High risk high returnThe word long term is a bit vague as how do we define it? 1 year? 5 years? 25 years? I don't agree that Bitcoin and Cryptocurrencies are bad investments. Here is why.
Indeed, Cryptocurrencies are very volatile but that is the biggest advantage with investing into it. Many Cryptocurrencies have increased a total of over 100 times and some even 150,000 times. The last bull run was in the end of 2017 but since then, most Cryptocurrencies have dropped by over 90%. Look at it this way, 100 times gain is 10,000% increase. If you invest $1000 into Cryptocurrencies, 100 times would be $100,000 but if you lose 90% of your initial investment, you will only lose $900. You are risking a small amount of money for a potentially big gain. Cryptocurrency markets outperformed most if not all traditional assets in the last 10 years. Even though some people may see Cryptocurrencies as a good short term investment, holding for long term is a much better strategy.
Indeed, the creator of Bitcoin is anonymous and the blockchain technology behind Bitcoin is very weak. However too many people think that only assets with intrinsic value are good investments. Look at Gold for example. It is very similar to Cryptocurrency in the sense that there is no intrinsic value to it and is solely dependent on more people buying it for the price to maintain. Of course some people may say Gold's intrinsic value is from Gold Jewelry but then one can argue that Bitcoin and other cryptocurrency's intrinsic value comes from its ability to act as money. Is intrinsic value that important for an investment? Well, that always depends on a case to case basis.
Cryptocurrencies are gaining more and more adoption and more people are knowing about it. Do I think Cryptocurrencies are the future? Of course not, it has no intrinsic value. Why do i invest into it then? Because I believe more people will invest into it in the near future. A lot of people believe in the decentralisation aspect of Cryptocurrencies (even though I don't) and more money will flow into the cryptospace. I think Cryptocurrencies will fail in the long term but there is still big profits that can be made from it. As long as you know when to leave the market, Bitcoin and Cryptocurrencies can be a good medium term investment. Investing into Cryptocurrencies should be done with care but if done well, can be extremely profitable. Cryptocurrencies are good for risk takers but not for safe investors.
Personally, I wouldn't invest into Bitcoin but look for developing projects that have a small market cap. Of course this is even more risky but as they say "you got to risk it to get the biscuits".
Declaimer:This is not investment advice and I take no responsibility for any loses you make if you decide to invest into Cryptocurrencies after reading this.
Posted by MasterA on 01-17-2019