Why is Bitcoin up 70% in just one week?
Buying is still easy but the risk has increased …
Why growth, why now?
Financial institutions have decided that the new global digital gold is more convenient to store than the old fashioned and very heavy gold. Yes that might not be the case but it’s gone from $10,000 to over $17,000 this week alone, amid signs that retail investors are entering. Bitcoin is due to enter the mainstream next week, when clearing houses begin offering futures trading. But, several US banks are reluctant to take part, according to the Wall Street Journal.
What about the future of Bitcoin?
In my previous post I wrote about a growth driven by insane expectations. True or not — there is still a hell of a ride right now until something unexpected affects the fast growing ecosystem. There has for sure been a strong buy trend the last month at the same time coin owners keeps the coins for an even brighter future. It is still hard to predict the future of Bitcoin, where a variety of events either can build or destroy the trust, trust that took years to build.
Is Bitcoin to volatile for me, I’m not interested in day-trading?
Insights from forums shows an increased frustration that Bitcoins ups and downs are more rare and harder to catch — You have to be fast to get a nice buy during a dip. Volatility will decrease, it is just a matter of time and volumes. We can expect a more distributed and mature investor network in combination with smaller variations in volumes from one day to another. If you think not, please feel free and share your thoughts with me.
Is there an inflation in the cryptocurrency market — and how does that affect the price of Bitcoin?
One positive thing with Bitcoin, compared with for example U.S. dollar is the transparency and that anyone can find out how many Bitcoins and accounts that are out there and how many there is left to mine. Minus some Bitcoins that have have been stuck due to user mistakes and fraud. If you are curious or want to contribute with your “fuck up” stories Ohmycoins is the place for you. Promise not to laugh.
Some will argue that there is actually an inflation in cryptocurrencies— and yes that might be true — depending how you view it. But that does not make Bitcoin diluted. Decide yourself…
I have for example traded Bitcoins to Initial Coin Offerings (ICOs) issued by startups — financing their projects or as an equity in the company. When they issue the coins, coins will have a value and can be traded on several exchanges. So from that perspective there is an inflation in investment opportunities for cryptocurrencies. But on the other hand, I could have sold my Bitcoins and invested the money in real estate. So what do you make of that?
The biggest difference spreading thinner to new coins is that almost no-one knows about the new coin and it will take tremendous time to market, build trust and become a Bitcoin brand. You can buy newcomers cheap, but the risk is extremely high that they will stay in the shadow. Bitcoin on the other hand is what Rollerblades was for Inlines during a decade and that is something that is obvious with the coming support from clearing houses. Coins that over time have escaped the shadow of Bitcoin are Litecoin, Dash, Ethereum and IOTA among a few more. They have also seen an amazing growth from very low valuations and volumes. Now they are also getting supported in user friendly mobile applications and adoption increases fast. If you want to compare -visit Coinmarketcap. A great site listing coins, prices and cryptocurrency market capitalizations.
What will be my biggest challenge when investing in Bitcoin?
This week NiceHash a marketplace / exchange was compromised. More than $60 million worth of bitcoin potentially stolen. The Guardian is reporting about it.
While the value skyrocket there are more and more attempts to steal your coins. To reduce the risk of getting your coins stolen at exchanges it is recommended to move your new coins to your personal Wallet or Wallets. There are Web Wallets that have invested a lot in security and will focus even more after every incident. If you decide to store your coins in a Web Wallet like Blockchain — please consider this:
- change your password often
- use a password manager
- enable two factor authentication — select a Web Wallet that supports it
- enable e-mail verification for login and transactions.
Then you have done what you can do on your side to make it harder to compromise. And one more thing …
- Always keep all your programs on computer and mobile updated
If you really don’t trust Cloud and Web-Wallets then transfer your coins to your own hardware Wallet. This guide from Bitcoin.it will help you decide which solution to use.
What about ICOs — What do I need to know before starting investing?
I will follow up this post with a post about ICOs. I personally think ICOs is the coolest thing that have happened together with blockchain since Internet went public. If you are curious about what ICOs can offer you, then start by visiting Tokenlot one great marketplace for new exiting offerings.
And if you are a startup — anywhere in the world — start reading about it— it might be a great tool to use to get things going in combination with bootstrapping, crowdfunding, angels and grants.
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With regards Froste
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