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There are many other altcoins circulating in the market currently such as (most prominently Ether and LTC), but among these, Bitcoin (BTC) is used as a common denomination in trading these coins. We are in the common FOMO (fear of missing out phase) that has led to an increasingly bullish market for bitcoin and the volatility of bitcoin is partially due to the uncertainty of its real world applications and its ability to remain secure. Bitcoin has seen a rise to a high of over 11,000 in a very short time (from monday to friday, bitcoin has fluctuated between 8k and 11.5k) and has also caused a prevalence of new bitcoin millionaires (10-20 thousand so far I believe).
Bitcoin, to many skeptics is now referred to as a bubble, the likes of Mark Cuban have gone public to heavily criticize the coin and its alts. Many claim that, like the dot-com bubble, the bitcoin bubble will also burst, resulting in massive losses. However, I believe that Bitcoin, although uncertain as the future of currency, certainly creates technological innovation. Even though the coin itself is volatile, blockchain technology is revolutionary. Currently the lightning network in development would allow for millions of dollars to be transferred in seconds of milliseconds as it utilizes the blockchain technology. Despite many skeptics and extreme optimists, Bitcoin has shown to push back against resistance and demonstrates value through its extreme growth. I myself am excited about the future of bitcoin and it is exciting to see many countries pondering its adoption as well.
What do you guys think about the possible applications of blockchain technology? Do you think that companies should begin to accept bitcoin as payment and if so would that help stabilize its value? (Elon Musk has been instructed to begin accepting BTC by LTC creator I think). Would you take the risk to invest in this new technology?
12 comments:
First of all, I think it's interesting that you mention the idea of fear of missing out. I do regret selling one at $400 and one at $6,000, but at those moments it was good enough to just have guaranteed profit and cash. Hindsight can get the best of people by leading to rash investments later, and I don't think it's a good reason to invest in something because you missed out before. That being said, I do believe in bitcoin's future, but any new investments I make will be based on that, not previous regret.
I think the volatility of bitcoin is only a concern for people who want to make huge instant profits. It is relatively stable in the long run and on a larger scale. A big challenge to BTC was China's ban on it, but the coin bounced back pretty soon afterwards. Bitcoin has always seemed to recover from dips with overall long term growth. I'm not sure what it would take to really bring bitcoin down, so I am content in keeping what I have left right now and not cashing out.
The idea of blockchain technology is not new - it dates back to 1992, but the implementation in 2008 allowed for the digital currency boom because it solved the double-spending problem in any online currency. In terms of investing in the technology, I am not sure if is worth it to make a new coin because the market is so saturated already, but it does have back-end application in all information distribution online, which encompasses a lot.
I find the idea behind the Bitcoin to be quite interesting, of having a currency not issued by a government that can be used anywhere. It is truly an idea to be adopted in the future. What I find strange about the Bitcoin, however, is the fact that people seek to invest in it for monetary gain. Reading the latest news reports about the spike in Bitcoin value, I believe that one sentence summarizes it all: "What goes up must come down." Bitcoin must demonstrate its strength as a currency, and begin being more widely used around the globe and on the Internet. If it doesn't do so, people will not comprehend any real practical reason to invest in Bitcoin, other than the fact that its value seems to be growing very quickly. And because investors are not tied to a concrete reason for investing in Bitcoin, the moment that Bitcoin values begin to falter, it may cause a mass panic that will lead to a rapid fall in the decrease of Bitcoin values. Mark my prediction. (just kidding, but that's still what I believe)
@Frank, I would have to disagree with most of your remarks above. For one, bitcoin is used in a lot of transactions around the world, but even if it wasn't, there doesn't need to be a "real practical reason" to invest in something, as the most practical reason to invest in anything is to make money. Bitcoin is called a currency, but it is less like the USD and more like gold, which is more of a commodity. Bitcoin will be even more limited however, as bitcoin mining (including all of the new coins that formed off of forks) is set to end soon, so the amount of bitcoin in circulation will never go up again after a few years and there will be no ways to obtain new coins. Your prediction that the moment Bitcoin falters will cause a landslide has been disproved countless times in the 9 year history of the coin. It may be true that what goes up must come down, the only way I see it coming down (as of now) is when a new, better, more novel investment enters the public eye.
Bitcoin is a bubble. A 20% drop in price in 90 MINUTES is ridiculous for any stock, much less a currency. This recent drop will only foreshadow things to come. Bitcoin has no insurance, no rate of return. Stocks have earnings and dividends. Bonds have coupons. The only thing that supports Bitcoin is the hope that one will sell a Bitcoin for a price higher than they bought it for.
Bitcoins prices seems to fluctuate quite a bit but in the long run however we can expect increases in value. As Micheal said the amount of bitcoin in circulation will remain the same. This is a good indicator that in the future the prices will continue to increase. As long as there is a demand for bitcoin I do not see value becoming extremely unstable. But it's not easy to predict the future, and due to the lack of insurance bitcoin has I do not see why companies would accept bitcoin as payment.
I feel that bitcoin's problem is that people are treating it like a way to get rich quick instead of treating it like its founders intended it to be, a alternative to fiat currencies. Bitcoin's goal is to remove the power of currency from the federal reserves and governments of the world.
We don't invest in dollars the same way we invest in stocks. We use them in our day to day lives, and since we as a society can agree that a dollar is worth about a candy bar, the economy hums along. One day, hopefully, bitcoin will reach that point. It's risky to put your life savings in its current state, however.
I believe that bitcoins are too risky to be a worthy investment. The truth is, most people who own bitcoins don't even understand what they are. And with a value that fluctuates so much, I don't think that it is smart to put a large sum of money into. I also do not think it would be wise for companies to allow payment from such an unstable currency that can go up and down in value so often. These companies would effectively be gambling with their money.
With stocks and virtual currency, however, you can never be certain about anything. So who know, maybe I'm wrong and bitcoins will increase even further in value in future.
Responding to Robert's point above, anyone using bitcoin to buy/sell items is inherently also investing in it. The reason that we don't invest in dollars like stocks is because it's relatively stable, which is something that you mentioned.
However, the value of the bitcoins that are in circulation is a lot less than, for example, dollars in America, which makes it less stable. When someone accepts a certain number of bitcoins for a good/service, unless they are selling those bitcoins immediately (which sort of defeats the purpose), they have to expect that the price will stay steady or increase. Similarly, when someone is willing to pay a certain number of bitcoins, they expect the value of those many bitcoins to be for worth an equal or smaller amount compared to the items that they paid for.
The thing is, no one sees Bitcoin as its own, independent currency. We don't look at a candy bar and automatically say, that's worth 0.05 BTC, because the value of a bitcoin simply defined (in most cases) by how much it's worth in USD. We care about dollars, not bitcoins.
I really wish I had invested, even just a few months ago, in Bitcoin. My brother did a while ago and he's been bragging about it ever since, and so he should be. Even though I don't really understand Bitcoin's use in the real world, universal currency is a very interesting concept to me. I'm quite skeptical about how much longer Bitcoin will be able to sustain this growth, and if this growth is actually real or not. I don't know a lot about stocks, but I know enough to be concerned about stocks that keep on rising higher and higher until one day they might just plummet... Anyways, it's crazy to think about how some people have been made into millionaires off of Bitcoin in such a short amount of time, and it goes to show the immense power of investing and its effect on the overall market.
I don't think many companies should accept Bitcoin as a form of payment right now because the cryptocurrency is very volatile making it very hard to predict its actual value. Recently, Steam has removed bitcoin as a form of payment and I believe this is a good thing since there are fees involved as well as how unstable Bitcoin is. I just don't see what determines how much a Bitcoin is worth. It's simply what people believe it to be worth. I do agree with Josh that Bitcoin is a bubble and that unexpected things can happen to it throughout the day. I would take the risk of investing in Bitcoin stock but not the actual Bitcoin because the stock is more stable.
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