A new worldwide currency is gaining in popularity. And it could affect the way we buy things in the future.
Bitcoin is a digital currency that many people are investing in. Some people who purchased bit coins early on have seen their money skyrocket in value. But not everyone thinks it's a safe investment.
They're the first digital coins you can send through the internet. And in the future, you may be able to spend them just about anywhere.
"In 2014, they expect things to expand exponentially through different exchanges," says David Schiller.
Bitcoin works a little like the stock market, but there are no banks or central authority. It follows the supply and demand principle. There are a limited of coins available. And the value of the coins relies on demand.
"Right now, people are apparently willing to buy bitcoin for about $800 or $900. And that may drop. But why are they willing to pay that much price? Because they believe it will be $1,200, $1,300, $2,000. And the scary bit is that's the only driver of the value of the bitcoin. This belief that it will keep growing," says University of Mary professor, Slavisa Tasic.
Ryan Masset purchased his first bitcoin for less than $200. And today, that same coin is valued at around $800.
"Throughout November and December, it went from under $200, up to $1100, down to $500, back up to $900. And has since settled in the low $800 range. It's been there for a couple of weeks, which for bitcoins is relatively stable," says Masset.
Bitcoins are most commonly purchased through an online exchange site, such as Coinbase. It's a high-risk investment you can spend. Overstock. com recently began accepting bitcoins. And a few Las Vegas casinos already announced plans to accept the currency.
"You have your wallet. I have a digital wallet. And then, we exchange digital numbers. And then, through these algorithms, it is exchanged through the block chain almost immediately," says Schiller.
And you can cash out whenever you want. But some are skeptical of the digital currency.
"Supply is limited, which is a good thing to have some stable value. But, the other thing is, demand relies only on people joining the game. And we don't know how long that's going to happen. It's been happening for the last three or four years, but it's still relying on people joining in, and I just don't know when will some markets decide just to not do it anymore," say Tasic.
It's a bit of a gamble, but some are coming out ahead.
Masset says you do need to be a little tech savvy to use Bitcoin. Because there is no central authority, it's important to protect your information. Unlike a credit card, you won't be covered if someone steals your identity.
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