Is the recent price increase in the price of Bitcoins a temporary high or is this really the start of something bigger? Many analysts predict that the price of bitcoins will continue to rise exponentially in the coming months. If you're holding a small amount (less than $100), you may be wondering what's going on and why. Here are some facts that may help you understand.
Many in the media have been speculating that this latest price rise is related to the United States government being unable to contain the growth of the "bitcoins economy". Others have claimed that this recent price rise is connected to a drop in the US dollar value of the bitcoins that users convert to US dollars when they use the peer-to-peer software. It is difficult to ascertain which the cause is. Peer-to-peer software like BitPay uses a system called the Paysafe Payment Protocol which guarantees that you will only pay what you agree to. Without this protection to traders of certain currencies, there would be widespread fraud and abuse and most users will simply stop using the service if they are forced to pay more than they intended.
In this day and age, the use case for investing in a currency like bitcoins is quite limited. The biggest uses are being used by businesses to transfer large volumes of money quickly to maintain smooth operations. Most people are still not comfortable holding large amounts of cash because they feel as though the investment potential is limited. Even if you are technically capable of holding large amounts of currency the perceived risk of dealing in this Cryptocurrency is much higher than investing in a traditional stock market.
The main benefit of investing in bitcoins as opposed to a traditional currency is that you don't have to worry about government intervention or high exchange transaction fees. If you don't mind waiting a few weeks for your new wallet to be funded then this may be the perfect solution for you. Otherwise, you will need to look into another viable option that doesn't involve high risks and large fees.
There are two major ways to facilitate fast transactions and these are through the Lightning Network (LN), which consists of nodes that relay transactions on the LN's peer list and the central bank, and off-chain transactions where users send their own transactions to other users with no need for a central bank. The LN network does not rely on the integrity of the state, as it relies on the credibility of the bitcoin holders which are referred to as the network. This is the reason why the bitcoin price keeps on changing; there are always news releases from the LN owners regarding changes to their algorithm which alter the security parameters. This also means that if you're trying to invest in bitcoins you'll need to stay well informed of these updates as they can cause your investments to move in the wrong direction.
The main downside to investing in bitcoins is that it lacks any governmental regulations that would make it easier for third-party institutions to make off with the bitcoins that are stored by users on the LN. This lack of regulation has resulted in several attacks on the bitcoin network. Several people have been arrested in the US and Canada for hacking into computer systems that were storing bitcoins. The worst-case was the hacker who took down the Canadian government's website. Fortunately, most countries have tight control over the currencies that are exchanged on the bitcoin protocol and they will immediately stop issuing them if they discover that a particular currency is being fraudulently used. Check out this website https://virgocx.ca/tpage/en/bitcoin/price/ for more info.
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