YOUNGSTOWN, Ohio (WKBN) – You’ve probably heard the word “Bitcoin” in the last few months. The online money, called cryptocurrency, is a new way to spend and it’s gaining massive popularity. But is it safe to use and invest in?
Here’s how it works. You go online to a site where you can buy Bitcoin. You can buy the currency — as much or as little as you want — using money from your bank account. Then, that cryptocurrency can be used to buy things the same way you would on a site like Amazon.
The difference? Bitcoin is faster and the bank doesn’t know you made the purchase. But there’s a catch.
“I think Bitcoin is total speculation,” said Dr. Peter Chen, a Youngstown State professor and financial advisor.
As more people pour their money into Bitcoin, the value increases. Bitcoin’s value has gone up more than 1000 percent in the last year alone. This year, it’s highest value was $19,000 for one Bitcoin.
You don’t have to buy one whole Bitcoin, though. A dollar can be divided into cents and Bitcoin can be divided the same way.
While Bitcoin’s value saw a huge increase, it also saw a massive collapse and is now holding around $10,000.
“A stock has an underlying business. The underlying business brings cash flow but Bitcoin has none of that,” Chen said.
Along with no cash flow, Chen said Bitcoin has no franchise and no assets.
Despite the design of the currency, some people see it as an investment opportunity. With such fluctuations in the price, is there any reason to seriously use or invest in this new technology?
Chen said right now, it’s not worth the risk.
“Anything with a ‘dot com,’ the price was skyrocketing.”
Chen sees Bitcoin as being similar to the Dot Com Bubble Crash of the late 90s. Speculation and excitement generate new interest and more money — which create an inflated price.
Chen likens it to a casino. Bitcoin might be good for entertainment, but for an investment?
“There’s no investment value at all,” he said. “I wouldn’t recommend anyone touch it. I wouldn’t touch it myself.”