Here’s Why Investing in Bitcoin Could Be Better than Investing in Currencies or Gold
Investing in Bitcoin is not for the faint of heart, but it’s also for those who never want to take any big chances. Presumably, if you’re reading this, you do not shy away from risk. Investing in Bitcoin has advantages, however, that may outweigh the risks.
With the emergence of Bitcoin and other cryptocurrencies, so-called blockchain technology has caught the attention of economists as well as “Anonymous” types and conspiracy theorists. This is a hint as to why Bitcoin makes for an interesting investment. In short, Bitcoin has enjoyed the perception of being an electronic money substitute for “nerds”.
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Bitcoin is a currency, but, unlike the U.S. dollar, the euro, or the British pound, no central banking authority controls Bitcoin. It is a currency that manages to slip the dictates of the State. Bitcoin bypasses the U.S. Federal Reserve’s monopoly on currency.
You Don’t Have to Be a “Nerd” to Like Bitcoin
You don’t have to be Julian Assange or Sheldon from the hit TV show The Big Bang Theory to benefit from Bitcoin. Bitcoin (“coin of bits,” as in computer bytes) was released in 2009 by a programmer (or a group thereof) who took the pseudonym Satoshi Nakamoto. It’s not clear whether it originated in Japan, but Bitcoin “runs” in English. (Source: “Who is Satoshi Nakamoto?,” Coin Desk, February 19, 2016.)
Bitcoin took a step beyond its electronic money and payment system competitors such as Paypal Holdings Inc (NASDAQ:PYPL). Bitcoin is everything but Bitcoin’s appeal comes from its decentralized nature. There is no central bank or company that produces and regulates its circulation.
Bitcoin simply avoids the kinds of risks that can affect your regular portfolios, currencies and equities. A bankruptcy of a company—a bank for instance—or the collapse of a State shall not destroy Bitcoin. It’s no surprise that Bitcoin emerged after the subprime crisis of 2007-2008. Theoretically, it can work in a world where there are no states or corporations. For now, that world resides in computers and the Internet.
Bitcoin is a bit like investing in physical gold, except that gold is still subject to market and political risks. Precious metals are not tied to the State and do not lose their value in crashes or disasters, but they have obvious problems. Gold can be diluted with cheaper metals, it is difficult to divide into small pieces for the purchase of cheap goods, and it is difficult to keep in large amounts.
Bitcoin: The Investment You Can Monitor on Technical Analysis Alone
Bitcoin solved most of these problems: it is easily crushed into a great number of parts and takes up little space. Bitcoin currency is kept in a virtual “Bitcoin wallet.” Nobody can steal it from you in the street. Bitcoin could be an ideal investment for those who like technical analysis.
Avoiding market and political risks, you could invest in Bitcoin based solely on technical analysis. The same charts and indicators used in the Forex currency market work for Bitcoin. A quick way to acquire Bitcoin is to apply for a virtual bank account such as “Bitstamp.”
This service allows buyers to open an account, depositing actual money. Then you must transfer your investment to a computer of your choice. Bitcoin is stored in a hard drive or an external memory device. The storage device becomes your Bitcoin portfolio. It’s best to keep Bitcoin in an external hard drive, not connected to the Internet. That way you avoid the risk of your Bitcoin deposits being hacked.
Bitcoin has yet to show its full potential. When it does, it could offer some pleasant surprises for investors. Bitcoin’s potential resides more in the long than short term. Still, Bitcoin presents an interesting, if unusual, alternative to invest in rather than the stock market, or better, the Forex markets.
