Bitcoin is a highly volatile asset. We are still very early, so it’s quite probable that will be the case for a while. I’d argue that it’s a feature, not a bug, but obviously for the moment that can be percieved as a problem, especially for financial planning.

I’d also argue, that the best strategy invented to date is simply buy Bitcoin in regular intervals without regard for the price and hold for long term. But I understand that may not be for everybody and the emotional toll of huge price swings can be significant.

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Digital gold

Bitcoin is often being described as digital gold. Same as gold, it is scarce and being mined and released into circulation at a fairly predictable rate. It is impossible to counterfeit. It is fungible, meaning some gold is not better than any other gold. It is divisible to a high degree. It can be anonymous.

It has most of the properties of gold, but improves them. It’s much easier to transfer, for one. Which means it is also easier to steal large quantities of. If you steal a ton of gold, people will notice when you try to carry it with you on the plane. If you steal 100 million worth of Bitcoin, you can carry it in your head or on a USB stick.

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Maybe you’ve heard about the recent attack on Bitcoin Gold exchanges, where the attackers stole some BTG using a form of double-spend attack.

Now, you might start to wonder: How is that possible? The genius of blockchain is in preventing exactly this type of attack. But this crucial property holds only under certain network conditions. Let’s explore how such an attack is possible and what you can do to protect against it.

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Bitcoin can be forked. It’s almost a magical process, doing a fork. Money, raining from the skies. You will realize how magical it seems, once you try to explain how the fork works to someone not familiar with cryptocurrencies and blockchain in general.

What do you mean? You have some bitcoin, and then suddenly you have also some other coin? So the original bitcoin is split in two? Does Bitcoin lose half of it’s value then? But how can you just create new money? Who is paying for that?

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