Why everyone should invest in bitcoin
As a bitcoin enthusiast that bought his first bitcoins a few months ago, I want to give you my gathered insights about why everyone should invest in bitcoin. I assume many people still hesitate to invest in it because it is a new technology and there is a certain trust issue due to the negative publicity bitcoin has been receiving over the past years. The volatility in bitcoin price also doesn't help to convince people to invest in bitcoin. However, I will outline several reasons why investing in bitcoin now, is worth it.
The first reason is that bitcoin, since its inception in 2008 bitcoin, has greatly surpassed the 3 tests of a trustworthy financial system:
- Undergo a price bubble.
- Survive a price crash.
- Survive a big scandal (Mt. Gox).
Despite these 3 very problematic events, bitcoin didn't die, but is still thriving with millions of dollars being invested in companies making business cases revolving bitcoin. This makes bitcoin a currency that is here to stay !
The second reason is its potential of high price increases. When you read in the internet about the possible future prices of bitcoin, you can find predictions that look too good to be true. There are even people claiming the bitcoin price could one day reach 1 million dollar. In theory it could be possible, but I doubt this will ever be the case. But I do believe that during times of crisis, bitcoin can reach extreme price increases. Bitcoin is considered a safe heaven asset and its market cap is incredibly small compared to other assets:
- bitcoin: 10 billion dollar
- gold: 7.500 billion dollar
- American stock market: 26.300 billion dollar
- global derivative market : 700.000 billion dollar
This overview shows that the bitcoin market cap is very small compared to the market cap of other assets. If a small part of the stock and derivative markets flows into bitcoin during a crisis, the bitcoin price could surge to extreme highs. Suppose a small amount of 0.1 % of the derivative market cap flowing into bitcoin during a crisis. This would be equivalent to 700 billion dollar flowing into bitcoin, which is 70 times the current market cap. It is obvious that such an inflow would make the bitcoin price soar like no other asset.
A third reason to invest in bitcoin is the devaluations of the Chinese yuan. China is carrying out a systematic devaluation of the yuan. China’s currency basket has been sliding at an annual pace of 12pc since the start of the year. In order to not lose purchasing power due to these devaluations, Chinese investors are diversifying in bitcoin. And it doesn't look like China will stop devaluating its currency which is positive for the bitcoin price.
A fourth reason is the economic turnoil in the world. Many economists even claim that due to the quantitive easing by central banks all currencies are being inflated. Some even warn that all fiat currencies are heading towards hyperinflation, thereby generating a massive wealth destruction. Everyone interested in saving its wealth should at least diversify part of his fiat money into save heaven assets like precious metals or bitcoin.
A fifth reason is the halving that occured yesterday. Bitcoin's popularity is increasing every day, but due to the halving the supply of new bitcoins coming into the market is halved. It is expected that this halving in the supply will lead to a strong price increase in the coming months.
I can continue giving more reasons why investing in bitcoin is worth it. But these are the most important reasons according to me. Never invest all your money in bitcoin and never invest money that you need. Be smart and be loyal to the general investment advices. Only invest money you don't really need and diversify your investments. Don't invest in bitcoin alone but diversify properly.
Happy investing :-)
I'm less optimistic of bitcoin. To me, the bitcoin "tribe" size has stagnated due to lack of innovation to end users. Sure, Wall Street will make use of it, but their approach is bitcoin is merely a fee to write to ledger. They do not see it as store of value (so far).
Also, why would someone pay $10k, when you can mine it for less. The mining-difficult needed to support $10k would by a large % of global power output.
Steem's social network and locked POS...that is tribe-growing
Everyone can have a different view of course.
You first have to think about how you use bitcoin. If you use it purely as a transaction, the price of bitcoin doesn't matter. Transactional demand is increasing year by year, so this is also pushing prices higher.
You can also use it as a store of value. Chinese people do look at it as a store of value. When the yuan was devalued a few months ago, Chinese people started to buy bitcoin. That's the moment I gained most profit from my bitcoin investment.
Why would someone pay $10k ? At the current moment we are not yet at that price level. But in order to mine profitably, you need to almost have free energy and a huge installation. You are competing against big mining companies. Also, it is not only a thing of mining. When shit hits the fan, you want your fiat money converted in something safe. So you just converted it into bitcoin. You are not gonna start mine coins. You just want to put your money in a safe place. What if gold reaches 4000 $ ? You think people are going to start mining gold because mining it would be cheaper ?
Yes, I do like Steem also. It doesn't need to be a competition. There are many coins offering nice value. I also invested in Ethereum. I got the same profits as with bitcoin until the DAO hack. Then price crashed. I lost almost all my profit with Ethereum :-). And now I am investing in Steem. I learned about it from a bitcoin youtuber. You see, competition is not needed. Many communities can thrive together ;-)
Good points in this post. Thanks for bringing this to my attention. It's surprising how much uneducated investors the crypto space has. You still see people invest in this shady and scammy coins. I was researching a way to find more info about the current cryptocoins on the market. I found this great website: https://www.coincheckup.com Every single coin can be analysed here based on: the team, the product, advisors, community, the business and the business model and much more. See: https://www.coincheckup.com/coins/Bitcoin#analysis To see the: Bitcoin Investment research.
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