In the last one decade, the world has changed enormously. The technical advances in the fields of science and environment have shown to the world that the future which everyone once saw in sci-fi films is not around the corner but it is here. Apart from the high-tech gadgets like Apple iPhone X or Tesla’s latest automobile, everyone these days is talking about the bitcoin and other cryptocurrencies. Although the idea of investing in a currency that raises your money overnight seems good enough to invest in it, there are several things that should make you think twice before investing your hard-earned money in bitcoin.
Entire social media feeds and the latest news topics of 2017 are filled with bitcoin news. There are many who are openly talking about investing in this, and there are many who think that bitcoin is not the safest investment. Bitcoins are now officially offered and traded by mainstream institutions such as the Chicago Board Options Exchange. Meanwhile, it is reported that BitGo — a cryptocurrency wallet — raised $42.5 million a funding round.
So, when everyone is accepting bitcoin and business wallets are raising billions of dollar, then why is investing in it a bad idea? Before going into that, one should be aware of the term “store of value.”
In the financial world, it is usually defined as an item that one can use to transfer the purchasing power from present to the future. The Conversation has talked about commodities like gold, whose price fluctuates because of speculations in the financial markets, but the price of gold will never succumb to zero.
However, bitcoin has no industrial use. There are many who are willing to pay a lot of money to hold on to some of the cryptocurrency for now. However, in reality, whoever is buying bitcoin is thinking that down the line there will be someone who will buy the cryptocurrency from them. So the million dollar question is, what will happen if there isn’t anyone down the line to buy that bitcoin from the seller? What would be the use of the bitcoin if there won’t be any buyer for it? What would be the use of such currency?
Apart from everything, there are many experts who are sure that the bitcoin bubble is going to burst any moment. In 2016, the price of bitcoin increased from less than $800 to more than $12,000. Investment expert Jack Bogle stated that there is nothing substantial that can support bitcoin and its rising bubble. During a recent event held in New York, Vanguard founder Bogle advised everyone to stay away from bitcoin — which skyrocketed 945 percent this year.
“You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.”
The 88-year-old Jack Bogle concluded his statement by saying that bitcoin may go to $20,000, but it will come back to $100.