Bitcoin: What is it and is now the time to invest? - WFMJ.com News weather sports for Youngstown-Warren Ohio

Bitcoin: What is it and is now the time to invest?

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YOUNGSTOWN, Ohio -

Chances are, you've probably heard the word Bitcoin. 

Like many people though, you may be having a tough time trying to figure out how it works.

Bitcoin is a digital currency, so popular it showed a huge growth in value in 2017. A lot of people made a lot of money on Bitcoin. So it begs the question, is now the time to cash in, or is Bitcoin ready to go bust?

Cryptocurrency has been around for about 10 years, but only recently has it taken off when Bitcoin skyrocketed to huge numbers.

Joe Danyi started dabbling in Bitcoin in 2014.

"I never did it for investment, just to understand the concept in its totality," said Danyi.

But understanding cryptocurrency like Bitcoin can be confusing. It's basically digital money that can be used globally with no bank or government backing it up.

"It's a great way to transact and it keeps the banks out of it, keeps them honest because you have another option than going through your traditional banks," said Danyi.

Apps like Coinbase, ATMs and online exchanges are making it easier for people to buy Bitcoin and more and more businesses are now accepting the digital currency as payment. Overstock.com is just one example.

"It's either going to be an amazing currency in the future or it's going to be nothing and that's really what it is, it's gonna be a coin flip," said Danyi.

It's that kind of speculation that has people uneasy about Bitcoins future.

"For some investors, who are looking to do something a little bit different, I would recommend just a very very small amount," said John Stewart with Farmers Trust. "I certainly wouldn't recommend anyone put any more than say one percent of your total assets in something like Bitcoin. It's not something that we're currently recommending for our investors, but for someone who is interested, I would say smaller is probably more prudent unless you're a real gambler and then you know, best of luck to you."

John Stewart is the chief investment Officer at Farmers Trust. He says don't call Bitcoin an investment but rather a currency alternative and a risky one at that.

"The risks certainly are such that it's a very new phenomenon. So nobody really knows ultimately what the future is gonna hold for Bitcoin," said Stewart. "There really is no underlying fundamental value per say, it's not backed by anything of course neither are the paper dollars in your wallet backed by anything but we have a very short track record so we have a limited history from which to draw conclusions and clearly the Bitcoin market has shown to be extremely volatile, rising by a hundred percent in a couple of days, falling by about 50 percent in a matter of about a week or so. With risk does come the potential for reward but you can't forget the risks out of the equation."

Bitcoin is so risky because it's like a stock and goes up or down in value depending on if people are buying or selling it. In 2017, people were buying and one Bitcoin was worth $17,000. Within the last month, people have been selling like crazy and it's now worth $7,000.

"When you see big banks start to get invested for real, that's when it has a real chance," said Danyi.

So until then, Danyi says the risk outweighs the reward and will stay out of the Bitcoin market.

"You're pretty much kissing your money away if you're to get in it right now."

"I don't think I would put any more into it than I would be willing to lose.  But it's something that will be very fascinating to continue to keep an eye on and see how it develops," said Stewart.

Bitcoin is one of the thousands of cryptocurrency out there. If you are interested in getting started, Coinbase is a great app for beginners and all you have to do is link a bank account and or credit card, have your identity verified and you can buy Bitcoin.
 

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