Bitcoin Investing: Is It Too Late to Invest?

invest in bitcoin

What’s happening in the world of cryptocurrency is nothing short of a revolution.

The potential of Bitcoin is still not fully understood by even the most active players in the market. Its capitalization as of today is valued at $220 billion (subject to change), and the daily trading volume is $4 billion (approximated).

Since the birth of cryptocurrency, there have been many questions like “Is it too late to invest in Bitcoin?” or “Can I make money buying it today?”.

If you’re starting out and don’t understand the basics of Bitcoin mining, take a look at our comprehensive guide on Bitcoin.

However, if you’ve done your homework and are still pondering whether to invest or not – this article is for you.

How Much Should I Spend on Bitcoins or Any Other Cryptocurrency?

bitcoin investing

Last December, Bitcoin‘s price had crossed the $10,000 mark, and it doesn’t look like it’s going to stop there.

Because of BTC’s recent value spike, a lot of newcomers believe that it’s too late to invest, and their questions remain unanswered.

So, they decide to play the waiting game with a desire to buy when the prices go low. At the end, they miss a lot of opportunities, and while they think, others make huge profits.

Since early 2017, the more popular cryptocurrencies have grown considerably. People who bought Bitcoin in January 2017 would have their gains multiplied by a factor of 14 (as of Jan 1, 2018).

The same applies to Ethereum. Check out the dramatic increase in the value of Ethereum.

Aren’t you surprised?

If you had invested in Jan ‘17, you would have been a millionaire!

Now, that’s a real jaw-dropper.

At the start of 2017, cryptocurrency was already pretty popular, but it was still unfamiliar to the general public.

The people who did know opted to invest and now, they share their success stories and left many wondering amidst other clueless cryptocurrency newbies.

But, let’s try and answer two basic questions- is it wise to buy something when it’s cheap or is it only worth buying after it has grown steadily for the past six months?

Any trader in the classical financial markets will say that it isn’t worth it. And they’re right about certain factors such as volatility, securities, commodity futures and currency pairs of the Forex market.

But the cryptocurrency scenario is entirely different.

It is very difficult to predict the variation in the price of a Bitcoin or any other cryptocurrency.

There are no clear-cut predictive models. A person who firmly states that investing in Bitcoin is a dumb move could be more wrong than right.

So, let’s cut to the chase. Should you invest or not?

How Has Bitcoin Changed the World?

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This is a visualization of the market capitalisation of Bitcoin when it was valued at $41B.

It’s a new market that is continuously developing.

And here’s a fact:

Most potential investors might have not even heard about it. Take an example of a few people from your circle who earn more than they spend.

Ask them two questions:

1.        Do you invest in cryptocurrencies?

2.        Are you interested in buying an asset that may earn you a passive income of more than 100% per annum and will you take this opportunity if you learn about it?

I can assure you that 90% of respondents will respond negatively to the first question, but the second one would be answered with a skeptical “yes”.

And this just means that in the coming years, a huge number of new investors will slowly enter this market. All of them will want to buy cryptocurrency.

So, what do you think will happen to its price?

Especially when you consider the fact that the industry flagship, Bitcoin has already produced 16 million coins out of the 21 million limit? Limited issuance; the deferred demand is huge due to the attractiveness of this asset for a huge audience.

Growth in Demand Generates a Vertical Trend

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Source: CME Group

In addition to private investors, major money holders like banks and hedge funds have an interest in major cryptocurrencies; even banks from Japan and Norway expressed their interests on Bitcoin over the last months.

In the past few weeks, the launch of Bitcoin futures on traditional stock exchanges and other sites has become one of the hottest topics.

The beginning of trading using Bitcoin was announced by the world’s largest commodity exchange “CME Group”, the “Man Group” investment fund, and the Swiss bank “Vontobel”.

More importantly, over the past six years, Bitcoin has become the most profitable currency in the world, rising from zero to $16,000.

Well, that escalated quickly.

Money Transfers in Bitcoin

According to the World Bank, electronic money transfers abroad over the past 15 years almost doubled and amounted to 0.76% of GDP.

The employees of foreign companies found in Bitcoin, an inexpensive alternative for sending money. I assume that the share of remittances in Bitcoin will be greater as people grow more aware of Bitcoin.

Political Uncertainty

Many people said that the growth of political uncertainty in the UK, the US and other countries are also contributing to the growing interest in Bitcoin. I believe that a good knowledge about Bitcoin in big masses, its high liquidity, the convenience of transportation methods and the outpacing growth dynamics will make this digital currency a strong competitor for other means of payment, both for ordinary consumers as well as investors.

Mobile Communication Development

The number of non-cash transactions in the next 10 years will increase from 15% to 30% as “the world becomes more connected via smartphones.” The share of smartphones is 63%, and the total number of smartphone users will increase to 1 billion by 2020.

In GSMA, it is believed that 90% of smartphone users will be from developing countries.

Almost everyone will have their own private bank in their pocket, which will also be another incentive for Bitcoin. Bitcoin will account for 50% of transactions around the world.

These claims may sound absurd, but there are some hard stats about Bitcoin:

Some Predictions About Bitcoin

  1. The number of users of the Bitcoin network will grow 61 times by 2030, which will be about ¼ of China’s population or 5% of the world’s population. The user network of Bitcoin has grown from 120 thousand in 2013 to 6.5 million in 2017, i.е. by 54 times. The usage will reach 400 million users by 2030.
  1. The average amount of Bitcoin in dollars/per user, will be $25,000. This will be facilitated by the funds of large investment organisations, individual professional investors and exchange investment funds.
  1. The market capitalisation (product of the number of holders and the average cost of 1 BTC) of Bitcoin in 2030 will be $10T.

The estimates point out that the cost of Bitcoin will be about $500,000 with 400,000 million users. (If $10T divided by 20 million Bitcoins, then the cost of one Bitcoin is $500,000)

It is important to note that the news revolving around Bitcoins is often negative. China began to take strict measures to regulate crypto-currency. The three largest exchanges recently introduced a fee of 0.2% for all transactions. And earlier, they also introduced restrictions on withdrawing money from trading accounts.

In addition, the Securities and Exchange Commission (SEC) recognized  Bitcoin as insolvent two stock exchanges. The main reason being- Bitcoin is still in the early stages of its development.

Despite All That, Why is Bitcoin Surging?

Reason #1

The disagreements that have arisen over the expediency of increasing the standard block size have moved into the stage of reaching consensus. A truce that promises to grow into a stable world, which will certainly affect the course of Bitcoin positively.

Reason #2

The technology of blockchain, which is the basis of the financial power of the cryptocurrency, has the potential to be widely used and applied in almost all spheres of human activity. Particularly, more funds invested in a decentralized system of registers called bankroll.

The wrong approach of financial institutions that intend to subordinate technology to the unacceptable principles of centralization will fail. Sooner or later, banks will be forced to recognize the superiority of the principles of decentralization, and the popularity of the blockchain technology (along with it, the cryptocurrency) will grow many times over.

Reason #3

Sidechain technology has become known only within a narrow circle of specialists (just like Bitcoin). They are the next step in the evolution of the blockchain. Their synthesis will become an example of successful symbiosis and will definitely strengthen cryptocurrencies.

Reason #4

The main reason for the growth rate of Bitcoin will be another reduction in the award for block creation in half. The complexity of generation against the backdrop of growing demand will significantly increase the quotes for the cryptocurrency. They are already growing steadily.

Why Does The Commission Fees for Transactions Grow?

The system of cryptocurrency generation is in such a way that, in parallel with the reduction of the reward for the creation of a new block by the miner, the acceptance level is growing.

The constant increase in the number and volume of transactions against the background of maintaining the standard size of the blocks provoked a sharp drop in the system capacity. In theory, a reduction in the reward for the unit will cause an increase in the commission charged by the nodes for the confirmation of money transfers.

Each reduction of bonus coins will become more significant for the system and provoke another growth of the commission.

Earlier, the mining of crypto-currencies brought a decent income even to the owners of ordinary personal computers, but now, this business makes sense only if there are farms with enormous computing power.

In addition, it is important to have a cheap source of electricity.

Many simply combine business with pleasure and engage in the mining of cryptocurrency. Professional miners cannot store cryptocurrency. They are forced to sell Bitcoins to cover operating expenses.

The constant growth in the number of virtual coins on the market served as a reason for the price drop. After another reduction (July 2016), there was another sharp reduction (in half) of the flow of digital currency to the market.

The preservation of demand against the background of a sharp reduction in generation undoubtedly caused an increase in the rate of the alternative monetary unit.

The effect of reducing it by half was not to have instantaneous consequences. It was possible that disgruntled users would have started selling coins.

This would cause a short-term increase in volatility, but with an increase in the deficit, it declined.

Some Statistics on Bitcoin Investing

The daily issue of the cryptocurrency is 1800 coins per day. In a day, about 16 million Bitcoins are circulating in the system, the value of which is about $6.5B.

The growth of demand will cause the appearance of a deficit against the background of a decline in the scale of production. The award will be reduced twice every four years.

It is speculated that the last zeroing of Bitcoin will take place in 2140 when the last block will be generated by the serial number 6,299,999. It will be obtained by a new generation of miners. It is unlikely that any of our contemporaries will be alive then.

Should You Invest or Not?

For this rhetorical question, there is one simple yet very effective answer- to buy cryptocurrency.

Learn more about it and ensure that you’re updated with the charts.

After all, sooner or later the time will come when the Bitcoin issuance will stop. Bitcoin prices will keep spiking over this year and the next, and it’s high time for you to invest money before the big jumps.

Bitcoin is certainly the future.


What is your perspective about Bitcoin investing? Feel free to share in the comment section below.

 

Feature image by Liquidink Design

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