Public interest in everything bitcoin is at an all-time high, from those investing to simply asking questions. Million are making money, but it could be a risky investment.
Here in the Tri-State we know a thing or two about mining… but we’re not talking about coal.
Old National Bank Chief Economist, Matt Finn knows a different kind of mining, built with bits and bytes into a blockchain.
“Once transactions are entered into the blockchain they can never be changed,” Finn explains. It’s one of the fundamental ideas of blockchain.
Bitcoin is created by users giving up computer power to solve complex math problems. This is called mining. The blockchain is a highly secure way of storing data. Miners earn a bitcoin as a reward for ensuring the integrity of the technology.
Finn says blockchain is a growing technology more companies are beginning to use.
Walmart, for example, may have a problem with their produce. If so, it’s likely everything gets tossed.
Finn says, with blockchain, Walmart would have the power to track each apple to the tree it grew on.
People are using that kind of power and security to grow money, too. Paper money and coins are like fossils compared to bitcoin.
Over the last 3months its value has skyrocketed, with a single bitcoin worth almost $19,000 in mid-December.
“It’s either wildly speculative, in which case this is going to end badly, or it’s actually finding its true price,” Finn says.
You can think of bitcoin a lot like gold. Some people like to buy it, not because they need it, but because it holds some value. Some are investing in fractions of bitcoin hoping to make money in the future.
The fear with bitcoin is, its value could change drastically by this time tomorrow.
Fifteen years ago, $20 real dollars doesn’t buy what it used to, but it will buy what it did yesterday. Finn says you can’t have the same reassurance with bitcoin.
“It’s a problem in that, if speculation becomes rampant, then it’s just a bigger bubble to burst.”
(This story was originally published December 18, 2017)