 Bitcoin is exploding again!
What is it and should you buy it?
Bitcoin
is a cryptocurrency. No physical coins exist, only balances kept on a
public ledger which everyone has access to. There are only 18,628,050
Bitcoins in circulation and the maximum number that ever existed/exist
is 21 million. The difference between those in circulation and those
that ever existed are the Bitcoins which have been lost and which can be
mined.
The blockchain
Bitcoin
uses a technology called blockchain for its security and transparency
of transactions and it is why it is being watched carefully by
governments around the world as a potential future currency.
I
won't try and explain the blockchain, as I really don't understand it
myself fully, but what we can say is that it could be a good way for
governments to introduce a currency where every coin's movement is
recorded and monitored and which governments could access, should they
need to, as a way to effectively remove the issue of tax evasion as
discussed above.
Should you buy Bitcoin?
You
may have seen on the news that Bitcoin is reaching new price heights
again in the last month and there appears to be renewed interest in it
as a potential investment. Firstly, you should know that Bitcoin is an
unregulated investment, so should you lose your Bitcoins (lose your
access codes) then you will have no protection from a regulatory
authority to get them back. In addition, Bitcoin appears to go through
these periods when its price goes stratospheric (let's call this what it
is: speculation) followed by a complete slump in price which follows
shortly afterwards.
My simple advice would be, if you are keen
on buying Bitcoin, then wait for the next slump and don't buy in at
today's prices. A slump will come although I can't tell you when. That
would seem to be the most sensible point to purchase Bitcoin and then
hold.
 How much should you invest? I
think the safest answer to that question is however much you can afford
to lose. For transparency purposes, I bought Bitcoin a few years ago,
and invested a 'very' small amount, which has performed exceptionally
well, but it was an amount which I could lose forever should the worst
happen. Bitcoin or Bitcoin cash? There
are now many different cryptocurrencies out there, and I can't comment
on any other than Bitcoin and Bitcoin cash, since I know little to
nothing about the others. There is an alternative to Bitcoin,
called Bitcoin cash. The main difference is that Bitcoin cash was
created to get around the problem of Bitcoin only having a finite number
of cryptocurrency coins in circulation and also the time it takes to
make a Bitcoin transaction. To put this into perspective, Visa
can process 150million transactions each day, or 1700 per second.
Bitcoin can transact a mere 7 times per second and the more interest it
attracts the longer the wait is. Hence, it is clearly not a substitute
for common currency...yet. The slow rate of transaction boils down to
the technology of the blockchain and the amount of data which needs to
be stored against each coin (remember the whole history of the coin is
registered each time a transaction is made). Bitcoin Cash was
created to get round this problem by effectively reducing the length of
the blockchain of information and improving transaction times. However,
this comes with the risk of being less secure. Store of value or potential future currency All
this being said, Bitcoin is being touted as a potential store of value
as an asset in much the same way as Gold. There is also finite resource
of gold in the world and the price swings according to demand. Bitcoin
doesn't pay dividends or interest, (like gold) and can't even be made
into jewellery! Bitcoin Cash has much more potential as a mass market tradeable currency! If you feel that you need to buy Bitcoin, or any other digital currency, then the best thing is to do some research, click HERE
for details, and trade in when the market collapses. Invest a small
amount of money that you can afford to lose and sit tight. Who knows
what will happen? What we do know is that the Chinese
government is one of the biggest miners of lost Bitcoins and that
governments such as Sweden and Estonia are seriously looking at
introducing their own cryptocurrencies. Cryptocurrencies are coming, and
clearly have potential, just how much and what part Bitcoin will play
in that evolution is anyone's guess. Maybe Italy will be the first to
introduce a fully operational cryptocurrency...you heard it here first! If
you want to speak about any of these issues or would just like a
general financial planning review for your life in Italy, then you can
contact me on email gareth.horsfall@spectrum-ifa.com or message/call me
on +393336492356 | 
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