The year 2017 started with high rises for cryptocurrencies as Bitcoin rocket through the mark of $1000 for the first time and even nearly touched the magic number $2K by the end of the year. Although the price later sliced down to the previous mark, there is absolutely no sign of Bitcoin slowing down.
“So, Should I invest in Bitcoin?”
This one is probably the most frequently asked question from people around the world who are greatly interested in Bitcoin, but the fear of volatility nature of Bitcoin and other digital currencies stops them to do so. Bitcoin is simply not a stock or company, it’s a currency. Investors need to understand the nature of Bitcoin before they jump into this magic world of huge profits, but with risks associated with them.
Bitcoin has turned evangelists, unknown investors, and even hackers into millionaires overnight. While many see it as an opportunity to earn a huge profit just in few days or even minutes, some others review it as a slowly fading fad as countries are adding regulations onto it as a bankless, stateless and wild payment tool which may cause the problem for fiat money and institutions associated to it in future.
While the argument on Bitcoin efficiency is still hot, it’s hard to get on any mark with the short-term results. Due to decent and fast-paced growth, Bitcoin has now the attention of almost every mainstream institution. The world’s largest future exchanges and options owner, CME Group has announced that it would soon offer Bitcoin futures in general, which gives Bitcoin a certain level of credibility that established fiat currencies have.
Similarly, VanEck — a renowned money management firm developed an index to track Bitcoin and other cryptocurrency movements, which could be further used to create and develop index funds. Investment professionals even estimated that it would be eight to ten months before investment firms start to offer various cryptocurrency products (such as ETFs) to their clients. It would definitely make the Bitcoin buying process easier in near future while allowing its price to go even higher with huge public demands.
The Volatility of Cryptocurrency Trade
Unlike mainstream retail investors own, traditional currencies aren’t something that you take a large stake in. All the state-sponsored currencies move with inflation while the primary purpose of long-term investing is to beat inflation. To hedge against the crucial impact of exchange rates on returns, some mutual funds own positions in state-sponsored currencies, but the currencies are the actual seldom used to generate returns.
The Bitcoin and other digital currencies don’t play with these rules. The primary reason for that there is a fixed cap on the number of coins that any digital currency will ever have in circulation. Oppositely, central banks and Federal Reserves can print more money to manage any inflation and support economic policies. Bitcoin will have a maximum of 21 million coins to be circulated, completely based on the distribution algorithms that control it.
Is It a Win All or Lose All Deal?
Bitcoin basically runs on a blockchain technology which convinced users for long-term last. But, financial experts state that they are not sure about how many of the currencies that rely on this blockchain technology will survive to thrive.
The value and price of cryptocurrency are highly based on the belief that it will continue to grow as a dominant digital currency in the world. As new digital currencies such as Ethereum, are developed and launched with more features and continuing to grow fast, we are just not sure who will be the winner in long run.
The Present and Future of Bitcoin, Cryptocurrency, Blockchain Technology
There are chances another crypto player end up it. Even financial experts believe that if traditional currencies adopt blockchain like characteristics, it will most likely to cut off the mainstream acceptance of Bitcoin and other available cryptocurrencies, potentially crushing not only the value but the existence of digital currencies.
It Will Cost your Profits
Big time institutional investors already have options to play with the cryptocurrency market. The number of digital currency hedge funds, which was just 11 in 2016, is now near to hundred by the end of last year (As per the report of cryptocurrency research firm Autonomous Next). Most of these funds don’t have a track record. And, the available hedge funds will charge a big management and performance fees in return (Usually 2% of annual assets with the addition of 20% of any profits).
The global exposure of Bitcoin is surely going to retain its supremacy for the time being. More options will be unfolded for investors due to the extreme competition among virtual currencies and newly adding regulations by state monetary institutions.
If you a risk taker and want to earn big time, investing in Bitcoin could be the opportunity that you have been searching for this long, but just pretend that you already lost your money to exclude the uncertainty of this new monetary world.
