With a combined market cap of $100 billion, of which Bitcoin accounts for nearly half of that, Cryptocurrencies have grown from a concept for only math geeks into fast-growing money-making machines. In fact, it is assumed to be the hottest thing in town for anyone aspiring to become a member of the M Club (Millionaire Club!). Can it be true?
Genesis of Cryptocurrencies
Bitcoin became the first cryptocurrency that caught investors' attention in 2009; however, its history and the identity of its inventor(s) are still pretty much shrouded in secrecy.
By September 2015, there were 14.6 million bitcoins in circulation, with a market worth of $3.4 billion. The success of Bitcoin has encouraged more creators of cryptocurrencies to get busy and produce newer ones such as Litecoin, Ethereum, PPCoin, and Namecoin.
Bitcoin millionaires
In 2010, a Bitcoin was sold for 20 cents, and one of the early investors that got on the boat was Jered Kenna, who reportedly bought 5,000 coins. Charlie Shrem first learned of Bitcoin in 2011, and he purchased 500 coins for $3 to $4 each. Charlie went ahead to buy thousands more when the price increased to $20. Today, a Bitcoin is sold for $2512. If Kenna and Charlie are still in possession of their coins, they are automatically millionaires.
Currency speculators think that the price of a Bitcoin may go up to $3000 as the coin finds more users in retail stores, financial institutions, and even in governments. The Russian president, Vladimir Putin becomes the first leader of a country to accept using Ethereum, a rival of Bitcoin for national oil transactions. China is working on its own cryptocurrency.
Some major concerns
Based on the rise in their popularity, cryptocurrencies may have become the newest pathway to joining the Millionaire Club. However, there are still some serious concerns that make wary investors run away from them. Some of these concerns include but are not limited to:
- Overt secrecy of cryptocurrencies--the transaction between two or more Bitcoin investors, for instance, is done without any intermediary intervention. In other words, there are no financial regulatory bodies that monitor and regulate those transactions.
- Cyberattacks -- Cryptocurrencies are technically virtual or digital currencies, which means that they are basically stored on the owners' hard drives. In the case of a debilitating cyberattack, it is possible to lose those coins.
- Flash crashes--Flash crashes occur when there is a huge selling order. A few days ago, Ethereum crashed from $340 a coin to as little 10 cents, due to a large selling trade.
In spite of the issues highlighted above, a large number of investors who are fearless risk-takers are still rushing to cryptocurrencies to try their luck. They may be right if the price of the cryptocurrency they have invested in spikes skyward someday.
