Is it Too Late to Make a Fortune Buying Bitcoin (or Other Cryptocurrencies)? A Bitcoin Investing Guide for Mere Mortals Who’ve Not Yet Achieved Crypto Billionnaire Status If you’re confused about Bitcoin, there’s a chance (a small chance) you’ll be even more confused after reading this article. I apologize in advance. But it wouldn’t be completely my fault. This is a complicated subject. And I don’t think many people really understand the cryptocurrency world. The truth is Bitcoin is more confusing and uncertain than most other investment options. That’s the main reason I wrote this article … I own some Bitcoin and a handful of other cryptocurrencies. I bought my first fraction of a coin just before the most recent media hype cycle began in November 2017.
But at the time I knew very little about cryptocurrencies. I read just enough to convince me to buy a little. After all, today’s interest rates aren’t doing much for me. So I thought why the hell not? But now my investment has grown and I’m left with some serious questions, like: Is Bitcoin a bubble — or, even worse, a fraud? And What’s the real value of Bitcoin? As I’m sure you know, the ‘experts’ have wide-ranging views on Bitcoin.
So who’s right? Is Bitcoin a new currency that’s poised to change the way we do business? Or is it just another fad — a bubble waiting to burst? D espite the fact that there are more than 800 tradeable cryptocurrencies (I actually have no idea how many there are, who cares?), Bitcoin remains far and away the market leader. The price chart looks hyperbolic. From $2,000 to $20,000 in the blink of an eye. Where to next? I was happy when Bitcoin fell from its recent peak of $20,000.
In my opinion, this drop was a natural correction rather than the beginning of the end. The long-term upward trend remains unbroken (so far).
But is this trend justified? A lot of smart people think so. Bitcoin Supporters and Their Predictions Many classy, high-profile people think Bitcoin is the real deal.
John MacAfee is a big believer. He made a seriously gutsy bet on Twitter, committing to a lewd act if Bitcoin doesn’t hit $500K in value within 3 years. And you thought Trump was blunt on Twitter. Ronnie Moas, who years ago said Bitcoin would reach $5,000, now says the price will hit $300,000 to $400,000 .
He says the biggest critics are those who are invested in banks, which will suffer if Bitcoin really gains traction. And he’s intrigued by the supply-demand equation. I am too. Demand for Bitcoin is increasing, while supply is constrained by design (the total supply is limited to 21 million). This limit will be reached in the next century, and not before then, because there are limits to how fast Bitcoin can be mined. But it’s important to note that 80% of the 21 million Bitcoins that will ever exist are already in circulation. So inflation (which causes money to become less valuable as more is created) will remain low. Tim Draper is long-time bitcoin investor.
He famously bought almost 30,000 bitcoins from an FBI-led auction when they shut down the black market website Silk Road. He predicted the price of 1 bitcoin would reach $10,000 by 2018. As you know, that price was actually reached in 2017. But he made his prediction back in 2014, when the price was just a fraction of today’s price, so it’s an impressive call.
The CEO of BTCC (China’s oldest crypto exchange) Bobby Lee says the market price of Bitcoin can easily go back to $20,000 in 2018 . Peter Thiel is even more optimistic. Thiel compares bitcoin to gold and says it’s main utility is as a store of value (many have pointed out that Bitcoin has failed as a currency because it isn’t used as a medium of exchange). He also likes Bitcoin because it can’t be hacked or counterfeited — it’s protected by what he calls ‘the security of the math’.
Good Reasons to Buy Bitcoin There are a lot of reasons to invest in Bitcoin. I won’t list them all. And I’m not going to get into numbers ..
. I’ll stick to the most intriguing high level concepts, for now. I’m also not going to compare Bitcoin to other cryptocurrencies. I’m more interested in the overarching idea behind Bitcoin, rather than which coin is the best. The main idea I want you to think about is this: like it or not, our lives are going digital. As a consequence, the things we want and need are getting cheaper.
Need to catch a ride? Pull up your phone and get an Uber. Want to catch a flick? Jump on Netflix. Or, if you don’t want to pay anything at all, just torrent something. Need to find a job and fast? Forget about dropping off your resume around town. Go on a site like Upwork and connect with people looking to hire freelancers. By leveraging the power of digitized, decentralized networks, companies are making things a lot cheaper and more efficient than they used to be. Even things that have pretty much always been in the realm of centralized authority are moving toward decentralization … Think about how telecom has evolved from large, continuous wired infrastructure, to discrete wireless connection points. Think about energy.
It’s becoming decentralized thanks to tech like solar panels and smart meters. And as a result utilities are struggling to keep up. Back to Bitcoin … Cryptocurrencies are basically digitized, decentralized currencies that are (in theory) cheaper to manage and trade than fiat currencies. Basically, if cryptocurrencies ruled, there’d be no need for banks as they exist today.
You can literally store your cryptocurrency on a flash drive (though there are many storage options). So here’s my #1 reason to buy Bitcoin: it’s a bet on the future disruption of the entire financial system. But that’s not the only reason I like Bitcoin. Here are bunch more: It’s secure and cheap to transfer : Part of Bitcoin’s value is derived from its ability to replace fiduciary trust with mathematics (cryptography, specifically).
This makes it, in theory, more secure than traditional currencies.
It’s also easier to transfer — you can send it anywhere almost instantly for a very low fee (though lately fees have risen quite a lot because of increased network traffic … that’s a problem that needs to be solved).
It can’t be mismanaged by governments : Bitcoin might not seem like a good store of value for people living in countries with stable currencies (like the U.S.). The truth is most people in the Western world are using Bitcoin as way to make money. We buy Bitcoin in the hopes of selling it at a higher price one day. But imagine living in a country with a government that’s so poorly managed or so corrupt that your hard-earned money is literally becoming worthless every day.
Yes, these places do exist . If you live in one of these countries and you want to exert some kind of autonomy over your financial future, the idea of buying Bitcoin becomes very attractive. We’re spoiled here in the west.
We can open an investment account at our bank and rely on a stable ROI. Plus, we don’t have to worry too much about inflation because our currencies are stable. But a big part of the world doesn’t enjoy this luxury. So a currency that’s decentralized and out of government control is very appealing. Bitcoin creates value : Contrary to what many experts have noted, Bitcoin can be considered an asset (albeit a non-traditional one).
Occasionally, a ‘fork’ occurs from the .
