Bitcoin – What if I invested in bitcoin a few years back? How much richer will I be? What stops me from making this investment now?
If you think you are the only one who hasn’t invested in the cryptocurrency market, you are wrong, but at High & Wise we don’t think that you should get involved in cryptcurrencies unless you fancy a flutter.
We completely advocate getting involved in stocks and shares, but just not crypto.
Prices of major cryptocurrencies like ethereum, litecoin, and bitcoin are increasing at an unbelievable rate. We are also expecting the launch of a “photo-centric cryptocurrency”
by Kodak (KODK). Cryptocurrencies offer individuals the opportunity to buy exchange-traded funds (ETFs), self-directed IRA investments, and bitcoin future trading.
To show why there is so much buzz about cryptocurrencies, an individual who had made an investment of $1,000 in bitcoin three years ago would be $38,000 richer in the current market, however this is probably the exact reason you have decided to do a search on Bitcoin.
There is just so much hype and excitement about how much money people have made.
A senior quantitative researcher at Betterment, Adam Grealish, says “But that’s a scary way to think about your investments.” He also added that the best way to assess an investment is by looking at its future prospects and not the past performance.
Why is it best to avoid bitcoin investment? These are three important reasons to consider.
It is quite similar to buying a lottery ticket
According to Grealish, the probability that you will get a big payout when you purchase Bitcoin is similar to that of a lottery ticket.
Grealish also makes an excellent point on how to understand Bitcoin investment. He tells us how similar Bitcoin investment is to a start-up investment by an angel investor. An investor always wishes that every investment will be profitable.
By considering all the factors which may affect the business, an angel investor is always prepared for a loss on an investment in most cases. Regardless of these factors, any of these start-ups which perform up to expectation result in massive payouts. In his words, “You have to be OK with losing everything.”
The future value of bitcoin is difficult to predict
If you want to analyse the future of a company, you have access to lots of information. These include financial reports and cash flows. This does not apply to Bitcoin.
This is because it is a currency. Comparing the purchase of Bitcoin to that of stocks in a company makes it a venture with more risk.
Those who believe in its value are betting that it will become widely adopted as a new way money is exchanged, Grealish said.
It’s hard to know if that will happen. While several companies are trying to attach themselves to the bitcoin surge, the future doesn’t look completely rosy.
There are lots of dangers associated with the trading of bitcoin futures according to warnings from Wall Street banks. Due to the extreme volatility of Bitcoin, Stripes will also stop transactions processing.
As cryptocurrencies begin to seal their place as a valuable means of exchange, there is also a possibility that other coins will rise which will survive where the Bitcoin will fail. In such a situation, the common question becomes; what if Bitcoin is not the right option?
There are other favourable investments
So you’ve heard the warnings. But you still want to put a little play money into bitcoin.
There are other places to save or where your money can be a more profitable investment. This is according to the Northwestern Mutual CFP, Chantel Bonneau. There are benefits which the IRA offer which you can use to your advantage.
According to Bonneau, for anyone with limited finance, bitcoin investment is risky and therefore if you are looking for an investment, it is better to do your research and venture in to traditional stocks.
We looked at the bitcoin graph for the past 3 months, and it’s fair to say it bounces around a bit. Sometimes because there is some relative news, maybe a breakthrough in its global reach, or use by certain investment institutions, and sometimes just because it can! It really is impossible to predict what is going on with the price.
For the reasons mentioned above, and due to this graph having no pattern to it at all, we believe if you want to have a bet, go down the bookies! On that note, if you want to see how we think you can genuinely make consistent profits from the bookies, check out our blog on how we consistently make £1500 per month from Matched Betting, or our guide to sports trading.
Thank you for reading about investing in bitcoin. Read our article on Etoro copy trading.
High & Wise