There's so much written about Bitcoin, from so many angles, it's hard to know what it really is.
What is it good for? What is it worth? Where is it going?
It's obvious there are huge moneymaking opportunities in Bitcoin. The cryptocurrency's unprecedented development has already minted a few billionaires and many millionaires in its short life.
You can be sure, however, those winners didn't get to where they are without knowing Bitcoin basics.
If you want a shot at Bitcoin riches, you have to know the truth about this cryptocurrency, so you can make this moment in history a profitable one.
Here's the truth about Bitcoin and how to play it…
Everything You Didn't Know About Bitcoin Basics
For starters, Bitcoin is a cryptocurrency based on blockchain technology. Here's what that really means.
The crypto prefix in cryptocurrency comes from cryptography, the practice and study of techniques for secure communication in the presence of third parties. Blockchain is a decentralized ledger in which a continuously growing list of records (blocks) are linked, secured, and distributed across networks of computers.
Now, about that currency thing.
Currency is a system of money. Gold and silver can be used as currency. Paper and coin currencies used to be backed by gold and silver. Eventually, "fiat" currencies replaced every other kind of currency, including all asset-backed currencies. Fiat currency is money that a government declares to be "legal tender." It's acceptable as payment of debt.
While everyone was sleeping, a former Wall Street insider executed night trades – banking 217% total gains in less than a week. Now, he's sharing his strategy for the first time ever…
Every currency in the world is fiat currency – they're made up. The dollar, pound, franc, euro, yen, yuan – they are all currencies simply because respective governments decreed them to be.
Bitcoin is no different. It was decreed a currency by its originator, Satoshi Nakamoto, believed to be a pseudonym for Australian tech pioneer Craig Wright. It's just another made-up fiat currency.
The blockchain technology that Bitcoin is based on is an open source networked ledger used to record the creation of bitcoins and record transactions based in bitcoins. The blockchain imparts no intrinsic value on the "currency" other than maintaining those records.
Mined for the Taking
You can't create bitcoins out of thin air – at least, not exactly. They have to be mined.
Bitcoin mining is a process where computers are used to verify a block of transactions along the Bitcoin blockchain, which are then put through a process that applies a mathematical formula to them. That then turns the block into a random sequence of letters and numbers known as a "hash." The hash is stored along with the block, at the end of the blockchain, at the point in time it is authenticated.
Everyone who participates on the blockchain has access to all records of all transactions, including the most newly made. Anyone can mine blocks (by identifying them by their hash and confirming them) and earn a reward of 25 bitcoins.
Satoshi Nakamoto mined the first ever block of Bitcoin, known as a genesis block, to earn 50 bitcoins.
This raises a question. How was Nakamoto, creator of the Bitcoin blockchain, able to mine a genesis block of 50 bitcoins even though there were no Bitcoin transactions before he created the first one?
That's Bitcoin. It's "a riddle, wrapped in a mystery, inside an enigma," as Winston Churchill might say.
So is the price of Bitcoin.
Because Bitcoin has no intrinsic value, and its utility as a currency is limited to those who choose to use it and accept it, the value ascribed to it is simply what the next person buying a Bitcoin is willing to pay for it in dollars, or in euro, or yen, or another cryptocurrency like Ethereum. Just to make it more complicated, that other cryptocurrency would itself have to be valued against an established currency to determine its price in order to buy Bitcoin at whatever its price is..
This year, Bitcoin's been getting a lot of attention, mostly because its price (in U.S. dollars) has skyrocketed.
In fact, a single Bitcoin rocketed from a value of $1,000 at the beginning of the year to almost $20,000.
All that "appreciation" is drawing a lot of headlines and investor interest.
The Future of Trading Bitcoin
About the Author
Shah Gilani is Chief Financial Strategist for Money Map Press and boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker. The work he did laid the foundation for what would later become the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk and established that company's "listed" and OTC trading desks. Shah founded a second hedge fund in 1999, which he ran until 2003. Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see. On top of the free newsletter, as editor of The 10X Trader, Money Map Report and Straight Line Profits, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade using a little-known strategy. Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on FOX Business' "Varney & Co."