What is Bitcoin & Why Should I Care?
Keep reading to get an understanding of WTF bitcoin is and why people won't shut up about it.
Bitcoin is both a technology and digital asset. As a technology bitcoin is a decentralized peer to peer payment system. What that means is it's an entirely unregulated method of transferring currency from one person to the next. The enticing angle of bitcoin is that it's a payment system with no "middle man" that would impose excessive fees or track your spending. In a manner, think of bitcoin technology as a Paypal or Venmo except without the transactions fees and IRS oversight.
Bitcoin, the coin, is best thought of as a digital asset, rather than a currency like money because it has no inherent value and isn't a widely accepted method of paying for goods and services. Instead, its value is entirely derived from the hype and hope that it will one day become a commonly used currency. Therefore, if you buy bitcoin, you're buying "hope" which isn't that much different than investing in the traditional stock market as its based on speculative future value as well. However, with conventional stock market investing you have more intel to help support your speculation. For example, you can know that a company is about to launch a product and that it may raise the value of their stock or that certain government policies could impact a company and therefore lower the value of the stock. You also have regulated company financial statements that can help you decide you if you feel comfortable investing in a particular stock long-term. You can't say the same for bitcoin.
The reason you know anything about bitcoin at all is that of the hype around it. The volatility of bitcoin has been a rollercoaster and groups are highly opinionated on both sides. Those that are pro-bitcoin cheer the loudest when the value of the asset raises and boo anyone who dares question it. On the other hand, staunch bitcoin opponents spare no opportunity to warn potential investors about what they see as a bubble ready to burst.
That said, my personal choice is to stuff my extra money in the traditional stock market. I'm not concerned about missing out on potential "gains" and the stock market is enough excitement for me. Besides, there are more stable ways to make a lot of money that don't involve investing in either the stock market or bitcoin.
As for you, if you are interested in getting into the cryptocurrency market first assess your risk tolerance and decide how much money you would be comfortable losing based on your potential gain. Don't base your decision on "expert" commentary and avoid the hype. Decide how much money you want to invest in the beginning, how much if any your periodic contributions will be and how long you plan to stay. Above all, STICK TO YOUR PLAN.