If the question is, “Should you be worried about Bitcoin?” then the answer is no. Coins are entering new highs, and due to the youth of the industry, this is relatively uncharted territory. Now, instead of worrying about coins, I encourage all investors to be cautious with investing and smart with their money. Understand that cryptocurrency is volatile by nature and can fluctuate a great percentage in a day. Make all decisions based on research and use this opportunity to prepare for the future. We don’t really know the possible value of Bitcoin, but if we listen to experts on the subject, this rise could be just the beginning.
Cryptocurrency has been booming lately, and while there might be a slight dip in value here or there, overall, most coins are up thousands of percentages from where they were in the beginning of this year. In fact, coins have made so much noise in the financial industry that major market players are starting to take them seriously. However, they aren’t noticing cryptocurrency for the positive reasons owners would hope for, but rather, they are talking about the immense risk involved with investing in coins.
Many cite that since coins are almost all fiat currencies, or money that governments have declared to be legal tender, but is not backed by a physical commodity, they do not really have any wealth value to them other than the wealth they are assigned. This poses a risk for investors because, unlike the U.S. dollar, which is legal tender backed by governmental assurances, coins are not backed by any official, governmental entities, and attain value only through us assigning them are value, and letting the market find the correct price through supply and demand.
Cryptocurrency is such a young concept that many investors don’t really know what to think of it now. The amount of coins available in the market is very low compared with the demand, so the prices have skyrocketed lately, but as coins develop, many things could change which affect how coins are valued, such as the usefulness of coins and the amount of coins available. At this point, coins cannot be used in most everyday transactions, but that could change which could greatly affect the price. Many believe that internationally-traded, government-supported coins are the currency of the future, as they can lead to an easy to navigate global trading platform.
Speculation by Major Market Investors Brings Doubt to the Public
In September, Jamie Dimon, Chief Executive Officer of JPMorgan Chase, said that Bitcoin is a fraud. He told a reporter that the cryptocurrency “Won’t end well” and that it will eventually blow up. Then in November, Nouriel Roubini, the economics professor who accurately predicted the 2008 market collapse, and famed economist known as Doctor Doom, said Bitcoin is “Neither a serious method of payment nor a good way to store capital” and that it is building towards a “giant, speculative bubble”. So, if these respected and successful economists are so skeptical about cryptocurrencies, why would anyone invest in them?
Perhaps, comments like these from respected members of the financial sector helped contribute to the loss in value of coins over the last couple of days. As more people are entering the market, with undoubtedly less knowledge about coins than those who have been in the market, and seeing the value of their coin decrease, these people are selling at a rapid pace in hopes to not lose their money.
To find success in the coin market, it is imperative to understand that the value of coins is constantly fluctuating, but like all things, the market will correct itself, and as more opportunities for spending coins appear, there will be more demand, increasing the price.
It is reasonable to be skeptical about the current prices of coins, given the large amount they’ve risen in value over a short amount of time, but there is no reason to challenge the solidity of these forms of currency. Mati Greenspan, an analyst with trading platform eToro, writes,
“Whether it is indeed a bubble or something else entirely remains to be seen. What I can tell you from my conversations with clients is that more and more people are starting to see bitcoin as money and the potential to replace the current fiat central banking system that has gotten out of hand”.
In my opinion, it is only a matter of time before cryptocurrencies becomes a viable option against the current money we use today.
Cryptocurrencies Will See Continued Growth in the Years to Come
While some investors are skeptical about the growth of Bitcoin and other cryptocurrencies, many more are beginning to see the value in it as a trading commodity, and as a currency. Charles Hayter, CEO of CryptoCompare, sees Bitcoin breaching the $10,000 mark as a closing of the second cycle of Bitcoin, where it progressed from online tokens and became more regulated and trustworthy. He now believes it will lead to a third cycle of Bitcoin, during which coins will become more commonplace for daily use, increasing in value all the while.
Already, Bitcoin futures are going to be implemented into the Nasdaq exchange, allowing investors to not only trade coins, but to trade coin futures as well. With new opportunities come new regulations, which is a good thing for the average investors. New regulations on Bitcoin could decrease volatility while increasing value, giving the investor an overall more confident approach toward buying, and as explained through basic market principles, the more people who buy coins, the higher the price will be.
