Mature Life Features

Cecil Scaglione, Editor

Posts Tagged ‘virtual currency

Only Your Computer Knows Virtual Money

leave a comment »

It’s a tenet of investing: if you don’t understand the company or product and what it does, drop it and move on to something else.

Which makes the Bitcoin story totally bizarre. Not only is it understood by a select group of financial high flyers, no one is really sure who started it.

Since the Bitcoin’s birth a dozen years ago, it’s travelled a bumpy road the stretches from a price of $400 five years ago to more than $60,000 earlier this year. Along the way it dropped to $4,000 in 2019 from $19,000 two years earlier.

But not to worry, if Bitcoin sounds a bit scary, there are more than 6,500 other cryptocurrencies on the market.

None of these currencies involve printing presses. They exist only in computers – cyberspace. Like Bitcoin, you can’t store any of it under your mattress.

There is a growing industry servicing the spending of Bitcoins after you buy them. They’re readily available at thousands of automated teller machines around the country.

The value of Bitcoin rises only if there’s a demand for it. If no one wants it, the value drops – dramatically.

If Bitcoin doesn’t catch your fancy, you can purchase Ethereum, Litecoin, Stellar, Polkadot, Cardano and, as pointed out earlier, thousands of other options.

And there’s a whole new language involved.

For example, Ethereum claims to be “a decentralized software platform that enables smart contracts and decentralized applications (dapps) to be built and run without any downtime, fraud, control, or interference from a third party.

“The goal behind Ethereum is to create a decentralized suite of financial products that anyone in the world can freely access, regardless of nationality, ethnicity, or faith.”

Did you get all that?

Transactions are conducted through a digital ledger called a blockchain. This involves a global computer network that stores the virtual money in a digital wallet.

A lure of cryptocurrency is the ability of blockchain to process and record software programs to transfer large sums of money around the world without an intermediary.

For example, it takes five days to transmit cross-border payments at an average fee of more than 6 percent, accounting for a $4 trillion business globally. Bitcoin cuts the transfer time down to about 10 minutes. Fees vary for the various currency forms. Some are no fee.

If you feel you understand the function of virtual currencies and see them as part of your financial future, make sure you understand the beginning, middle and end of what can happen to your money if you think you’d like to get involved and invest.

Written by Cecil Scaglione

October 22, 2021 at 5:00 am

Posted in Finance

Tagged with , ,