Bitcoin reached the all time high of around $20000 per bitcoin in December 2017 and in a single day retraced to around $15000 levels. In a single day the market cap of Bitcoin rose from around 250 Billion dollars to more than 300 Billion dollars.
Now comes the most important question Should you invest in Bitcoin at $20000 or even at $15000?
Before getting answer to this question you should ask yourself
- Is it a legal tender
- Is Bitcoin legal in your Country.
- Are you willing to loose everything you invest.
Since Bitcoin are decentralized, no one can control Bitcoin’s price rise or fall. This is the only fact that Bitcoin or other crypto currencies can rise more than 100% in a single day and might fall 200% the next day.
Now coming to the main question ..
You should Invest in Bitcoin, no one is against Bitcoin or any other crypto currency. In Indian perspective, Bitcoin is not legal tender in India but still is not banned in India so you can continue to invest in Bitcoin but you will have to bear all the risks associated to the crypto currency markets.
While on the other hand if you invest in Share Market or Government securities, all of them are backed by some physical things which can be sold to recover your loss none of it is true in terms of Bitcoin.
We are listing 5 Reasons as to Why You should Invest in Bitcoin but Cautiously.
- Extremely Volatile : Just as I wrote above, the Bitcoin or any altcoin are extreme volatile in nature. The prices of these coins are not regulated or centralized by anyone in the world therefore if a person wants to pay more he will grab it for high price and even vice versa. After rising from $1000 from January 1 ,2017 to around $20,000 on 8th December 2017 rising about 2000% or 20 times the original price.
If the price would have risen to around $2000 or may be $3500, this would not have been a bubble but it is certainly a bubble in near term.
- Coins are not Currency or Commodity : One of the most looked for commodity is Gold which has it’s value as a precious metal and in older days they were used as currencies. They are only backed by the Demand and Supply economics. Since none of the crypto currency are backed by any tangible asset, there are risks involved.
- Legal Issue : Some of the countries do not legalize crypto currency while others have banned crypto currency and some do not have any issues on Crypto currencies. If your country does not legalize Bitcoin or any alt coin, then probably it is in your interest to stay away from them.
- Ponzi Schemes / MLM Activities : Of late I have seen many crypto currencies which are not mined i.e. POW ( proof of work ) is not present in mining rather they work on POS (Proof of Stake) which means you should invest some money in coins and they give you more and more coins. Some of those coins which were issued to users have been long gone and since the deposits were only in crypto currencies, they can not be tracked or found.
- Illegal Activities : Since Bitcoins or any other altcoins are un traceable or trackeable, you can not be sure who is going to use them. A currency transaction follows a trail and each transaction can be followed because of proper KYC ( Know Your Customer ) but it is not in the case of any of the altcoin. They can be used for any sort of illegal activities around the world.
Finally, you should invest in Altcoin for a longer term, all those who held bitcoin since it’s inception are now billionaires or millionaires and you can be one if you continue to hold it for a longer period of time but do it sensibly.