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The Bitcoin

The whole world talks about Bitcoin. And fairly, bitcoin itself has become a mainstream legend. So, should you really invest in Bitcoin?

The question sounds simple, the answer is quite complicated.



To start with basics first, Bitcoin is a huge technical innovation to make payments between two different parties using a blockchain model. Well, for laymen, blockchain can be understood as a technical term, which is as simple as a ledger verification. But the most important part is - Bitcoin is decentralised and completely anonymous. Thats right! Bitcoin transactions are beyond the purview of a government order, banking institution or a regulator. It just involves two parties to partake in a transaction. And that is all there is. Simple, isn't it?

But how will a technical innovation such as a bitcoin come to a mainstream adoption without the realisation of the majority of the stakeholders? Most importantly, the Governments, Bureaucrats and Corporates. Thats a big challenge that surrounds the Bitcoin currently. However, the whole Bitcoin community is upbeat to the challenge and foresee the future of monetary transactions based on Bitcoin blockchain technologies. Bitcoin is more of a renaissance of coming of age evolution of the monetary transactions. The change is, definitely happening.

Currency has always evolved with generations. The barter value gave way to trades, which evolved into the Gold store as an asset value which gave birth to fiat currency across the world. However, its been a long time the currency as a store of value shifted in cognisance into other asset classes. Bitcoin, itself seems to be establishing itself as a pure asset class. A store of value. All the people calling this a Tulip mania or a bubble craze might end with disappointment. Bitcoin is here to stay. Bitcoin is here to change the perspectives of societies. We are going to evolve.

So, in the year 2017 alone, Bitcoin value rose by 1800 times. Thats astounding! The whole world just woke up, got up and starting watching. Some people started jumping in to the wave, in the fearing of missing out FOMO. However, there are still 95% of the people who are completely oblivious to the Bitcoin advancements. Few people are simply standing by and acknowledging the changes. People who are still not sure of the Government regulations, rules, obligations and impacts.

However, its just the beginning of a new asset class as a store of value. Just like Gold, Bitcoin also has a limited supply of coins which makes it more exotic. Just like Gold, Bitcoin can also be mined by miners by solving complex computer programs. However, as the value of Bitcoin grows, the complexity of the problem just increases making it impossible to mine for new Bitcoins. Hence it can be assumed that Bitcoin has more or less a limited supply. And more importantly, the value of the new asset class can be moved around the world, instantaneously, and anonymously.  So, Bitcoin has a long long way to go from here.

On the flip side, Bitcoin also has a few negatives. Though Bitcoin transactions are completely anonymous, the transactions are still logged in the ledgers which can be traced back to the sender. Though not apparent, the information is still available on the network for a track back. Other Alt coins such as Monero are solving just this problem. Secondly, Bitcoin transactions are becoming slower as the blockchain complexity is going up. I recently moved 20000 Bits to an exchange wallet, and the transaction took around 25 minutes approximately. Not quite the way we like it to be. The Bitcoin community is going to solve this problem, sooner than later, by a process called Fork. In the coming days, we will hear more about the Bitcoin lightning network which is said to improve the Bitcoin transactions considerably. Fingers crossed. Another drawback is the transaction fees. Currently, Bitcoin transactions are not completely free. The Bitcoin miners charge a very minimal amount of transaction fee (way way less than a forex , banking fee) to verify the ledger by the miners. There are plans to completely do away with the transaction fees. And there are many Alt coins such as Ripple and IOTA, which are planning to provide transactions without charging a transaction fee. Very interesting. More about Alt coins in the upcoming posts.

Back to the original question, should you invest in Bitcoin. The answer is a big YES. Definitely. There is no better time than now to get into the innovation and be an early adopter. The crypto currencies are going to grow really big and move beyond the control of any centralisation. I see the community quite closely, and the cryptocurrency is a big movement. And do not look at the price point of entry, just buy the amount of Bitcoins / Bits you are ready to loose forever. Buy and sit tight, for say 5 years, to see how a seed matures into a plant. Or probably a tree.