What was the first thought that came to your mind when you saw that word? Maybe you were envisioning a beautiful piece of jewelry or perhaps even a gold brick? Whatever your immediate thoughts were, they more than likely shared a similar idea: valuable.
Gold is one of those words that is capable of inspiring so many thoughts, emotions, and ideas into a person since it is such a valuable substance. There is a reason for that. Gold is a very rare substance, not just on Earth, but throughout the Universe.
It is created through explosive cosmic events, such as dead stars colliding, and then crashing onto a planet such as ours, ready for the picking. Well, that is how it used to be anyway before humanity figured out how to extract it massively.
It was once an abundant material, where people could go into the rivers and potentially find nuggets just flowing downstream or sitting in some loose dirt. As time went on, and people began to seek out this substance, it became more difficult to find.
As time progressed, the rarity of the substance became apparent, and the value that got placed upon gold only seemed to increase. Eventually, sources of gold were challenging to locate, so people just went on with their lives.
Eras came and went, with countries fighting wars so they could grow in power. Immense wealth was necessary to make the gears of war turn, and one cannot forget the saying, “they who have the gold, make the rules.” The wealthiest countries were, therefore, the strongest and took control.
The most influential countries remained in power until one big thing occurred within the Western United States that would change the structure of the world; they found gold in the hills! That’s right; there was over 750,000 lbs of gold deposits within the Sierra Nevada Mountains.
Between 1848 to 1852, people from around the United States flooded to the California territory to make their wealth through the mining of gold. These people begged, borrowed, mortgaged property, and spent their life savings to get funds to make the journey across the country to seek riches.
Some were very successful during this rush, since there was over $2,000,000,000 of precious metal extracted during this time. Unfortunately, most were not. It’s not surprising that people would desire to better their lives and put it all on the line to do so though.
The times were rough for many in the world, and the chance to change the course of your life did not come along every day. Even so, we have never seen such a pursuit of wealth in our recent history where people would sacrifice their life savings on a gamble, until that is, Bitcoin came around.
Just like in 1848, the whole idea of finding excessive wealth somewhere has been the dreams of many, although incredibly unlikely. Those ideas, have sat in the back of most peoples minds as slight fantasies. Would you consider investing your life savings and everything else just to try to mine gold?
Looking back on that timeline we can sit here and scoff at the idea of ever doing that, yet, we hear about people investing all their savings into Bitcoin. When there appears to be a once in a lifetime historical opportunity, people seem to lose their minds and throw logic out the window.
When people found out about cryptocurrency, they did not quite understand how it worked or how there was a value to it. People are accustomed to their currency being “backed” with something physical, such as gold. Even when it is just data in an account, the numbers get backed by something.
Cryptocurrency, however, is backed by absolutely nothing and the value that gets placed upon it is wholly set upon people’s willingness to accept it for payment. Initially, it got used by people to make anonymous purchases of drugs on the infamous Silk Road.
It has adapted vastly since then, where many different forms of cryptocurrencies are accepted as payment from everyday household items at Overstock.com or food from affiliated crypto restaurants. The most notable of those cryptos is, of course, Bitcoin, and more services are starting to accept it.
Although there are over 10,000+ cryptocurrencies out there, Bitcoin remains to be the poster child for the movement, and as it grows in value, people want to get involved. Those who were in on the bottom floor made a potential fortune if they sold at the $20,000.00 mark before it dropped.
Those that did not sell are still in a position of power because it continues to rise and the idea of it reaching 30, 40, even $50,000.00 and beyond is not out of the question. People have invested their livelihoods into this belief, and I genuinely hope it works out for them.
It is hard to deny the whole “virtual” currency trend since it seems to be the future, and people don’t want to miss out on their “get rich opportunity.” The opportunity is not just as simple as choosing when to buy a stock, but there are other ways that people are going about getting Bitcoins.
The “Mining” Process
Have you heard of Bitcoin mining? It’s where you get a pickaxe and harvest it from your computer, one digit at a time. Just kidding, well, about the pickaxe anyway. Bitcoins technically get mined, but not in the traditional sense.
They technically get formed through complex number algorithms that will make each one of them unique, and there is a set number that can be “mined.” It started off easier, but to produce or “mine” each coin, it becomes far more complex, requiring a lot of electricity and computing power to produce.
That is correct; Bitcoin is still getting produced. However, each new coin that gets created will take a lot longer and require far more resources. Just like when people had to dig deeper into the earth to get to the riches buried within, the same goes for getting those last bits of Bitcoin created.
Just like within the original Gold Rush in the West, the idea of investing everything into the potential of digging up a fortune was hard to pass up. Not everyone could do the work of mining the resources up though and would hire the work out for a cut of the profits.
Bitcoin is similar in this way; not everyone can mine or create their own. That is where Bitcoin “mining” companies come into the picture. They work by having you “invest” your virtual currency with them for a length of time, so that they can grow the investment.
The idea would be like trusting your money with an investment firm, but without the same protections available since the digital currency is not universally accepted. If everything worked out though, for the investor, they would end up with more Bitcoin then they started with and be thrilled with the result.
Unfortunately, many of the these “mining” companies were nothing more than a scheme that appeared like it was paying out returns, but eventually, it would collapse. Many were nothing more than a well-designed Ponzi scheme where people who got out early enough made money.
Those that did not, however, suffered the loss of the collapsing mining company with no sign or way to recover their invested Bitcoin. Although there are legit mining situations, it is essential to do your homework before getting involved so that you don’t run the risk of falling for a scheme.
Bitcoin Images Are Gold Colored – Coincidence?
One cannot deny the fact that Bitcoin has an alluring pull because it is indeed a way to amass great wealth, and quickly, just like the Gold Rush. The difference between the currencies is that gold is a valuable resource and commodity, while Bitcoin is, a mystery.
The idea behind cryptocurrencies is that they don’t necessarily have a solid backing like most currencies do, but they still hold value anyway. Regarding the future, one form of money replacing all others does look like the path that will one day occur. However, that doesn’t mean it will be Bitcoin.
From an outside point of view, Bitcoin being the top dog within the cryptocurrency market currently does not necessarily mean it will remain there. Many little things can derail the leader of the crypto market like a country choosing to enforce regulations against its usage.
If the currency cannot be accepted, it does not technically hold any value. That is the downfall of the virtual money because laws and regulations can dramatically impact value. That does not change the fact there is plenty of money to be made within the crypto market, it just means you have to do your research.
There is a lot of potential gains to be made with cryptocurrency, but the market must agree with you on the one you are putting your money behind. Today the top dog is Bitcoin, tomorrow it could be Litecoin, and the next day, who knows.
The main point is that we cannot guess if Bitcoin will be the primary digital currency or if one of the other thousands becomes the dominant one in the market. As investors, do your research and don’t rush in without a plan just to try to strike it rich. Remember; pyrite looked golden too.
Wrap Up – Should I Get Involved?
Whether or not you are the guru of cryptocurrency does not matter as much as knowing some of the risk parameters involved. Bitcoin, like any other investments, has a risk that you need to evaluate and understand.
First, you want to keep an eye on the stock and treat it like any other, to determine if it is a wise time to purchase. Getting in when the stock is dropping and being ready for a bounce-back is an optimal time to buy, but difficult to predict.
The difference when dealing with cryptocurrency as opposed to the traditional market is the different regulations that can impact the stock dramatically on a day to day basis. Bitcoin, for example, can experience an extreme shift in one degree to another based on the accepted use of the currency.
If regulations are placed out there that restrict the usage of Bitcoin, it could have a dramatic impact on the value of the currency. Remember, it is essential to keep an eye on what type of regulations are getting proposed on an international level so that you can stay ahead of any trends.
The cryptocurrency market is fickle, making it difficult to know whether you should be investing heavily or selling off those coins as fast as possible. It is one of the main reasons that as a smart investor, you need to stay current with what’s going on in the virtual market.
Always remember, just like gold, Bitcoin could be there one day and gone tomorrow. They called it a Gold Rush for a reason, and those that got there the quickest benefited the most. That does not mean there aren’t plenty of profits to be made.
Whether the future of currency is Bitcoin or another crypto, one thing remains for sure, it will be digital, and we need to stay prepared.