Penny Stocks For Dummies
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The concept of Bitcoin was not directly tied to penny stocks at first, but penny stocks are quick to become the perfect vessel for any investor stampede. And people jumped on the Bitcoin bandwagon in droves!

If you don't fully understand Bitcoin, don't worry — most people don't. But even without proper knowledge, thousands will still pile into a good investment mania when they see one!

Similar to the marijuana penny stocks, opportunist companies sprang up to provide all things Bitcoin-related. This included Bitcoin vending machines, exchanges, Bitcoin mining services, digital wallets, consulting services, and so much more.

There is a difference between a Bitcoin business and a business that accepts Bitcoin as one payment option. If the local grocery store or your nearest pub starts taking Bitcoin, it's still a grocery store or a pub. Bitcoin-related businesses are those companies that base their entire model on the Bitcoin concept. They provide a product or service to the Bitcoin industry.

Many Bitcoin enthusiasts spoke of the growing merchant numbers in the early days, as Bitcoin soared. However, starting from a base of zero, the first phase will include only an expanding base of Bitcoin-friendly merchants. Many of these businesses will eventually change their minds on accepting the alternative currency, and will stop taking Bitcoin altogether, for any of a number of reasons. The first casualty of this attrition rate was a pub in Ireland, but you'll see more over the coming years.

Like all manias, the Bitcoin craze played out exactly as you might expect. In addition, because the concept was so revolutionary and media worthy, the stampede was fueled further by endless broadcast coverage across almost every news outlet.
  • 2007: Satoshi Nakamoto began working on the Bitcoin concept. This may not be his real name.
  • July 26, 2010: One Bitcoin is worth 6¢ in U.S. currency.
  • June 8, 2011: Bitcoin value reaches $29.60 in terms of U.S. dollars.
  • August 8, 2013: One Bitcoin is valued at $143.91. This is where the media started to take notice, and where the rampant gains started pulling people into the frenzy.
  • December 4, 2013: Bitcoin hits its peak, trading for $1,147.25 for a single Bitcoin. By this point, anyone who was going to buy Bitcoin now had. The decline begins.
  • December 18, 2013: Bitcoin prices cut in half, dropping to $522 within two weeks.
  • January 14, 2015: Bitcoin trades at $177.
Although the concept of Bitcoin was cutting edge and unique, there was nothing new about the investor mania that surrounded it. In fact, the entire course over which it played out was more predictable than surprising. Just like the pot penny stock mania, or the dot-com bubble, or the Dutch tulip bulb stampede, as soon as the trend brought in the most people, they all went down together.

About This Article

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About the book author:

Peter Leeds, also known as The Penny Stock Professional, is the publisher of Peter Leeds Penny Stocks, a popular financial publication with over 50,000 subscribers. He is also the author of Invest in Penny Stocks.

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