Bitcoin Exposed: Today's Complete Guide to Tomorrow's Currency Read Free

1.15- 1.5 range. This estimate is based on continued acceptance and greater fungibility.
     
    Variability happens across all markets, including currencies. Only when markets rise as fast as Bitcoin did, do they set-up for a steep fall just as fast.
     
    Bitcoin was designed to offer a limited number of Bitcoins. Limiting Bitcoins through setting how many can be produced is supposed to create a currency that gains value over time.
 
    Here is a chart showing the growth in $ value of BTC's:
     

     
    This may be hard to see, but the values ranged from $.06 up to over $200.00. While this shows that huge profits are possible with trading Bitcoin, it also shows the possible downside. Storing wealth in Bitcoins at this stage of development is not, in my opinion, the best use of Bitcoin.
     
    The chapter on “How to Trade Bitcoins” is probably a better way to work with Bitcoins. Increasing wealth by simply holding Bitcoins will work better later on. For now, Bitcoins are great for trading, not for storing wealth.             
     
    3. Joining the free currency movement and accessing all the motivated customers within it.
     
    Over 600,000 people per month are searching online for how to join the Bitcoin movement. These are potential customers for anyone in commerce. Only a few stores accept Bitcoins currently (see the list in the Appendix). Any store that offers products for sale using Bitcoins taps into a growing market. It does not mean that a store has to only use Bitcoins. They can still accept credit cards, Paypal, or any other form of payment we choose.
     
    Using Bitcoins for commerce and offering products to the growing marketplace brings excitement to the site, creates back links for improved online rankings, and helps grow the free currency movement.
     

What Are Bitcoins Really Worth?
     

Bitcoins, like all currencies today, are worth what they are exchanged for. There is nothing backing Bitcoins. There is no gold, silver, or value of any kind supporting a bottom level for them.
     
    One possible value for the lowest amount a Bitcoin’s worth is how much computing power and electricity is required to produce one Bitcoin. This value varies based on electricity costs where the mining computers - that do the work for a Bitcoin reward - are located. Electricity costs for mining a Bitcoin (calculated by PCPer.com here: http://www.pcper.com/reviews/Graphics-Cards/Bitcoin-Mining-Update-Power-Usage-Costs-Across-United-States ) range.
     
    For a standard Bitcoin mining computer (let's say, an AMD A8-3850 APU), costs range from $.305 per day to as high as $2.50 per day. For more specialized computers, the costs range from $0.55 to $4.05 per day.  The number of Bitcoins produced per day depends on several factors.
     
    The lowest level produced is about 0.050 btc and the highest per computer can reach 3.2 btc. Taking the low end on all numbers gives us a value of:
     
    (1btc/0.0050btc/day)*$0.305/day=$61.00 base cost to create or mine a Bitcoin.
     
    The computer's cost is not included here because this level would be for a non-specialized computer.
     
    With a $/BTC price of $50 today, each BTC is costing the least efficient miners $11 to produce. The most efficient miners are still making a lot of money though. Here’s a look at more optimistic mining costs:
     
    Taking the high end production numbers:
    1/3.2 BTC/day*($4.05 electricity + $8 computer)=$3.77 base cost for larger scale efficient miners.
     
    Since the $/BTC exchange rate is $100+ (and rising) today, a large scale Bitcoin miner can make money all the way down to a $/BTC exchange rate of about $4.00
     
    This suggests that rarity is the idea backing Bitcoins. With a BTC production limit of about 21 million BTC occurring in 2140, there is very gradual growth built into the system.
     
    A clear understanding of what inflation and deflation is important. Bitcoin is considered to have deflationary properties. Not so fast.
     
    While on the surface