Christmas crypto: what you need to know about online currencies

Graphic by Nikhar Dhingra

Some people are hard to shop for. Each year even the most savvy shoppers are left scratching their heads, trying to decide what gift to get the guy or gal who has everything.

Old fallbacks like a watch, ring, or gift card are starting to give way to an interesting new gift: Bitcoin.

The much talked about but little understood crypto currency has jumped in value nearly $5000 since this October.

This rapid increase has been mirrored by the increase in discussion surrounding the currency, its viability, its immediate future, and even its role as a Christmas gift.

For those who are new to the world of crypto, Bitcoin may seem mysterious.

What exactly it is depends a lot on who you ask, but for the sake of simplicity it is okay to think of Bitcoin as another form of currency.

Unlike conventional money, however, there is a set amount of Bitcoin that cannot be exceeded.

This protects the currency from inflation though it by no means keeps the value of the currency steady.

Another difference from conventional currency is the security Bitcoin can provide to users.

If used properly, Bitcoin is anonymous and the transactions made with it cannot be easily traced.

But one of the most common uses for Bitcoin in recent times is as a store of value.

Just as people buy gold in order to keep up with the rate of inflation, so to0 are more and more people buying Bitcoin.

The value of gold, however, is not increasing anywhere near as quickly as Bitcoin has in the past year.

This has led some to use Bitcoin as a means of investment, hoping for an even steeper increase in value going forward.

What is driving up the price of Bitcoin?

Once again it depends very much on who you ask, no one seems entirely sure.

One reason may be the increased adoption of the coin by countries like Japan, where Bitcoin can be used in most places the Yen can.

Others claim that the increase in value is due to the defeat of alternative cryptocurrencies, which have been unable to chip away at Bitcoin’s massive market share.

A recent upstart competitor, Bitcoin Cash, was expected to do significant damage to Bitcoin (the original) but after a dip in value Bitcoin fought back and reclaimed most of the market.

Another possibility is that as more people learn about Bitcoin and its incredible climb they are eager to jump aboard for fear of missing out.

As I write this Bitcoin sits at $12,472 up nearly $5000 from a month ago and up over $11,000 from a year ago. A small investment last year or even last month could have turned into a fortune today and the frustration of those who have missed out is palpable.

This is not to say that the currency is without skeptics many major financial institutions and commenters claim that this is but a bubble, similar to the dotcom boom and crash of 2000.

Though there may be value in Bitcoin, these skeptics say, it is certainly not worth the amount it is currently valued at.

These skeptics believe that there will come a crash to correct Bitcoin, bringing it to a value deemed more appropriate given the coin’s current functionality.

Such criticism has not caused much worry within the core of the Bitcoin community who say that in the event of a dip they will simply buy more Bitcoin.

As the holiday shopping season enters its most frenzied month more and more people are looking to Bitcoin as an interesting alternative gift.

Those who express interest but fear taking the jump would likely appreciate a risk free way into the market.

Other may simply appreciate it as a solid investment, a modern version of the savings bond grandparents often gave to grandkids.

Others see it as a way to introduce new and somewhat unknowing investors to cryptocurrency.

Rather than explain the concept, it may be easier to give the gift of Bitcoin and almost force the receiver to learn about their new gift and its inner workings.