Obscure Internet Currency, Hot Potato, Shield Against Rogue Government, Hedge Against Inflation, A Luxury Good or an Interplanetary Super-Asset? Having conquered $13,500 USD, Bitcoin has been stealing the limelight again, with projections around future price appreciation running rampant.
For those who are still sitting on the fence, it may be difficult to assess whether now would actually be a good time to get in on the original cryptocurrency, or whether it’s best to wait until there is some kind of market crash.
It all depends on your investment horizon, your own expectations and view on the significance of Bitcoin in the future, and the type of exposure you intend to gain. Let’s think about that, but first things first – and let’s make it quick – what exactly is Bitcoin again?Bitcoin is a program as well as the name of the cryptocurrency that belongs to it. As a program, Bitcoin lives only on the Internet. It is not controlled by any one person or organization, but is instead maintained by ‘miners’ who can earn Bitcoin from the program by ensuring the network’s continuity, security and integrity. As a currency, the program only allows for the ‘mining’ of 21 million Bitcoin which makes it a scarce asset – like gold. When you buy Bitcoin, the program will record your wallet address and the amount of Bitcoin that is held in that address. What is your investment horizon?
The price of Bitcoin is primarily determined by forces in the market. What happens on exchanges like Binance, Coinbase or AAX can be followed on price data sites such as coinmarketcap.com. This gives a good indication of the price of Bitcoin.
The price changes continuously. In a way, Bitcoin is like oil in terms of volatility and the way it responds to the forces of supply and demand. But, recently, it’s also been compared to a fine wine or a whiskey – a luxury item that increases in value over time.
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