What is it?
Bitcoin is a form of currency existing only on the internet. Currency that exists only online is called crypto-currency. As you may already know, most countries have their own form of currency such as the U. S Dollar, the Chinese Yuan, the British Pound, the Canadian Dollar or the European Euro. The values of those currencies depend on the economy conditions of those countries. Example, If the United States is at war and buys more imports than they’re producing products to export… more than likely the U.S dollar will depreciate because their debt is constantly growing with other countries. Other things can affect the value of a currency such as natural disasters, foreign policy, political actions, and even the election of an official (Trump).
The Good
Consider Bitcoin as a foreign Swiss Bank account. Bitcoin could be a safe haven for different forms of currency because it is not easily influenced by the economical or political factors of a specific country such as inflation, recessions, elections, and even war. This means the value will not go up or down based off of the activity of ONE country. This minimizes risk. When domestic currency is converted to Bitcoin, your money transforms and can be used wherever Bitcoin is accepted. Bitcoin is unique because it can easily be converted back to the popular currencies you need such as the Dollar, Japanese Yen, The Euro, Francs, Pounds etc.
Many people are converting their money to cryptocurrency, as a form of investment for their savings. As more and more people convert their cash to Bitcoin, the demand surges as the supply decreases. Everything in business derives from supply and demand. There is a finite number of Bitcoin that was created. When a product is scarce , you have to charge more to balance the demand. Prices of Bitcoin continue to sky rocket as long as people continue to storm the market and buy in.
The Risk
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What will happen if an event occurs where everyone wants to convert their money back at the same time? A similar event is what caused the Great Depression. A crash in the demand for Bitcoin has not yet occurred. One factor that may directly affect the cryptocurrency market is a world war because this is the type of controversy that could affect almost every country’s economy . However, even that remains to be proven. What if: instead of fleeing the crypto-market during tough times, more people flock toward it using it as a safe haven for their money.
I wrote this article years ago… Fast forward to 2020…The Covid-19 Coronavirus crisis is a massive event that could cause nations to flock to crypto. Instead of suffering the effects of the virus on currencies individually, people can convert their currency into crypto and guard themselves. For example, Americans are having a tougher time gaining control of the virus than nations like North Korea so the economies will be impacted differently. However, by converting to crypto, everyone shares a common ground against effects on individual economies like inflation and recession.
Evaluating Your Investment Decision
In conclusion, there are various forms of crypto-currency. Bitcoin is just the most popular one right now. Bitcoin can be bought with cryptocurrency platforms such as Coinbase. Download the app, transfer your money to your created account, and then convert your currency into Bitcoin. Bitcoin has just broke a record in terms of value. It is now worth north of $11,000 (at the time of original publishing) US Dollars per Bitcoin. This means it takes $11,000 to own one “coin” or else you’ll have to buy a piece (percentage) of one.
Is it a good investment? I think it is a fair investment at this point. As with all investments, you have to keep your risks balanced. In other words, Don’t put all of your eggs in one basket. Invest in stocks (Read: How to Buy Stocks in 3 Simple Steps), Real Estate, AND Bitcoin. I wouldn’t bet the house on any ONE thing. The cryptocurrency market creates an equal playing field for many nations and may be the currency of the future.
