Should I Invest My Savings in Bitcoin?
When it comes to safely investing our savings, we often find that no option truly gives us the peace of mind we want. After all, that money is supposed to protect and support us when we grow too old or become too injured to work; if we invest it improperly, what will we do when we need it?
For these reasons, it’s hard to decide just how to invest savings. Some would suggest stocks, bonds, or gold, but the newest discussions revolve around Bitcoin. This cryptocurrency rises and falls in value daily; in the final three months of 2015, the value of Bitcoin rose to over $400, fell to $325, and then rose again to $430. The high point of the year was at $437, and the low point was around $175, according to Blockchain.info, and that was only in 2015. Over the years, it has seen as high as $1,200 at one time. With such a volatile asset, it can be difficult to know if investing your savings in Bitcoin is a good call or not.
Bitcoin is a fixed asset, meaning that there will only ever been a specific number of Bitcoins made. The supply is estimated to cap in the year 2140, at which time the Bitcoin that is in circulation will have to be split among however many millions of users are in the Bitcoin game. This means that, eventually, the value of Bitcoin will level out. We likely won’t see any more soaring value points within the next few years.
On the other hand, as Bitcoin becomes integrated into society and normalized, we could see the value of Bitcoin rise dramatically. Any time a currency becomes a part of legitimate business and practical payment, its value rises. The more something is used for valuable trades of goods and services, the more precious it becomes.
While there are several other cryptocurrencies on the rise, none have the staying power of Bitcoin. The name got into the game too early, and has stuck it out too long, to be overshadowed by another currency now. This means that as the world of digital currency grows, the value of Bitcoin will only go up.
Similarities to Gold
Several business experts have compared Bitcoin to gold, noting that it is scarce, there is a finite supply of Bitcoin, it can’t be counterfeit, and it’s divisible. These are all features of gold, and any time a currency can be compared to the standard upon which all modern currency is built, the more value it has. The more consumers treat Bitcoin like gold, putting their money into it in a similar fashion, the more stable the Bitcoin actually becomes.
As you can see, Bitcoin has a clear path to becoming very valuable long-term, but let’s not forget that it still isn’t the most secure option yet. Hacking, lost currency, and incorrectly transferred Bitcoin still plague the system. Before you put all of your savings into Bitcoin, be sure that you can handle the consequences if something like these events ever happen.