When you pay with a credit card or using your phone, you don’t actually see the physical transaction of money. Bitcoins are a similar concept and its soaring in popularity. Many are investing now, hoping one day bitcoins will be accepted for everyday use.
The value of a bitcoin has surpassed $17,000, but unlike a one dollar bill, you cannot actually hold a bitcoin. It’s virtual money that’s simply worth whatever others will pay for it.
“People see how fast it's growing and they want to be a part of it," said Chris Sweeney who put a Bitcoin ATM at the Corner Store and More in the Simmons Building in Little Rock.
He sees at least a dozen people a day using it to buy bitcoins. So, what exactly is a bitcoin?
"A way that people can pay for goods and services that avoids the traditional banking system," described Michael Pakko, Chief Economist at U.A. Little Rock.
Bitcoin was created in 2009 by an anonymous computer whiz. It’s a digital form of currency stored in a digital wallet that has no middle man like a bank. It was first obtained through mining, kind of like gold, but it’s all on a computer.
"It’s an alternative to the traditional banking system and a lot of people are attracted to it for that alone," said Pakko.
Bitcoin’s price has soared more than 1,600 percent in 2017, now surpassing a $17,000 dollar value for one bitcoin.
The U.S. Securities and Exchange Commission released a warning Monday on crypto-currencies suggesting that since it’s not governed or protected, it could lead to fraud. The coin isn't registered with the SEC, meaning while there isn't anything stopping it, it hasn’t been approved for trading.
"What we’re looking at is an increase in value based on speculative activity," said Pakko.
That’s because while some businesses like Next Bistro and Bar are accepting bitcoin as payment, it still isn’t widely used in day to day transactions.
"You can’t walk into a physical store and they want your bitcoin, it’s a little too hard for them to accept it right now," said Sweeney.
Many financial leaders advise doing extensive homework before investing in bitcoin. Since there isn't anyone regulating bitcoins, there isn’t a service number you can call, but there are a lot of questions you should ask.
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