Bitcoin As An Investment: Things To Know

Bitcoin has been thriving of late, and as a result there seems to be more talk about its status as an investment commodity. This is not necessarily new, as some experts have been advocating for the idea of bitcoin as an investment for a few years now. But given that it’s technically a “cryptocurrency” and was designed as an alternative method of wealth transfer, it’s an idea a lot of us are still just getting used to. To many, bitcoin is becoming more analogous to precious metals and resources than to, say, the dollar or euro.

If you’re starting to think this way, and you’re considering the idea of treating bitcoin like an investment, here are a few things you’ll want to know.

Bitcoin Is Near An All-Time High

It’s hard to put this in writing with any degree of certainty, because bitcoin has proven to be very volatile, even as it trends upward overall. But to date the statement a little bit, consider that near the end of October, 2017, the bitcoin price hit a new all-time high and broke the $6,000 barrier for the first time. It climbed even higher shortly thereafter, and at the time of this writing it’s essentially at a new high. This is certainly something to keep in mind if you’re considering entering the market. One mode of thinking is that you could be catching it in the middle of a sensational rise; another is that you might want to wait until it dips a little bit before buying in.

There Are Different Modes Of Storage

As you may know, bitcoin users can choose from a wide range of wallets, including paper, hardware, and software options. Each type of wallet comes with distinct pros and cons relating to convenience, security, and extra features. But when you think about which kind of wallet to trust, your thinking should be influenced by how you plan to use that bitcoin. For instance, a paper wallet has strong security benefits, but is also easy to lose. Thus, it might be more appealing for short-term holdings when using bitcoin as a currency, but less so if you plan to hold onto your bitcoin for a long time.

Influences Are Different

When you look at most ordinary investments, there are set factors you can look at insofar as they might influence the market. But bitcoin operates fairly independently, and involves a different set of influences. It’s important to learn to recognize these if you plan on purchasing any digital currency as a commodity. For instance, you’ll want to keep an eye on regulatory movements in major countries, and notice if any significant companies begin accepting bitcoin purchases. Things like these can increase demand quite quickly.

Altcoins Are Worthy Of Attention

Bitcoin is a very intriguing commodity at the moment, but keep in mind there are also numerous prominent “altcoins” – other cryptocurrencies – also. These don’t get the same amount of attention because they’re worth far less than bitcoin, but they can also be treated as investment commodities, and to a degree they’re less intimidating. You can buy fractions of a bitcoin, so really there’s no difference in how much you’ll be risking or how much you’ll stand to gain – but trading a currency valued at $6,000 or more can be a little bit daunting. Altcoins like litecoin and ether can be interesting alternatives.

Experts’ Opinions Vary

Just recently, an article about bitcoin’s stunning surge throughout 2017 raised the question of a $10,000 price and asked: is it achievable, or will the bubble burst? That’s a fairly extraordinary question when thinking of values that high, and it reflects the fact that experts’ opinions vary greatly. People as prominent as Warren Buffett have suggested that bitcoin is in a sustained bubble that’s going to burst and cause a crash; others who have monitored bitcoin for years are confident that this surge is only the beginning of a lucrative rise. It’s worth reading some of the opinions to keep yourself informed before making a potential investment – but know in advance that you’re going to see convincing arguments on both ends of the discussion.

4 Comments

  1. Although I’ve not invested in any cryptocurrency and can’t imagine that I’ll do so in the future, it’s fascinating to watch the recent bitcoin rally and see how people get captivated by it. I recently only mentioned #bitcoins in one of my twitter posts and all I received was a mini-shitstorm because I dared to speak of a bubble…

    -David

  2. I jumped aboard the crypto train this summer for no reason other than I wanted to be a part of the whole mania for better or worse. Most of my holdings are in Bitcoin with a tiny amount in Litecoin and ETH. While no one can predict the future with any certainty I think the future of crypto looks bright with a looooooooooong runway still in front of it. For all the hype, news, talk about BTC derivatives coming, etc. BTC is still not even close to becoming mainstream. Despite a price of ~$7K it has a lot more room to grow. Most still don’t know how to buy/sell cryptos, spend them, store them, etc. Reminds me of the PC revolution that started ~30 years ago. Who had a computer in the home? Now who doesn’t. Who used email/Internet in the early 90s? Who doesn’t today. Who owned a cel phone ~20 years ago? Who doesn’t today. Who uses crypto today? Who won’t in 10 – 20 years.

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