Are you ready for digital currencies?

When it comes to material things, technologies, and progress in general, I have never been an early adopter. I like my little comfort, even though I am adventurous with travel and life decisions, I guess having familiarity in the form of material things brings the stability I don’t have changing countries more often than some people change jobs. So when I first heard about Bitcoins and their offer of buying and selling goods via a digital currency, I was a bit skeptic. But like any financial product that changes value, it can be considered as an investment, and as such, studied as one of the various ways we, here at Make Money Your Way, investigate in order to diversify our sources of income.

I trade Forex, which are foreign currencies, and do so because, even if the dollar drops for example, I still need it for my construction needs. I still need Euros to travel back home, and Pound Sterling to pay my UK bills. So worst case scenario with currency trading, I take a loss but still have a use for the albeit lower currency. With Bitcoins, I know that many companies are starting to accept them, but it is a pretty young currency, having been introduced in 2009. So if something were to happen, and for some reason Bitcoins were not accepted around, you couldn’t trade them for much. Unlike the dollars that still are backed by the central bank and the U.S. government.

Bitcoins also have ups and down that are hard to predict since they don’t rely on political and economical data, but rather on supply and demand, and online buzz and other hard to expect events.

For example, the price variations of Bitcoin for the past few weeks have been from $386 on September 30th down to $325 on October 8th. Knowing that is was valued at over $1,000 earlier this year, and that it was worth around $100 in early 2013, it is pretty scary for investors, unless you are planning on shorting the Bitcoins of course.

I would trade extremely carefully if I were to invest in Bitcoins. Maybe start with one, make a few trades, buy, sell, or just hold it for the long term and see if it buys more down the road. But it feels a bit like gambling rather than the more stable currency trading I am used to.

I have to admit that I try to go for things I know when it comes to investing, and that has been a recommendation from successful investors too: if it is too complicated for you, just stay out of it and invest in what you know. I am not a techie and I have a hard time grasping how Bitcoins are created. Apparently, it is an online protocol, that could be done by any programmer, and it is called “mining”. While Bitcoin.org says Bitcoins are created at a predictable rates, I still don’t really get what makes them of any value, aside from the fact people find them a convenient payment method. But the high volatility could mean your payment may cost you more money than all the bank’s exchange and wire fees if Bitcoins lose value when you need to use them.

[Source:makemoneyyourway.com]Sourse: Thefinancebucks.com