BITCOIN BUY! SHORT! Wait... What even is this?
If you haven't heard the word "Bitcoin", you must have been just born yesterday. It is a digital currency that is currently valued over 20,000 USD. Yes. 20 Grand. Now, I won't mention anything about a "huge bubble about to burst" or "just a dream". Instead, I want to go deeper. What even is this thing? Why is it such a hot concept? And is it actually the future?
Well, Bitcoin is a cryptocurrency/blockchain currency that you can get by buying or mining, which I will dive into in a later post, and it can be traded for currencies like USD. Although it IS a currency, its volatility makes it... not so much of one.
Usually, in a currency, what we are looking for is stability. However, the volatility of Bitcoin makes it such that it can grow 10% or fall 15% in one day, which is shocking! To make this easier for you to understand, you may be able to buy a pen for 0.00001 of one bitcoin , but the next day... you can't. In fact, you don't even have to wait for a day. Just wait for a few hours, and your purchasing power can literally (and I am not kidding) plummet 20%. One moment you can buy something, and the next you cannot. Now, while Bitcoin is currently traded like a stock, its main purpose is to be a currency, to be used to buy things with. However, Bitcoin can only buy almost none of the billions of products out there.
And isn't that the POINT of a currency?
See, that's the problem. Since Bitcoin is decentralized:
1. Its volatile and not suitable to be used as an actual currency
2. It cannot buy actual goods
3. Governments are against it
4. Any new cryptocurrency created by a government will easily be more trusted than Bitcoin
5. It's not as safe as you think (proven by how it got hacked in early 2021 by the FBI (for good purposes) to recover ransom money from hackers)
6. Only a few institutions support it
Thus, before you invest in bitcoin , take a while to see what exactly is the thing you are looking at. For this entire year, investors like us have been just blindly following the crowd. Bitcoin (and crypto) could be the future, but from my point of view, its just some code put together haphazardly. Unless governments back up Bitcoin or create a new cryptocurrency, at least for now, this thing isn't going to the moon just yet. For now, we can only trade crypto for the short term and not invest in them.
Well, Bitcoin is a cryptocurrency/blockchain currency that you can get by buying or mining, which I will dive into in a later post, and it can be traded for currencies like USD. Although it IS a currency, its volatility makes it... not so much of one.
Usually, in a currency, what we are looking for is stability. However, the volatility of Bitcoin makes it such that it can grow 10% or fall 15% in one day, which is shocking! To make this easier for you to understand, you may be able to buy a pen for 0.00001 of one bitcoin , but the next day... you can't. In fact, you don't even have to wait for a day. Just wait for a few hours, and your purchasing power can literally (and I am not kidding) plummet 20%. One moment you can buy something, and the next you cannot. Now, while Bitcoin is currently traded like a stock, its main purpose is to be a currency, to be used to buy things with. However, Bitcoin can only buy almost none of the billions of products out there.
And isn't that the POINT of a currency?
See, that's the problem. Since Bitcoin is decentralized:
1. Its volatile and not suitable to be used as an actual currency
2. It cannot buy actual goods
3. Governments are against it
4. Any new cryptocurrency created by a government will easily be more trusted than Bitcoin
5. It's not as safe as you think (proven by how it got hacked in early 2021 by the FBI (for good purposes) to recover ransom money from hackers)
6. Only a few institutions support it
Thus, before you invest in bitcoin , take a while to see what exactly is the thing you are looking at. For this entire year, investors like us have been just blindly following the crowd. Bitcoin (and crypto) could be the future, but from my point of view, its just some code put together haphazardly. Unless governments back up Bitcoin or create a new cryptocurrency, at least for now, this thing isn't going to the moon just yet. For now, we can only trade crypto for the short term and not invest in them.