Should You Invest in Bitcoin?

Everyone has something to say about this cryptocurrency. The finance world seems to be split, people are taking sides, and clearly everyone has an opinion.

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The basic intention of Bitcoin is to make sending money easier, with minimal to no fees.

Before I can answer the question, I need to dive a little deeper into what Bitcoin is. This cryptocurrency was released in 2009, at the heart of the Financial Crisis. The idea of cyrptocurrency was not new. The intention of a digital currency is to have a community regulated currency that is not controlled by government regulations. Furthermore, the digital currency would make transferring money easier. If you think about it, the money you hold in your bank account is actually a digital representation of your money. Considering the bank doesn’t actually hold the total amount of everyone’s deposits in reserves; in fact they aren’t required to do so.

As more people want Bitcoin and more people use Bitcoin, the more “valuable” it becomes as a viable currency.

Back to cryptocurrency. The value in this form of currency is the technology behind it; blockchain. I will not get into all the complexity of blockchain – in it’s most basic definition, blockchain is what turns a “digital” currency into a “crypto”-currency. Therefore, the true value of Bitcoin is the blockchain technology. Understand that many businesses that aren’t in the finance sector have been investing in the development of this valuable technology because it can be applied in many different ways. With that said, Bitcoin is not blockchain technology, it simply utilizes blockchain. And investing in Bitcoin doesn’t mean that one is investing in blockchain technology.

…exchanging your Bitcoin for paper money is also a difficult and costly task.

The basic intention of Bitcoin is to make sending money easier, with minimal to no fees. The idea was supposed to be a Financial Revolution to counter the debacle of the Financial Crisis. As more people want Bitcoin and more people use Bitcoin, the more “valuable” it becomes as a viable currency. There are challenges to it’s growth and acceptance as a currency because Governments will want to regulate it, thus moving away from the original intent. Additionally, as it becomes regulated there will be more fees. This is already happening. Understand, purchasing Bitcoin is not an easy task… one must go through the proper platforms. Furthermore, exchanging your Bitcoin for paper money is also a difficult and costly task.

Bitcoin was the first decentralized cryptocurrency. This has been a blessing and a curse. The blessing is the exponential growth, the curse is that the technology that Bitcoin uses is outdated. Hence, all of the “forks” that have been occurring. In the meantime, there have been new cryptocurrencies with superior technology entering the space.

So, should you invest in Bitcoin? I have no idea. The real questions are whether cryptocurrency has staying power? Will Bitcoin be able to overcome government regulations & the banking industries resistance? Will businesses adopt Bitcoin as a form of payment? When the dust settles, will Bitcoin be the cryptocurrency that survives? Or will another cryptocurrency with superior technology come to the forefront? Or will the banking system create it’s own cryptocurrency that gains traction? Are you prepared to ride the rollercoaster? What’s your return on investment expectations? How does this investment fit into the diversification and allocation of all of your investments?

Depending upon how you answer those questions, will reveal to you whether you should invest in Bitcoin. Anytime you’re considering investing, do your homework and get informed.