Bitcoin Investing

limits of supply

Bitcoins can be kept as an investment as well as using them as a cryptocurrency. Limited supply and increasing adoption amongst the general population suggest this might be a good strategy.

Over recent years, Bitcoin proved to be one of the best investments out there. With $1 growing to almost $20,000 in less than seven years, what’s not to like? And, according to many experts, this may be only the beginning.

Bitcoin started out as the brainchild of inventor Satoshi Nakomoto in 2008; realizing that traditional money systems (fiat currencies) may have run their course and were not ideal for the Digital Age, the concept of a cryptocurrency was born.

An increasing number of people have become aware of Bitcoin’s extraordinary potential in the Digital Age with the result that demand has increased dramatically and sheer momentum has now catapulted it into mainstream use.

Despite a less than salubrious start due to its association with the dark web, Bitcoin is now emerging from the wilderness as a legitimate, mainstream alternative to traditional banking. In May 2015 the New York Stock Exchange (NYSE) listed Bitcoin as a tradeable index while several countries have now acknowledged and adopted it into their taxation regimes. In the US, Congress is in the process of drafting legislation to protect cryptocurrencies from government interference.

limits of supply

Although specifically designed as an integral part of Bitcoin’s structure, the blockchain-concept has taken the world by storm and is one of the hottest tech buzzwords around. Branded as a distinct technology in its own right (blockchain-technology), there is now a furious scramble to adopt this game changing technology as a solution to digital processes, opportunities and challenges in numerous applications.

The flow-on effect of blockchain’s popularity is wider acceptance of Bitcoin as a secure, fast and reliable replacement of traditional banknotes and coins; this, in turn, increases demand for Bitcoin and leads to steady upwards pressure on its value, the likes of which we have experienced over recent years.

Investors in Bitcoin can follow a passive buy-and-hold strategy or the more hands-on active trading strategy. Because the cryptocurrency industry is still in its development phase, many new digital currencies come and go, causing extreme fluctuations in their value. Therefore, an initial strategy of  accumulating Bitcoin and simply holding on to it might prove to be the prudent option.

Esteemed Harvard University academic and crypto investor, Dr Dennis Porto, states that Bitcoin’s past price-performance followed the digital technology rule called Moore’s Law; if the current trend continues  – and there is no known reason why it shouldn’t - then the price of 1 Bitcoin could reach $100,000 by the year 2021. Worth holding onto, for sure!

See here for some winners and some losers of the bitcoin investment game.