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We continue to minimize in-person activity. We will reopen our office when the situation allows. Please read our COVID-19 policy here.

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Bitcoin: Current and Intended Uses Of Cryptocurrency

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With new cryptocurrencies surfacing (what seems like each week), we thought it was necessary to give you a rundown on one of the most popular—Bitcoin—and its current and intended uses. But first…the basics:

What is Cryptocurrency? It’s a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units and to verify the transfer of assets. 

Bitcoin is the original form of cryptocurrency.

Bitcoin as a Currency (its intended use)

Currency Pros:

  1. Decentralized ledger – Users don’t have to rely or trust on traditional and centralized financial institutions to track your currency. A “crowdsourced” and “grassroots” form of currency. 
  2. Privacy, ease of use and near-instantaneous transactions – There is no need to walk into a bank or use an ATM to open an account, obtain the currency or send someone money—it’s all done digitally.

Currency Cons:

  1. Extremely volatile – Why would you allow someone to pay you 1 Bitcoin (shortened as BTC) for a car today if that same exact car might cost you 1.2 BTC in two hours?
  2. Transaction costs/electricity use – This is supposed to be a benefit of digital & cryptocurrency, but Bitcoin suffers compared to other digital/cryptocurrencies in this department.

Bitcoin as an Investment (its current use)

Investment Pros:

  1. High risk/high reward – A $100 investment would now be worth $80,000 in the last five years. $500 on November 11, 2017 was worth $1,000 on December 11, 2017 and is worth $800 on January 11, 2018.
  2. Fun! – It’s not a traditional, “boring” investment when the blue-chip stocks take months or years for any significant change to occur. Very easy to track.

Investment Cons:

  1. High risk is extremely high risk – No regulation and very little security. The major exchanges are frequently hacked and millions of USD worth of BTC are stolen. Despite the overall exponential growth, there have been multiple crashes of a 30% drop within a matter of hours.
  2. Competition from other cryptocurrencies – Other cryptocurrencies attempt to take advantage of Bitcoin weaknesses (Ripple, Ethereum are the current prime competitors).

Want to know more?

Meet Keith Hayden…a CPA, hip-hop enthusiast and big fan of accounting (seriously)! This University of Michigan Alumnus enjoys the great outdoors, a never-ending supply of 5-hour energy and sports. Check out Keith’s expertise and credentials, then connect to see how JVTR can be of service!