Digital "cryptocurrency" bitcoin surpassed $10,000 on Wednesday for the first time in its history. By comparison, at the beginning of 2017, it was only rated at $1,000, a pretty stout jump for the alternative currency that is accepted online for all manner of goods and services and has been criticized for its use on the dark web.
Some believe the alternative payment is the future of digital transactions, pointing to its relative security and popularity among techies. Others believe it is a fad with a handful of well known financial experts referring to it as a fraud.
So, should you even care? To better figure that out, we have to start with what bitcoin is in the first place.
In the most basic sense, bitcoins are measurements of currency you can use just like regular money but through digital-only transactions. You buy them in the same way you would exchange cash for gold or a gift card. The value of bitcoins continues to escalate because it is still new and only represents less than $200 billion in capitalization, a pittance compared to the more than $200 trillion in regular global currency.
Bitcoin's origins are as odd as the concept itself. No one knows for sure who invented it, but it began as open source software that allowed hardcore nerds to trade goods and services online. Because there was no centralized control, it allowed the currency to grow free and loose from restriction, and it gave users the anonymity many of them desired, in some cases changing hands for some pretty unscrupulous purposes from laundering money to even funding acts of violence.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
But, there is no denying its growing popularity. More and more merchants are allowing bitcoin for payment. The list includes fairly large, legitimate retailers like Expedia, Microsoft, Overstock.com and Square as well as online hubs like WordPress, Wikipedia and 4Chan. That number is expected to grow at least somewhat as more people use digital payment services both online and via their smartphones.
That doesn't mean we should all run out and buy a bunch of bitcoins. Yes, they can be an investment just like any other form of currency, but the market is still extremely shaky and there is a growing debate over whether or not there is any legitimacy to bitcoin in the long term. Still, it does sound a bit like people saying the internet would never amount to anything when old guys in suits at centuries-old investment firms cry fraud on the young whippersnapper bitcoin.
Right now, there isn't a ton of use for it beyond investing simply because there are so few companies that accept bitcoin as payment. And therein lies the risk. If it taps into even a fraction of the global market, bigger names in retail and services will have to jump on board. Conversely, it could all just be a puff of smoke in the smoggy skies of the financial markets.
No one really knows which makes investing in bitcoin particularly risky. But, if you have some spare change and think it is worth a whirl, hop on Coinbase and get in on the ground floor. You might get rich. Just don't be surprised if your vaunted bitcoins wind up being worth less than the pixels they are stored on.