Chances are if you are reading this article, Bitcoin has at the minimum peaked your interest. Depending on who you believe, Bitcoin can be the investment of the century or a well thought out pyramid scheme designed to bilk investors of their money.
The world’s largest cryptocurrency has seen some massive price swings over the past few months. It went from about $10,000 at the end of November to nearly $20,000 by the middle of December
Some brokerage houses have decided the risk far outweighs the return. Merrill Lynch is one such company.Merrill Lynch has blocked clients and financial advisers who trade on their behalf from buying bitcoin, citing concerns over the cryptocurrency’s investment suitability.
World renown investor Warren Buffet is not a fan. “Stay away from it,” Buffett said on CNBC in 2014, adding: “The idea that it [bitcoin] has some huge intrinsic value is just a joke in my view.” at the time bitcoin was priced at about $640. Now it’s trading above $16,000. But Buffett, who is known for his patience and resolve, is still sticking to his guns. “You can’t value bitcoin because it’s not a value-producing asset,” Buffett said.
Still, some cannot resist the “lure of easy money”, but does it or will it work for you, the individual investor?
The Downside of Bitcoin
Despite being on a generally upward curve for the past several years, there’s no telling when the cryptocurrency could suffer a sudden downfall in price, causing millions of people across the world to lose by the billions.
Right now, the currency has just recovered from a period of freefall and is slowly beginning to make its way upward again, with periodic ups and downs.
So the question is, can you handle the price swings? Most investors cannot. And because Bitcoin is not subject to any centralized policy or government, it causes bitcoin to be crazily untrustworthy as a means of accumulating wealth. So it truly is buyer beware.
The Upside of Bitcoin
If you enjoy buying and selling, trading Bitcoin might be for you. The constant rise and fall in price makes bitcoin the perfect mode of investment, albeit a very risky one. People who have purchased and sold bitcoins at strategic times have reported as high as an eight hundred percent return on investment.
Trading in bitcoins has become a lucrative business in itself. We have talked to several traders who claim they have made thousands of dollars in a matter of days.
At this point it would be a good time to remind everyone. Past performance is not indicative of future performance when it comes to Bitcoin.
Bitcoin is not for everyone, in fact not for most investors. If you cannot tolerate the possibility of losing your entire investment, you would be better off staying away.