitcoin valuable: transaction fees are low and exchanges are convenient. It’s simply easier than using a credit card. Bitcoin isn’t the only cryptocurrency.
The bitcoin crash
While it’s true that there are those who want to understand the technical underpinnings of bitcoin and other digital currencies better to predict their values, one of the most widely discussed charts on the internet—the trepidatious eye candy of bitcoin price charts—is incomplete. A big reason why is because that eye candy is entirely focused on bitcoin’s price on a world market. Of course, there are many other digital currencies and assets that are not traded in a world market—for example, Ethereum and a handful of blockchain stocks—and that fact makes the chart at your fingertips more puzzling. As Alex Wilhelm—founder of Coinschedule and cryptocurrency observer at CoinDesk—told me, bitcoin’s chart is the classic example of being as insightful as it is flawed.
Why is the bitcoin crash happening?
One reason is because bitcoin remains very volatile, being up by up to 17,200% in 2017 as well as falling by up to 90% in 2018. Volatility is measured by comparing the average daily value of a cryptocurrency over one month to that of the preceding 12 months. Bitcoin is still some way off its all-time high of December 2013 at $17,910 but it is worth remembering that between March 2013 and March 2014, its price fell from $13 to $2, at one point. As of yesterday (December 7) the average daily value of bitcoin was $7,130, which means that it is still 42.9% off its all-time high in December 2013. Another factor is that governments, which have been cracking down on cryptocurrency exchanges, particularly China, have been restricting the trading of bitcoin and cryptocurrency altogether.
How did the bitcoin crash get started?
Back in 2017, the value of bitcoin hit a peak of $19,511 in December. It was then down to $5,000 per bitcoin in mid January 2018. Bitcoin now seems to be trading at around $6,500 per bitcoin, but many remain skeptical of its long term value. Many have called this crash a bubble, but even if it is a bubble, there is still a lot of money involved. Currently, the cryptocurrency market is worth around $330 billion. Do people actually use bitcoin? Surprisingly, more people own cryptocurrency than actually use it. Blockchain-based bitcoin wallets are a lot easier to use than a traditional bank account and transaction fees are a lot lower than using a traditional bank.
What’s next for cryptocurrency prices?
Cryptocurrencies have been trading in the $700 range since late September 2018 and, much to the chagrin of investors, are expected to drop below this level soon. Some have attributed this prediction to mainstream crypto community for not supporting the resilience of the cryptocurrency market, however, we believe this movement is driven more by traders and investors who are determined to sell at any cost in the attempt to salvage their long-term investment. This is because the majority of cryptocurrencies are being traded and bought in the country of the buyer while the seller is based in overseas.
In summary, this is a volatile sector. The Bitcoin and cryptocurrency market means different things to different people, so unless you are ready for heavy volatility then a good way to invest in it is with great care and skill. If you don’t feel that you are skilled enough to deal with the volatility and risk, then I don’t think you should risk your money in this market. I’m taking advantage of the volatility with my GPG wallet and only spend with caution and small amounts. I’ve enjoyed the Bitcoin boom, but it’s now time to move on, reevaluate and prepare for the long term.