The Bitcoin Boom
The crypto-currency, bitcoin, has exploded in value over the last ten years. If anyone could have anticipated this boom, there is no doubt countless individuals would have purchased hundreds, if not thousands of the digital currency years ago.
In July of 2010, one bitcoin was valued at $0.08. Today, one bitcoin is valued at over $11,000. That is one hell of a return.
Over the last week, I’ve been asked by family and friends about this thing called a “bitcoin”. What is it? Should I buy them? They’re increasing in value like crazy, I should invest, right?
Not so Fast…
Here is the deal with bitcoins — they’re a digital currency. Therefore, there is nothing tangible about them. They have to be stored in a digital wallet. These “wallets” vary based on the type of device used (computer, phone, tablet, external hardwallet, etc.), and come with potential risks. PC Matic’s vice president of cyber security, Dodi Glenn, states,
“Each of these wallets have their own pros and cons. For example, if your hard drive dies, and the data isn’t recoverable, you could lose all of your bitcoins. If you use your mobile device, hackers can trick mobile carriers into switching your number to another device, and reset your password, gaining access to your bitcoins. If you use a web based wallet, those sites can be hacked, and your account stolen.”
There are also two different variations of wallets. These are referred to as cold and hot wallets. Cold wallets put your bitcoins away, so they cannot be used. Dodi referred to this as similar to a CD one can invest dollars into at a bank. Cold wallets are typically more secure than the alternative. However, hackers still could potentially breach the account and steal the digital currency. Hot wallets are like a credit/debit card where you could use the bitcoins for more frequent transactions.
But how likely is it, that a hacker breaches a site and steals thousands of bitcoins, leaving you penniless? Well, according to Time Magazine, it just happened. Hackers broke into the crypto-mining service NiceHash and stole 4,700 bitcoin, which is equivalent to $70M USD.
So, Should You Invest?
Ultimately, it’s a risk. But aren’t all investments? Bitcoin value changes daily, similar to the stock market.
The second risk are the hackers. Cyber criminals know the value of one bitcoin. They know its value has skyrocketed. They also know this is a digital currency that is often kept on one’s devices. How convenient — hackers know how to hack into devices! Once the bitcoin is hacked, it’s gone.
The last risk is losing the bitcoin because of hardware failures. Like Dodi mentioned above, if your hard drive crashes and the data isn’t recoverable — neither is your bitcoin. Ouch! Or if you store your bitcoin on an external storage device and lose that device, it’s gone. That would be a hard pill to swallow.
Are you okay with those odds?
**PC Matic is not encouraging nor discouraging users to invest in bitcoin. However, potential investors should be aware of the benefits and risks.
**If you are a PC Matic user, and need assistance with the program, please reach out to our support team at www.pcmatic.com/help.