Future Or Folly? Breaking Down Bitcoin
January 8, 2018
They don’t physically exist, yet just one can be worth upwards of $15,000. However, a local financial expert says when it comes to Bitcoin, unless you’ve got money to play around with, it’s best to steer clear in terms of a serious investment.
Bob Laura of Brighton-based Synergos Financial says Bitcoin, which are basically lines of computer code that are digitally signed each time they travel from one owner to the next, cuts out the middle man on financial transactions conducted online. He tells WHMI that while that allows for transparency about the transaction itself, it also provides anonymity to its users. He likens it to placing money in a public locker where anyone can look inside and see what is inside, but have no idea who put it there and who takes it out. That makes it popular with tech enthusiasts and speculators, but also criminals.
The system is kept honest by a group of tech-users called miners, who network their computers into what is called a blockchain, which keep a record of every bitcoin transaction. That’s the window in Laura’s locker analogy. Miners are then rewarded by occasionally being gifted with bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn’t be an issue. Only 21 million Bitcoin were created, which Laura says provides them their value as there are no new ones expected to ever be added.
However, he says their value is subjective and likely to plummet without much notice. But for those determined to get in on the venture, Laura advises that a less risky way to take advantage of Bitcoin’s popularity would be to invest in companies like Overstock.com or Word Press that accept Bitcoin as payment. But even then, he says it’s not something he would recommend to his clients. In fact, he believes putting your money on red or black at the Roulette table might be a less risky bet. (JK)