Is It Worth Investing in Bitcoin | Singapore
In our previous post on Bitcoin, the price of Bitcoin was priced slightly below $2,000. It shot up to $20,000 last year in 2017 and it is currently priced at $8,500 at press time, that is almost three times higher. Those who invested in bitcoin years ago are likely rejoicing. The Monetary Authority of Singapore (MAS) has issued two warnings about investing in these currencies in the past five months. However, is it worth investing in Bitcoin in 2018?
Disclaimer: This article should not be taken and viewed as investment advice, but only information and opinions. This article is for information and illustrative purposes only.
Is It Worth Investing in Bitcoin?
What is Bitcoin?
Bitcoin is a form of virtual currency, known as a cryptocurrency, which is similar to the former US “Gold Standard” currency, but operates like its own internet and is the world’s first free market, decentralized global currency. That simply means if you have bitcoins, you do not physically purchase goods by handing notes or tokens to the seller.
Bitcoins are generated by using an open-source computer program to solve complex math problems in a process known as mining (will cover this later).
Each Bitcoin is defined by a public address and a private key, which are long strings of numbers and letters that give each a specific identity. This means that Bitcoin is not only a token of value but also a method for transferring that value.
In short, the core innovation that makes Bitcoin special is that it uses consensus in a massive peer-to-peer network to verify transactions.
How to Make Money with Bitcoin?
Mine or trade. By mining for Bitcoins, as long as the markets remain active you can basically make money for nothing. But the problem is, mining is such a tough gig now that it is hardly worth it. Turning your computer into a miner will likely make it noisy and heat up.
It would likely take you a long time to even mine a single Bitcoin, by which time you probably would have spent more on electricity.
However, if you have access to some serious computing power and you don’t have to pay the bills, you could make some easy money here.
A more realistic way of making a lucrative profit with bitcoin is via trading them through the most prominent exchanges, such as Coinbase.
Back in 2011, you could have bought Bitcoins for $10. Selling them at $1,000 today would have delivered a profit of $990 per Bitcoin. Basically, you should have bought about 1,000 Bitcoins back when they were cheap.
Is It Worth Investing in Bitcoin?
The sudden popularity of digital currencies has welcomed investment from different sectors all over the world. Bitcoin is a highly experimental digital asset. It’s kind of like investing money in a kickstarter.
Investing in Bitcoin in the hope of taking advantage of future price increases is as simple as buying Bitcoin on an online exchange. Bitcoin transactions are subject to few regulatory oversights, which makes transactions fast and headache-free. It is a relatively easier to invest in bitcoin than any other assets. That simply means there will be more people hopping on the trend of this new technology. More demand, limited supply, and that it is going to be driving the steady growth of bitcoin’s value in the long run.
Also, bitcoin is inflation proof and it is still in its infancy. It eliminates third parties between you and your money and subject to capital gain without a cap limit value to fiat currency. Bitcoins cannot be “printed” arbitrarily by a central bank like US Dollars or British Pound Sterling can, and it is therefore immune to the inflationary crises that plague fiat currencies.
The price of Bitcoin will probably continue to rise because of the recent popularity of the Blockchain and cryptocurrencies. Furthermore, the number of Bitcoins that can ever be generated (by “mining” them using computing power) is finite—there is a maximum number of Bitcoins.
Bitcoin or its blockchain technology could radically change the way financial transactions are facilitated in the future. The benefits of this system are that it is transparent, secure, and streamlined so that there are fewer parties involved in facilitating each and every transaction.
If you are willing to take risk of your money then no problem. But as a first-time investor, start with a small amount. No one has any idea how Bitcoin is going to perform over the long run.
By now you can probably see that the answer isn’t that simple. It’s not just a matter of should you invest, but also a matter of how to invest.
Never Invest Money That You Can’t Afford to Lose
Don’t take anyone’s advice about what will happen with the currency, do your homework, learn about Bitcoin and come to a conclusion.
Be always cautious and careful when you are not familiar with cryptocurrencies. When bitcoin is sailing high, everyone wants to buy in. But as soon as it starts crashing, people freak out and they start selling.
Successful investors buy low and sell high, but our natural instinct is to feel more comfortable buying when things are good and more comfortable selling when things are bad. Most of the people are aware of the existence of bitcoin because it made headlines on major media.
Bitcoin is a highly risky and speculative investment and you should never invest money that you can’t afford to lose, especially in cryptocurrencies such as bitcoin.