Bitcoin’s major contribution to the future of finance was meant to be as a means of exchange. Transactions using virtual currencies were designed to be faster, easier, cheaper, and more secure than cash or credit cards. However, Bitcoin and the scores of cryptocurrencies that have followed it have evolved into investments that are held rather than currencies that are transacted.
Virtual currency markets are constantly under development. By its very nature, cryptocurrency is designed for constant improvement. Often, these improvements come in the form of hard forks on the Bitcoin blockchain. These forks, which are basically software updates, increase the ease, efficiency, security, or other features of the virtual currency. Some forks planned for early 2018 – including Bitcoin Interest, an update that allows held coins to collect interest – can add real value to your cryptocurrency holdings.
Cryptocurrencies Are Held as Investments
Investing in currency is not a new or controversial idea. The first foreign exchange market was established in Amsterdam almost 500 years ago, and since then investors have held and traded currencies with the expectation of profiting off changing exchange rates.
Virtual currencies give a new generation of small cap investors the same opportunities that larger financial institutions have had access to for decades in the more limited ForEx markets. Decentralization has translated to democratization in currency exchange markets. This is particularly exciting for small-cap investors, who struggle to make returns in financial markets that are designed as a way for the rich to get richer.
Just like governments and big banks, small investors are now buying currencies and holding them with the expectation that they will profit from a positive exchange rate. As a new generation of investors flock to virtual currency exchanges, tech entrepreneurs are launching new products to meet their needs.
Bitcoin Forks Create New Investment Opportunities
Many new coins are launched through Initial Coin Offerings (“ICOs”). However, with several new coins being launched every day, investors struggle to find the coins that create real value for their portfolio. As a result, the typical ICO release has become incredibly volatile and highly competitive.
Unlike ICOs, coins created through forks on the Bitcoin blockchain inherit legitimacy from the leading cryptocurrency. Launching a coin using the established Bitcoin platform is an effective way tech entrepreneurs can raise capital without the risk of launching and ICO.
A handful of new forks have been released in the last few days of 2017, and several more are on the horizon for early next year. Some of these forks – like Bitcoin Cash and Bitcoin Gold – have risen above the competition to become valuable investments. Others, however, have created little to no value for Bitcoin holders.
Bitcoin Interest Gives Investors a Return on Virtual Currency Holdings
Unless you’re receiving interest on your holdings, an investment has no value until it’s sold. Based on market activity, your assets can be worth a fortune or a song. That is, until you liquidate them.
The new virtual currency exchange markets provide investment opportunities unparalleled in our current generation. However, most of us are holding our digital assets rather than using or trading them. As a result, the value most virtual currency portfolios are subject to the whims of a highly volatile currency exchange market.
Bitcoin Interest is an upcoming fork on the Bitcoin blockchain that will give investors a return on the coins they are holding. Anyone holding Bitcoin at the time of the fork will receive Bitcoin Interest Coins (“BCI”) equal to their Bitcoin holdings. Held coins earn interest payments, similar to savings accounts in traditional banks but usually at much higher interest rates. This creates an immediate value for virtual currency investors, who usually park coins for weeks or months while they wait for exchange rates to grow more favorable.
Bitcoin Interest provides investors with a return on their virtual currency holdings. This opens up a new stream of revenue for investors, so long as they hold their Bitcoins in a compatible wallet. Bitcoin investors can look forward to seeing the benefits of BCI when the fork occurs in the coming weeks, so be sure to set yourself up to take advantage of this automatic increase in the potential value of your portfolio.