How Much Are People Willing to Risk to Buy Bitcoin?
With the price of bitcoin skyrocketing by more than 1,000 percent since January, and the Chicago Board Options Exchange and CME Group giving a vote of confidence by offering bitcoin futures, many are scrambling to get in on the action. But just how much are they willing to risk?
There’s plenty of signs the surge is real. The app for Coinbase, the largest U.S.-based bitcoin exchange, was the most downloaded on Apple’s charts last Thursday. It was installed more than 575,000 times in the beginning of December, and the record-high influx of new users has caused issues with logins and other functions of the service. CNBC also noted that the Google search term “buy bitcoin with a credit card” is around its historic peak. Given all the news coverage lately—and bitcoin’s crazy run last week—it’s not surprising.
According to Joseph Borg, president of the North American Securities Administrators Association, the growth has reached the point that people are taking out equity lines and mortgages to buy the volatile cryptocurrency.
Regulators are trying to discourage people from making such a risky move with their personal finances. As Borg told CNBC, “This is not something a guy who's making $100,000 a year, who's got a mortgage and two kids in college ought to be invested in.”
Other prominent figures in the cryptocurrency and financial advice fields are offering similar warnings. Michelle Singletary, a personal finance columnist for the Washington Post, wrote a piece on Monday entitled “Should you invest in bitcoins for retirement? Only if you think riding a roller coaster without a safety harness is a good idea.” She further made the point that trading bitcoin is “more akin to gambling than investing” and recommended that people only engage in the cryptocurrency markets with money they can afford to lose.
Erik Voorhees, CEO of a cryptocurrency exchange called ShapeShift, also tweeted, “If you have a lot of crypto, and also significant debt, strongly consider selling some crypto at these all-time highs and paying down debt (completely if possible). Corollary: don't go into debt to buy crypto at these prices.” And Brian Armstrong, CEO of Coinbase, also issued a warning to investors last week in a Medium post that read, in part, “We also wanted to remind customers of some of the risks associated with trading digital currency. Digital currencies are volatile and the prices can go up and down.”
For all the news of its rise, bitcoin is no stranger to precipitous drops—the price fell on multiple occasions by thousands of dollars last week. Predictions that the rapidly rising prices are indicative of a bubble that will soon burst, and the possibility of calamitous hacks, are all concerns to keep an eye on before heavily investing in the cryptocurrency.
Source:- http://www.slate.com/blogs/future_tense/2017/12/11/bitcoin_s_surge_is_leading_people_to_take_out_mortgages_to_buy_cryptocurrency.html
Future Tense is a partnership of Slate, New America, and Arizona State University.
Aaron Mak writes about technology for Slate
Something I learned when to talking to people who are knowladgable in crypto(as much as you can be, seeing as they are relatively new to the masses) is that there is money to be made here, but that they would never save their money using crypto( retirement funds,etc.).
It may be that they are scpetical, but I agree that it it too early to risk it all on crypo.
Great read by the way :)
In my opinion I have done the Investment 'city 'route...its for the serious long term... Crypto... its a laugh...its fun...if you win..smile...
upvoted you
Nothing is without a risk. Even if you hold your money in cash form and keep it in a bank you're still taking some risk, as demonstrated clearly by the 2008 financial crisis. Plus it never hurts to diversify a bit and not keep all your eggs in one basket.
Tell me about it!!! I was advised in 2008 to put money into property 'It will be as safe as houses'! ... Cost me a bloody fortune when the market collapsed