A Bitcoin Revolution

Stack of bitcoinsWe are all about income streams, and our favorite by far is revenue generating websites. Certainly they do not come without risk, but when you vet the company and the guarantees, they look great to us, and the returns certainly speak for themselves. You have to make up your own mind on that and anything else presented here. Everyone’s situation is different, and we do not presume to know yours. All we can do is provide you with information that will allow to make your own decisions.

If that sounds like a disclaimer, it is, because this next one is way out there. We met some great people at a conference recently and were introduced to investment ideas all across the spectrum. One was in Bitcoin – the best known of the “crypto-currencies” out there today. If you’ve never heard of it, here is an excerpt from Wikipedia with a brief description:

“Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency.” You can read more here..

The Bitcoin is like the Donald Trump of currency. There are those who like it or love it and think it will be worth $500,000 or more some day! Then there are the detractors who believe it is all a house of cards and will go to zero tomorrow. Most likely the truth is somewhere in between. Always look behind the statements and try to understand the motives behind one position or another. Bitcoin is a big threat to the current banking world because transactions, unlike those with banks and credit cards, are peer to peer and nearly free.

The currency gets a bad rap because, due to its anonymous nature, it can be used for nefarious purposes.  But it continues to gain legitimacy as more merchants begin to accept it.  Online stores and have accepted Bitcoin for a while now, and a recently announced deal will bring on as many as 260,000 merchants all across Japan.  It is also possible to buy gift cards with Bitcoin through certain outlets that offer the cards for traditional retailers such as Home Depot, CVS, Kmart, and even!

And, Bitcoin does actually have something going for it that other other currencies don’t have: A pre-defined schedule limits the total number of Bitcoins so that they gradually approach a total of 21 million (ignoring those that have been lost through deleted or misplaced wallet files). The limit of 21 million bitcoins is “hard-wired” in to the protocol, and there will never be more bitcoins than this. This chart is an approximation of how Bitcoins will be generated.

Today, we are right on target at a little over 16 million Bitcoins, so there is no surprise so far. Valuations in terms of major currencies do fluctuate pretty dramatically – and the risk lies here. We bought our first Bitcoin for a little under $1,600, and today’s value can be seen below. Last week it went to $2,800, so trading in Bitcoins is not for the faint of heart.

Saying that, there are some really interesting options in the currency surrounding the way it is created, or “mined”. That’s right, Bitcoin mining is how Bitcoins are generated. Not with a pick and shovel, mind you, but with sophisticated computer programs that generate new Bitcoins according to the protocol described above.

So, the question is, would one wish to be a part of this revolutionary new currency, and if so, how? Our advice is this: if you do decide to “invest” in a Bitcoin program, be sure it is with funds you can absolutely without question afford to lose. DO NOT, and let me repeat, do not under any circumstances borrow or commit funds you might otherwise need to a Bitcoin investment.

That said, the question of “how” remains, and we tell you about an option we are using in the next post, The USI-Tech Solution…coming soon!


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