Bitcoin....Did You Miss The Boat?

Bitcoin just hit $12,678, $16,574.99, $18,915 and its growth is getting too hard to ignore. What was once a currency that was only understood by the geeky tech crowd or the alternative-type investor has become too relevant to ignore by the masses. If you were a critic, a skeptic, or just did not know or understand Bitcoin until this point, is it too late to get in?

It is likely not too late to invest in Bitcoin, if you use it as a piece of a well-diversified portfolio.

Technology creates needs for us that we never knew we had by making everything we know faster, easier, and often cheaper; Bitcoin is no different. It is shaking up the banking industry by making banking faster and cheaper, without having to deal with the stringent rules and red tape of a bank.

David Namdar, Head of Investments for Galaxy Digital Asset Fund, compared bitcoin to email.

“Twenty years ago, if you wanted to explain email to most people, the question that would arise is ‘why bother, we have phones, mail and fax machines’. It took time for people to see the value in email, and how it could make our world more efficient, because it was so foreign.”

Since its debut in 2009 debut, Bitcoin has allowed people to use an easily transferable payment system.  Many countries in the world do not have secure banking systems. Bitcoin gives individuals access to store their wealth in an invisible online vault that no one else can access.  

One of the biggest criticisms of Bitcoin is that governments can shut it down, but due to the blockchain technology, it is not actually achievable to be completely shut down. In September of this year, China required that all Bitcoin exchanges be shut down. This shuts down the exchanges, but peer-to-peer transactions can still exist.

Bitcoin is still worth investing in for the speculative investor.

If Bitcoin becomes the currency that many of it’s fans believe it will be, it could become a common form of payment in our world.

A few things would have to fall in line for this to happen. Mainly, the currency would have to be hacker and scandal-free. Bitcoin banks on being a safe way to hold money, that cannot be duplicated, hacked or broken into; this would have to be the case over the long term life of the currency. The longer the currency can maintain security, the more it will be considered valuable. Fund Strategist Tom Lee claims that the cost to counterfeit a Bitcoin would be in the billions.

Another indication that Bitcoin may be around for the long haul is if it were to increase its intrinsic value, or its usefulness outside of investment purposes. Major vendors would have to start taking Bitcoin as a valid form of payment; we would have to see a world where the Amazon products can be paid for in Bitcoins.

Another reason it may not be too late to invest in Bitcoin, is that likely, the best environment for Bitcoin is in an unstable economy. Bitcoin was released to the world in 2009, during the bottom of the banking crisis. The stock market since 2009 is up dramatically, and it has allowed investors to focus on stocks. In the 8 years of Bitcoin’s existence, the environment has been far from ideal for the currency, yet it has performed tremendously. Much like gold, if the economy pulls back, Bitcoin can potentially be a strong place to store wealth. It is, however, important to acknowledge the impact of volatility that bitcoin’s potential usefulness can have as a store of wealth.

Bitcoin should only be used as a piece of a larger investment portfolio, with a true understanding of the risks in mind when making the decision to add it to a portfolio.


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