Forbes: Bitcoin prices have been over $ 4,000, why should not they act?

nnnRampage comments: With the recent bitcoin prices and showing gratifying gains, more and more people have been unable to bear, hoping to buy Bitcoin, quickly profit. This paper analyzes this phenomenon, explains the concept of Bitcoin and currency, and points out that the bitcoin market is not stable and is full of speculators. Although the price is rising, ordinary people still need to invest in special currency cautious.n
nnTranslated by: Inan
nAlthough most people do not know what the bitcover is, but its price alone last year from $ 570 has soared to $ 4,300 – 750% increase is shocking. This phenomenon makes more people want to have some bit currency, hoping to make pen quick money, and this is very risky.n
nWhat is Bitcoar?n
nBitcoin is an encrypted currency. This means that they can be used as money, but not as tangible as money. They can be used as an online currency to buy items. You can not put it in a drawer like storing dollar bills or Kruger gold coins. Bitcoin can trade like any other currency. Although they are virtual, but can be the same as cash for people in the network transfer.n
nIts virtual features are not inferior. The dollar that our financial institutions have labeled in the online statements are considered real money, but that’s just digital dollars. In fact, it is not a drawback that Bitcoin does not exist in kind, as the number on the financial statements is not the same as the entity’s currency. Bitcoin can be used in many places like the dollar, similar to what we use credit or debit card transfer value.n
nCompared with other currencies, Bitcores are unique in that no financial system (such as the Federal Reserve) manages its existence and value. Bitcoils are tracked by many users through block-chain technology to manage them. The block chain technology itself is not a problem; it has been conceived for various purposes, such as accounting. Bitcoin is a unique currency, because there is no central bank to control its production. People can see who sells and holds Bitcoin and creates a bit currency market. This makes the bit currency very different from the dollar, the euro or the rupee. There is no government “good faith and credit” behind the currency.n
nWhy is money different from other things?n
nMoney is a magical thing. If they were not, we had to trade through material exchange. If you want to buy gasoline and no money, it must give the seller a chicken or other sellers want something, which is very inconvenient. So people create money to represent the value of the item. We can say that a gallon of gas is worth $ 2.5 instead of a gallon of gas worth a chicken. So the currency represents the value of all the items. The bill itself is just a small piece of paper that is of no value. But it represents purchasing power. So it can store value. We hold the dollar so that we can use what it represents to get what we want.n
nMoney is not the only form of value storage. People buy gold and lock them in a safe because they think the demand for gold will rise and their value will rise, so gold can store value. People buy art collections or rare currencies because they think that as time goes by, the demand for such artifacts will increase and their value will rise. Art becomes the way of value storage. Some people buy a house is not to live in, but because they believe that the demand for real estate will grow, so real estate can also store value.n
nBut the value of these forms of storage are at risk, because its value may disappear. If people exploit new mines and produce large amounts of gold, their value will drop. If the artwork is a fake, it is no longer of value. If people’s demand for art or ancient coins drops, their value will go low. The value of this item is not related to its owner, but to others.n
nThe value of the assets may be the value of the collapsen
nIn the 1730s, the Dutch used tulip bulbs as stored assets. People are eager to get tulips to give tulip bulbs value. But as time goes by, people buy tulip bulbs are no longer for planting, but for their representative storage value. More and more people buy tulip bulbs, the price is also rising, and later, the value of a tulip bulb actually reached the average annual salary of workers in the Netherlands 10 times – higher than the price of the whole house is also high. People think that the value of tulip bulbs will continue to go up.n
nBut people do not control the production of tulip bulbs. Ultimately, more tulip bulbs are produced, and their value is much higher than the value that people can get through it. Although the tulip bulbs had been so expensive for several months, the collapse of their value took only two months. When the tulip bulb holder realizes that no one is sure of their value, everyone wants to sell it as soon as possible, resulting in complete loss of all value. This asset, which is perceived as a storage value, collapses, and the investor has nothing but a pile of worthless bulbs.n
nAlthough Bitcoin is unlikely to have such a complete breakdown, but people in the purchase or to be extremely cautious. Because there are other risks. There may be someone invading your exchange or storing Bitcoin. In addition, the large fluctuations in digital currency, large bit-currency transactions may make bitcoal prices within a day within the range of changes to 30% or even higher.n
nBecome an investor, not a speculatorn
nSome speculators and traders are trading on digital money markets such as Bitcoin. They do not care about their basic values. They are concerned only with their current value and the momentum of price increases. If the prices of what things are rising, they will buy, just want to be higher than the price of the price to sell and profit from the transaction. They did not realize that their trading things have stored value because they only want to trade quickly and profit. Even if the value of the drop they will sell, and thus suffer losses. So they are speculators.n
nMost of us work hard to keep a small sum of money in the bank. Most of the deposits are used to spend, buy food, pay utilities, enjoy the entertainment and so on. If we have more money and hope it can appreciate, then we will use the money to invest in assets of basic value, such as real estate or company. We look forward to investing in reporting and making long-term investments to provide reserves for future consumption.n
nUnless you are a professional trader or speculative “gambler”, please stay away from Bitcoin. They are of no value, but only the value of the currency. Bit currency is not subject to any government agency management, nor any government support. Its value depends purely on the confidence that the holders think they will continue to appreciate. This market now looks more like a tulip effect, rather than a serious investment.n

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