Ben Todd | Jun 2, 2017 | 1
Should You Invest in Bitcoin?
Who are we to say if you should invest in Bitcoin. This is not like asking us if you should put your money into peer-to-peer savings, or if you should put your money into small-cap pharmaceutical companies. Nobody is experienced enough with cryptocurrency to accurately guess what is coming next. We will be just as surprised if somebody brings down the whole cryptocurrency market tomorrow as we would be surprised if each bitcoin becomes worth one million US dollars tomorrow. Cryptocurrency could become the world’s unified currency, or it could become yet another way for money to end up in the wrong people’s hands. Should you invest in bitcoin?
Helping You Make Up Your Own Mind If You Should Invest In Bitcoin
Disclaimer – we are not giving you financial advice. All I am going to do is present you with a few facts and then give you my opinion on them. Luckily, eCheck.org draws in people who think with their heads rather than their feelings. If you wish, you may interpret the facts differently and come up with your own opinions. Luckily, we are not in a situation where “everybody else” is doing something to the point where people start to “feel” like they should follow. There are quite a lot of big players that are avoiding bitcoin—notably, banks, consultancies, insurance companies and most of the world’s governments.
Somebody Is Making Some Serious Money
If you had spent $100 on bitcoin in May 2010, you would now have more than $72.9 million today in August 2017. The price of bitcoin just keeps on climbing, and the investors who were smart enough to hold on to their bitcoin are rolling in money right now…or, they are holding on to their bitcoin because they believe that bitcoin will continue to rise.
My Thoughts – You Have Missed The Boat
The people who got in early seem to be the only ones who are making good money. People who are investing now are taking a very large risk. On the other hand, if you can find an Ethereum token that is relatively new and has a future (isn’t a pump and dump token), then you may be able to make money in the long run.
Bitcoin Is Liquid And Is Fueling The Price Surge In Other Cryptocurrencies
Of all the cryptocurrencies, bitcoin is the most liquid. Its liquidity, and Japan’s decision to start recognizing it as legal tender is the reason the price of bitcoin has surged. The price of other cryptocurrencies is rising at the same time (albeit not at the same rate) as bitcoin price surges.
My Thoughts – Those That Rise Together Will Crash Together
I know how wrong my statement is, so allow me to clarify. When bitcoin has a price surge, we have seen other altcoins/cryptocurrencies rise too. It makes sense that if bitcoin experiences a sudden fall that some (if not many) of the other altcoins/cryptocurrencies will fall too.
Prices Vary Widely Around The World
There are markets around the world that are trading bitcoin. It seems that even if you make an investment in bitcoin and then you decide you are sick of it, you may still be able to sell your bitcoin for a profit by finding exchanges where bitcoin is overpriced.
My Thoughts – Too Many Hands Picking The Blackberries
I don’t want to sound like somebody who is out to ruin your parade, but the profit to be made via arbitrage is 90% luck. There are so many people moving bitcoin from one exchange to another in order to make a profit that you luck seems to matter more than skill or selling power. Many people are doing it and many are making a profit, but it is not the sort of profit you would write home to tell mother about.
Bitcoin Is Used As A Hedge Against Market Uncertainty
World markets may crash, or countries may enter a depression from which they cannot recover. If the USA experiences another depression, it will not be able to bail itself out by getting into more debt. Companies that are too big to fail are going to fail, and the paper tiger (as the Iranians call America) will crumble. Bitcoin enables people to protect themselves against the coming storm.
My Thoughts – Giggle
Firstly, at the time of writing, the president of the USA is an experienced billionaire who is more than capable of pulling the USA out of most of its debt and to keep the economy ticking over nicely. You may not like him, but he has made and lost billions at the rate that most people gain and lose weight, so if anybody knows how to pull the US out of debt…it is him. Secondly, too many people have too much invested in our current monetary system, global market and global economy. Even if the people at the top were not prepared to do whatever it takes to protect the system…wouldn’t you?
If you were given the choice of having to hand over your home to the IRS, or voting to not pay China back the 14 trillion that is owed, wouldn’t you vote to stiff China? I am not saying that it is going to happen, I am saying that we have to look at human nature, which suggests that if things are going wrong, it is sometimes okay to change or bend the rules until it goes right again. Using bitcoin to hedge against a global market crash is not a smart investment.
Bitcoin Fills A Need And Is Therefore Likely To Stick Around
People have to trust their banks and their governments when dealing with their local currency. Cryptocurrency doesn’t require trust. This means that people who are unable to trust their banks or government are able to put their money into bitcoin and keep or spend their money without fear. It also means that investors have to rely on trusting the people they lend to rather than trusting the local banks, which may work well for people who couldn’t otherwise get investment.
My Thoughts – Find A Need And Fill A Need
Hedging against a global market crash is dumb, but cryptocurrency can work as a great hedge on a smaller scale. I see bitcoin working in places such as Africa where people cannot trust their banks, so they own their wealth as a cryptocurrency. Even in Japan, we have seen the government adopt bitcoin because people do not trust the country’s policy of monetary easing. When governments in Africa start to destroy their local currency, the population may turn to bitcoin. Seeing people turn to bitcoin in Zimbabwe is what convinced me that bitcoin is here to stay (for now anyway) because it proved that bitcoin can fill a need.
Bitcoin’s Market Share Is Falling While Others Are Rising
Bitcoin’s price keeps rising, even though its share as part of the cryptocurrency market keeps falling. Ethereum, Litecoin, Ripple and other alt coins are gaining more of a market share while bitcoin is losing its share of the total cryptocurrency market. Dodgecoin was created as a joke in 2013, and yet Dodgecoin is now a $400 million market.
My Thoughts – Bubbles Worry Me
Just because Bitcoin is losing its share of the total cryptocurrency market is meaningless. Maybe it will matter in a few decades when everybody has a cryptocurrency wallet, but at the moment and under today’s conditions, Bitcoin’s loss of market share tells us nothing about if you should invest in it. What worries me is where you are supposed to invest your money if you do not put it into bitcoin. I look at the Dodgecoin example and it stinks like a bubble. Bitcoin’s bubble bursting is years, if not tens of years, away, but the smaller cryptocurrencies/altcoins may burst at any time. I already feel sorry for the people who invested in Titcoin, Auroracoin, and/or Namecoin.
Conclusion – Bitcoin Is Going Nowhere And Some Ethereum Tokens May Be Suitable
Bitcoin is going to be around for a long time, and it may be worth hanging on to your bitcoin and then selling in the distant future. If you are looking for an investment opportunity, then you need to find one of the altcoins/cryptocurrencies that are just starting out and that are going to fill a need. There are plenty of altcoins/cryptocurrencies out there that look like they were created to be pump and dump currencies. You need to find the ones that will still be here in ten years.