There is no doubt in the fact that bitcoin trading is slowly taking the world of trading by storm. Major banking and financial regulatory authorities such as the European Banking Authority for instance have bitcoin warned that users of Bitcoin are not protected by chargeback or refund rights, although financial experts in major financial centers accept that Bitcoin can provide legitimate and valid financial services.
After a certain amount of transactions have been verified by a miner, they will receive newly minted bitcoins for their work and thus new bitcoins will be added into circulation, while the number of bitcoins in circulations are now in the multi-millions range, the maximum amount of bitcoins that can ever be created is capped at 21 million.
History is littered with currencies that failed and are no longer used, such as the German Mark during the Weimar Republic and, more recently, the Zimbabwean dollar Although previous currency failures were typically due to hyperinflation of a kind that Bitcoin makes impossible, there is always potential for technical failures, competing currencies, political issues and so on. As a basic rule of thumb, no currency should be considered absolutely safe from failures or hard times.
Like any asset, when there is a higher demand to buy than to sell, the price goes up. This is bad because these new investors are entering the market without understanding blockchain and the underlying principles of these currencies meaning they are likely to get burnt".
The creation rate is automatically halved approximately every four years as more bitcoins are added into circulation, whilst this system is modeled after gold, mining difficulty is always increasing as hashrate increases and makes finding new bitcoins harder as the number of available bitcoins reaches the 21 million cap.
On December 17, 2017, Bitcoin reached an all-time high of $19,783.06 (£16,131.50) before plummeting to $13,800 (£11,252.80) on December 22. At the time of writing the cryptocurrency was priced at $10,331.11 (£8,453.95) - but soon it could see drastic highs according to cryptocurrency experts.
What's perhaps most telling is the media‘s ongoing fascination to focus on Bitcoin‘s negative connotations - how it's used by nefarious actors as a means of payment to fund illicit purchases and activity - and its incessant price movements, which are always difficult to explain.
On 19 June 2011, a security breach of the Mt. Gox bitcoin exchange caused the nominal price of a bitcoin to fraudulently drop to one cent on the Mt. Gox exchange, after a hacker used credentials from a Mt. Gox auditor's compromised computer illegally to transfer a large number of bitcoins to himself.
Similarly, the value of bitcoins has risen over time and yet the size of the Bitcoin economy has also grown dramatically along with it. Because both the value of the currency and the size of its economy started at zero in 2009, Bitcoin is a counterexample to the theory showing that it must sometimes be wrong.