Investing in Cryptocurrency Is Safe and Smart
Why it's a good idea to invest in Cryptocurrency.
Bitcoin is just emerging out of the 18-month bear market. Bitcoin, of course, has been doing really well. It's up from $3,000 and its been trading as high as $9,000. It is still very early days in crypto currency. If you look at the size of the entire crypto market, Apple has more cash on their balance sheet than the size of the entire crypto market. So, is investing in crypto currency a smart and safe decision?
Increase in Market Players
The crypto currency market is still a tiny market, but some people think this will be a multi trillion dollar market by the end of this year. Both eTrade and Fidelity have said that they are going to roll out trading products this year for Bitcoin. Traders are going to move from this market where you have to deal with wallets and long strings of numbers. It'll be easy for the average person holding their own cryptocurrency to now being able to log into, Let's say, their fidelity account, click a mouse button and buy Bitcoin. That's a game changer, right?
Favorable Historical Trends
Historically, when you go from hard to buy to easy to buy, you see a massive increase in the price of the underlying. During the first gold ETF rollout in 2004, gold was trading at 350-400 an ounce. It ended up going to $2000 an ounce because it went from hard to buy to easy to buy. Before, if you wanted to buy gold, you had to buy a futures contract which put you on the hook for $40,000 or buy physical gold and pay six percent commissions. So GLD made it very easy for you to buy gold. In the early nineties, there were no ETFC. So if you wanted to buy the S&P 500, you'd have to buy a mutual fund and you get ripped off the 8 percent. Then the SPYETF came out and there was a massive explosion in value off the S&P 500. So, crypto currency traders think they'll see something similar to that taking place for cryptocurrency. As cryptocurrency tax software makes it easier to buy and hold digital coins, you're going to see enormous amounts of capital start coming into that space. And then, of course, that will roll down into the so-called altcoins and they will continue to grow and continue to boom.
Facebook is rolling out Libra. They're calling it a crypto currency. It's not really a crypto currency, but it's interesting that they're using the cryptocurrency nomenclature and the crypto currency narrative in order to push their coin. What's interesting about that is that they're going to educate their 2.7 billion users on what a cryptocurrency is. This is great for the entire cryptocurrency ecosystem, because people might get their feet wet with Facebook's coin, and then they'll buy a little Bitcoin or Ethereum, and all of a sudden they're getting involved in the whole market.
What about these lightning networks? Is there something that makes it fast? Lightning network is a way of reducing the cost and increasing the speed of doing transactions on the Bitcoin network. The network is still a couple of years away from really being a fully functioning system that will be in widespread use. But it's a mistake that people make when they say if they can't use Bitcoin to buy their coffee, then it has no value. That's like saying if they can't use their Ferrari to hold firewood, what's the point of a Ferrari, right? Different coins do different things. The big value out of Bitcoin is that it's the most secure network in the world. So if you have high value data that you want to secure or anchor into the Bitcoin network, there's no other computer network in the world that's more secure than Bitcoin.
Bitcoin really is digital gold. It's this kind of way to store money in a digital fashion that has this fixed supply and is incredibly secure. It is a truly smart and safe investment.