When it comes to investing, there are many different viable options. People invest in the stock market, real estate, bonds and other commodities. As the world continues to modernize and become more digital, a newer investment opportunity has come into the horizon. Bitcoin is an asset that is unlike any other. Bitcoin was created in 2008 by an unknown man, or group, who used the name Satoshi Nakamoto. Many people do not fully understand what Bitcoin is which can cause them to not engage with it. However, there are many reasons why it should be included in your investment portfolio.
In short, Satoshi’s main goal with Bitcoin was to create a cashless system that allows two parties to digitally send Bitcoin (money) without the need of bank or government approval. Sending money through banks can become very costly, as they impose a lot of hidden fees. When you own Bitcoin you store it in a digital wallet, just like you would store cash in a wallet. Every wallet has an address from which you send or receive Bitcoin. If I wanted to send my friend $20 worth of Bitcoin, he would tell me his wallet address, then I would type it in my digital wallet to send it to him. Since these wallets are not tied to any personal names or home addresses, payments cannot be traced. This is another benefit of Bitcoin, as some people don’t want others to know how they are spending their money. This solves that problem. While Satoshi’s main goal of using Bitcoin as currency is a good idea, I believe that it is still far from actually being implemented across the world. Money is attached to the government, and unless a country makes Bitcoin their main currency it will be tough for it to become the main payment system across the world.
Even though Bitcoin has a long way to go until it is widely accepted, I believe that it is a very good investment that people should include in their portfolios. When Bitcoin was invented there was only a supply of 21 billion. Unlike cash, you cannot print more. This prevents Bitcoin from inflation. Many people, including myself, compare bitcoin to gold. I consider it to be digital gold. But, it differs from gold in that gold’s supply is unknown. Miners could discover thousands of pounds of gold tomorrow, which would drive the price of gold way down because the supply is much greater than originally thought.
Bitcoin is also a good investment because it is lesser known. Millions of people have never even heard of it. One Bitcoin is currently priced around $7,200 and has a total market cap around $130 billion. To put this into perspective, gold’s market cap sits around $9 trillion and the market cap of the top 500 U.S. stocks sits just over $21 trillion. This alone shows how much less Bitcoin is valued due to the fact that it is a newer form of currency. since it is new. When Bitcoin first started, it was valued at one cent per coin. Bitcoin then went all the way up to $20,000 in 2017. This shows that it has grown at a rapid rate as it became more known and globally accepted. People will continue to see that it has the potential to grow in value and make them money.
With any new asset class, it is important to understand the risks that come along with it. With Bitcoin being such a new investment, many people have deemed that Bitcoin has no value at all, so you should stay away. I believe that it has become more mainstream every year and people should be cautiously optimistic with it. As a personal investor of Bitcoin, I believe that it has the fundamentals to become a payment option in the future. If you are looking to invest your money in something, I would advise taking a deeper look into Bitcoin, but only invest what you are willing to lose.