Is Bitcoin Still A Worthwhile Investment?
Bitcoin has become the buzzword in investment circles these days. If you want a quick return on your investment and a long term vehicle with fantastic returns in the thousand percentile then Bitcoin seems like the sure bet. So says everybody – the tech gurus, media, blogs and probably even your butcher and neighbor.
However, there has been some concern as to whether it is too late to get into Bitcoin now and if it will dive again like it did over the past few days.
The lawmakers and skeptics in the finance circles who have been warning against Bitcoin investments probably have a smug look on their faces after recent events. But Bitcoin is not ‘dead’. In fact Bitcoin has bounced back within 48 hours, gaining almost 30% from its lowest close in the past 6 days. Yes, it is volatile but it has also shown that it is quite resilient.
Return on Investment in Bitcoin
There is no such thing as a sure thing. After the 2008 global economic meltdown, we have all learned that the words ‘job security’, ‘money in the bank’, ‘capital guaranteed’ and ‘low risk portfolio’ means squat. You have to be prepared to take some risk, albeit small at times, if you want a return on your investment. The higher the return the greater the risk – that’s how it has always been. And to some extent, Bitcoin is no different.
Bitcoin was not intended to be an investment vehicle. It is a digital currency that operates independently from known real world currencies (fiat currency) and is not regulated by any central authority. The aim was to make online transactions simpler and less costly without manipulation by any single party. The boom in recent months has made it an attractive investment vehicle to many.
There is talk about a market cap of $40 billion or even beyond. Only 21 million Bitcoins can ever be created given the nature of its structure, as with many cryptocurrencies. But you can trade in fractions of a Bitcoin. The rise in price recently has been largely fueled by speculators and media hype. If you bought Bitcoin just a year ago, then you would get an amazing return on investment now.
Future Value of Bitcoin
There is no way of knowing for sure that Bitcoin will continue with this momentum. Some say it will touch $10,000. Others predict $40,000 for a single Bitcoin. And $100,000 and $1 million figures have been thrown around. Nobody can say for sure. Bitcoin touched and surpassed $1,000 in the past month before falling in the last 6 days.
If Bitcoin does see just $2,000 then it still a worthwhile investment even today. Just when it will reach this mark cannot be predicted with any degree of certainty. To lock your money in now and at best you see $2,000 by end 2018, you will have still seen almost 350% return on investment in 5 years. Very few investment vehicles can offer this type of return for 5 years.
On the flip side though, Bitcoin price could fall and you could be out of pocket in months or years. Like any investment, there is a risk factor. So it is important to invest with money you can afford to lose. Or at least money that will not decimate your family’s future should it all be lost. By all accounts, Bitcoin is a worthwhile RISK to take if your finances permit.