With Bitcoin at $ 20,000, people got into the rush to the encryption market. There was a promise of massive growth and potentially huge returns on investment
People flooded the market like that, but they went in for all the wrong reasons, actually. However, this has created a huge peak of interest and a huge spike in price. Things have changed a little bit now, with Bitcoin going for $ 6,000, and that has caused a huge sale, as investors now flood the market. But what are the reasons people buy Bitcoin?
Enter for the right reasons
People were going to throw money at something they did not understand in the hope of making a profit.
The dotcom boom was based on similar events. People rushed, without knowing why, and built a huge market on a fragile basis. Those who are not so technically inclined may have avoided Bitcoin’s understanding as a new wave of technology and used that as an excuse. But still, as investors, they should at least be experienced with their resources.
Compared to equities and bonds, Bitcoin will not be a good investment, especially when considering long-term capital appreciation. Bitcoin has increased its value substantially over time, but it lacks some other facets.
In shares, an investor has a credit in the net worth of the company and, as the value of the company grows over time, so does the net worth. In bonds, individuals invest the company’s money in exchange for an agreed flow of interest.
Thus, both options offer future earnings and future income and mark the solid investment funds. Bitcoin can not be counted in the same breath as stocks and bonds. Having a Bitcoin today does not entitle you to more Bitcoins in the future, nor does it offer the promise of any future cash flow.
But, in any case, Bitcoin shines like a technology. Those who are trying to separate Bitcoin and Blockchain are wrong to do so, but their premise is right; Bitcoin should be heralded for its technology potential.
Its use as a decentralized system of money that frees users from the tyranny and hegemony of the banking system allows for seamless cross-border transfers and disrupts the financial system – are reasons to celebrate and return Bitcoin.
Bitcoin has been compared to the dotcom bubble several times, and there is probably merit in that. In the dotcom situation, a technology was being used as an investment opportunity as people rushed to join the bandwagon.
This base of uninformed people became rich in quick types in the dotcom boom, causing the technology to be almost forgotten as companies changed their names and did everything they could to make money, including buying with debt.
All these signs were repeated in Bitcoin, and perhaps the best thing for that. Those who entered space for wrong reasons were able to quickly leave. And those who remain, are true to the potential and vision they still have.
Should I buy Bitcoin today?
“Do not buy Bitcoin to become a millionaire overnight.”
If, like the Internet and all its associated powers today, you believe Bitcoin can change the world, then it pays to buy now – while it’s cheap.
If, you want to buy to make money fast, give up.