Bitcoin
Overview
Bitcoin is a cryptocurrency that operates without a central authority and allows fast payments anywhere in the world with low processing fees. The payments are confirmed by a blockchain where miners can verify every transaction. The miners are then awarded bitcoin for each block they process. Bitcoin has grown rapidly in the past few years, at one point growing to be worth more than 20,000 USD. Many people have varying views on bitcoin and cryptocurrencies. Warren Buffet has compared bitcoin investing to "rat poison," others have predicted it will go to zero, and others have said it will continue to grow.
Research Question: Why are there such varying opinions on the viability of Bitcoin and cryptocurrencies?
Why We Chose This
Bitcoin is something that we are both interested in and we both own bitcoin as well as cryptocurrency miners. One thing we noticed was everyday there would be conflicting articles about bitcoin with a wide range of predictions from a variety of sources and opinions.
Bitcoin Headlines
There are many different views of Bitcoin in the media. One reason for the skepticism is the volatility of the price of Bitcoin. The graph shows the price over one year, with a low of about $1000, and a high of $20,000. This is a lot of movement compared to traditional stocks, as 2000% gains in one year aren't very common among stocks.
Evidence 1: The Price of Bitcoin and Supply/Demand
- Bitcoin's price has been very volatile over the past year, as the chart shows. This has caused many people to question its validity as a currency, with some calling it a bubble or saying it won't be worth anything in the future. This is usually the reason people do not invest in bitcoin or discourage others from doing so. They feel that it is not a safe investment because of its volatility. Also, there are limited number of bitcoins in the world with only 21 Million that will ever exist. Recently the 17 Millionth Bitcoin was mined. Over the past year the demand for bitcoin has increased, one of the primary causes for the large price increase.
Evidence 2: Bias for or against Bitcoin based on existing assets
After doing more research on who says what about bitcoin, most of the time, people take an opinion based on what benefits them.
Tom Lee: He is a bitcoin investor that has his own assets in bitcoin. This means that he profits when bitcoin goes up. By making high estimates of bitcoin, he is able to influence the price. He has made multiple high estimates for bitcoin.
Warren Buffett: He has billions of dollars in traditional currency and stocks, so is makes sense that he would be negative on bitcoin. He has also been skeptical about companies like amazon and google when it comes to investments.
Evidence 3: Government Regulation
Finally, due to the reasons above, government officials also have different views on Bitcoin and cryptocurrency. This can lead to regulations or investigations into cryptocurrencies, increasing skepticism from the public. The fact that bitcoin is anonymous can lead to regulations from governments to prevent illegal spending or tax evasion.
Conclusion
Overall, there is a lot of information and differing opinions about Bitcoin. The main causes of the varying opinions are the historic volatility of it or a bias based on existing assets. These have led to the variety of media opinions conflicting each other every day.