Interest in cryptocurrency, specifically Bitcoin, has taken off like a rocket in the last 30 days, spurred largely by the precipitous spike in Bitcoin’s price. While the interest is driving conversation, we feel there hasn’t been enough advice offered to individual investors of how to both make sense of the cryptocurrency boom and to make a decision on whether buying any is a good idea.
Bitcoin is network software that facilitates the secure exchange of digital tokens–called Bitcoins–among anonymous users of the network, anywhere in the world. This New York Times article explains how it works. Other cryptocurrencies work much the same way.
Cryptocurrencies act in some ways like actual currency and can be used to buy a limited number of things, but they are not created by or backed by any government. The full faith and credit of the US government stands behind the dollar. Bitcoin is not backed by anyone. It is hard to create more of most cryptocurrencies, so the interest in them has created demand that is difficult to match, and this has driven up their prices.Read more