Bitcoins Cryptocurrency

Should I Invest In Bitcoin – Know the reality 

Written by Robert

Everyone is talking about Bitcoin but very few people really understand what is going on here. Is it a scam? Is it a tulip mania 2.0? Is it a ponzi scheme? Or perhaps you ask yourself: Should I invest in Bitcoin before the price will soar even more?

Understanding Bitcoin basics

Bitcoin is simply a technology firstly used in 2009. It is foremostly an excellent international payment network and secondly an aspiring digital currency. No one owns in the way that no one owns email technology. It is independent, decentralized and open source. One would say that It is Western Union 2.0 and digital cash at the same time – a democratic currency which price is solely determined by supply and demand.

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Is Bitcoin a good investment?

There is no simple answer. However, we can tell you pros and cons and you can decide for yourself.

Pros:

Bitcoin’s price is steadily increasing as there is an ever increasing demand for it in commerce (those saying that it is because of a speculative bubble might have a point as well but not completely). By now, the investment to Bitcoin has yealt at least 1000% a year on average. Is it going to continue like that? We do not know. Value of Bitcoin is not just in being a currency. It is foremostly an excelent international payment network. Even if the currency won’t turn out useful enough in free market, it will always have it’s great value in enabling fast and cheap money transfers abroad. Bitcoin is a truly useful technology and has it’s niche. It enables usages never seen before such as convenient accepting of online donations (without credit card fees and paperwork) or mircopayments for contents (such as paying Bitcoins worth several cents to access an article, music etc.). It superseeds credit card payments in many ways. It is way cheaper, easier to use, it is much faster to process and the payee doesn’t have to worry about identity or a credit card number theft. It is a great alternative for fiat inflationary currencies issued by our central banks. Once real inflation arises as a result of ever-present deficit spending, Bitcoin might become a natural place for storing people’s wealth beside precious metals. Bitcoin is not inflationary because total number of it is strictly limited by design.

Cons:

Bitcoin is an experiment. This technology is still jung and unproven by time (e.g. contrary to gold). Even if it is open source and has been thoroughly looked upon countless times, it might show some critical weaknesses which could be fatal for the whole technology. Central banks seldom like competition. Governments rarely like something which cannot be shut down at whim. It may happen that Bitcoin will be declared illegal. This won’t destroy Bitcoin but will seriously affect it’s usage and therefore it’s price. Bitcoin is extremely prone to bubbles. It’s price is highly volatile as it’s value has no historical tradition yet. There are huge amounts of speculators who could create artificial demand. Therefore it is very difficult to choose the right time for Bitcoin first purchase. There is no guarantee that free market will keep using Bitcoin as a currency. If trust in it as a currency declines, value of Bitcoin will decline as well. It may happen that a better digital currency will eventually show up which would cause a migration of interest towards the new currency. That would gradually decrease demand for Bitcoin and therefore it’s price would eventually fall.

Conclusion

Is Bitcoin a good investment? We do not know. Did we invest? Yes. Investing in Bitcoin is extremely risky but can potentially yeald very interesting outcomes. Do not invest in Bitcoin any money you cannot afford to loose because it may easily happen. Anyway, if you say YES, we will gladly guide you how to invest in Bitcoin.

About the author

Robert

Robert loves the sea and dreams of getting a home with a beachfront. He used to be a Data Scientist in a multinational company but left his job to follow his passion for writing.