Before investing in cryptocurrencies you must be aware that your investment can go and down as cryptocurrencies are more commodity like than true currency.
Taking Bitcoin as an example, it is the by product of processing blockchains, it is produced as part of the proof of work and is was used to encourage/reward people to process blockchains ledgers.
As it is a product that is difficult to produce it is rare and like anything in short supply it can rising in value very quickly if there is demand. Lack of demand or increase in production can reduce the value. The other side of bitcoin is that it is unregulated and as it is becoming more popular as an actually form of currency to purchase goods it is under the risk of regulation by the finanical markets which if that does kill it will stop wide swings in value.
It has has a terrible environmental problem, it is not green Bitcoin uses more electricity annually than the whole of Argentina. Cambridge researchers say it consumes around 121.36 terawatt-hours (TWh) a year – and is unlikely to fall unless the value of the currency slumps.
It also likely that environment regulation could affect the production of Bitcoin which could drive values up sharply. Bitcoin as a proper currency at the moment is bad as if you priced something at one bit coin in the morning it would equate to £40,000 at the end of the day it could be over $50,000.
This means the price of good and service in bitcoin have to be constantly adjust in fractions of a bitcoin to ensure a consistent price or on the spot currency conversions will be required. You have all these problems plus the fact the value makes cyber attacks more likely as the ROI for cybercriminal launching attacks is more worthwhile. If your cyber wallet or exchange is hacked you can lose your investment.
Do you believe in Bitcoins?
I believe they are misunderstood and very inmature at the moment and the underlaying blockchain ledger is not a silver bullet application. It doesn’t provide anonymity as a bitcoin transactions are store in supposedly immutable ledger.
Anonymity in using bitcoin for illegal transaction actually comes from the lack of identity check at certian exchanges where bitcoin is changed into real world currency. The blockchain ledger relies on more than 50% of nodes accepting a particular transaction is valid, if you can control more than 50% of the nodes you can control the ledger.
The power requirements to generate bitcoin is going to be an issue unless you can use green electricity but many miners are not in eco datacentres. I do fear that investors could be caught out by the swings in bitcoin and the uncertainity in whether it will be regulated and how which could limit returns on investment.
bitcoin
–EOF (The Ultimate Computing & Technology Blog) —
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