The recent run-up of Bitcoin has a lot of people thinking about investing in the mysterious digital currency. For lay people, Bitcoin is a digital currency that operates on blockchain technology which is essentially a shared digital database of financial transactions which some are even calling a new type of internet. It cuts out the need for banks to clear your transactions since the currency is completely digital. Advocates of the currency say it represents the future of money, independent of governmental manipulation and inflation. Critics like Jamie Dimon call it nothing more than a pyramid scheme that will end badly for millions of naïve investors. Bitcoin is not a business or a tangible asset, it produces no income, and is not backed by government. Mark Cuban says that betting on Bitcoin is a bit like going to Las Vegas – you should only invest what you can afford to lose and you should not, under any circumstances, invest more than 10% of your assets in Bitcoin. If you’re interested in learning more about Bitcoin, you should probably start by reading up on it. Mastering Bitcoin by Andreas M. Antonopoulos is frequently cited as a must-read for curious investors.
I don’t consider myself an expert in blockchain technology – at least not yet. Cryptocurrencies and NFTs (non-fungible tokens) both use blockchain technology. That’s what gives them value. However, very few people can explain what blockchains are or how they work.