Every few years a new investment hits the scene and captivates investors with the promise of overnight riches. The new thing today is Bitcoins, whose popularity has been skyrocketing in recent months.
Having heard the term over and over again, and yet not really understanding what Bitcoins really were, I decided to take a closer look at them and decide if they were something I should be investing in.
What are Bitcoins?
This is the first question you should be asking. Bitcoins were first introduced in 2009, and are a decentralized digital currency. It is a peer-to-peer currency that is regulated by internet users worldwide. The Bitcoin economy is designed to be free from the meddling hands of central banks. A process called “mining,” which is done by computers solving very complex math problems, creates Bitcoins and also keeps the system working.
Because the problems are so complex, they require a huge amount of computing power. This is done on purpose to limit the amount of mining that any one individual or company can do, which in turn limits the amount of Bitcoins available. This helps control inflation and is used to protect the value of the currency.