Until recently, most people have heard something about Bitcoin, but after this fall, everyone knows about it. Since the second half of September, the price for a single unit of Bitcoin has gone up nearly five times. From around $3000 on average, it has jumped to almost $17,000.
All of this happened within a three month period and, compared to January, when a single Bitcoin cost $800, the jump is huge. The news about this gigantic spike in value has made a lot of people pay attention and many of them are also jumping in, looking to invest.
The first ever crypt-index fund was opened, where adequate investors can trade with Bitcoins legitimately and now, a lot of people who were reluctant before are looking at the possibility of investing in Bitcoin and trading it. However, is it really smart to invest in Bitcoin? We break it down for you.
Cryptocurrency, what was it again?
This is a digital currency generated by a computer and it has encryptions that make it secure. They cannot be found in physical form. At their core, cryptocurrencies are code and nothing else. Still, this doesn’t mean that they aren’t valuable.
Bitcoin is the most well-known cryptocurrency and it was created in 2009. However, there are many other cryptocurrencies that have showed up on the market since then and one of the mentionable ones includes Litecoin that also had amazing growth in 2017 (over 7,000 percent).
Don’t rush into investing before knowing these things
Even though there is a lot of potential, like with any other investment, there are risks and you need to understand them in order to make a sensible investment. First of all, no cryptocurrency is backed by any government and they are all decentralized.
While others feel that this is a downside, others think that that this is what’s good about them as there are no banks involved and people can transfer Bitcoins whenever they want, while at the same time having the option to do this anonymously.
Still, no regulatory institution regulates its value if it rises or drops suddenly. Additionally, cryptocurrencies don’t have intrinsic value, meaning that their price is determined by how much people are currently willing to give for it. Cryptocurrencies don’t pay dividends, neither do they generate income.
This is why extreme value swings like the ones we have been witnessing recently are possible.
Is investing in cryptocurrency in long-term a thing?
It’s still too early to discuss long-term investing in digital currencies. There isn’t any long historical data like with the stock market and it’s impossible to make a good analysis of trends. Still, there are already people who are worried about the possibility of hitting a bubble.
Should you invest in any cryptocurrency?
It is possible to buy any cryptocurrency using various exchanges. Still, before you make such a move, make sure that you’ve set aside a sum that you don’t really need when it comes to your life quality. If you are investing, make sure that you will in no way be in danger if you lose the money you invested.