Saving Bitcoin for a Rainy Day

Submitted by editor on Sat, 02/24/2018 - 22:14

Bitcoin is not going to go away. Currently only a fraction of the world’s population owns any Bitcoin and the spread is increasing every day. As there will be only 21 million Bitcoins mined or created the value will increase as that limit is reached and those that own the most Bitcoins by that time will, quite possibly, be the wealthiest. In terms of global population Bitcoin will be like hens teeth.

But it is not just individuals who will seek to own Bitcoin. A survey recently commissioned by Citrix in partnership with One Poll of 740 IT decision makers has brought to light that several large businesses in the UK hold an average of 24 Bitcoins each. Other main currencies are also being held including 54 percent holding Litecoin, 43 percent Ethereum, 33 percent Ripple and 29 percent Dash. Research show that there is a trade quietly going on with over half considering selling some or all of their crypto currency and others using it in research, fundraising and training and R&D activities. Some plan to use the crypto currencies they hold to pay providers and employees. Concerns over volatility have hindered stock piling of Bitcoin to any large extend and a waiting game to see if it will settle down to a more stable level. Other concerns are security with 35 percent storing their currency on hard wallets or off line to prevent any hacking attempts.

And superannuation funds and other large institutions are sitting up and taking notice. Currently none has Bitcoin in their portfolio but ways are being looked at to incorporate Bitcoin and possibly other currencies into a super fund portfolio. However, according to Munro’s Accountants, it IS possible to add Bitcoin to a Self-Managed Superannuation Fund (SMSF). But as a SMSF cannot purchase assets from an individual it must be done through an exchange. There are other factors to consider and your accountant will be able to advise you regarding your individual circumstances in this matter.

So how much Bitcoin is being ‘stored’ rather than traded? There are stockpiles of Bitcoin around the world. Many of those that initially bought or mined Bitcoin in the early days have kept most of their stocks. The originator Satoshi Nakamoto is considered to be still sitting on one million Bitcoins, worth around 10 billion USD at today’s price. At the moment 80 percent of all Bitcoins have been mined and are in circulation or stored. It is difficult to be accurate but it has been estimated that a good third to half of all Bitcoins are being stock piled or stored and when the full 21 million have been created or mined then the price will reach an all-time high and stay there. As the time gets closer to the 21 million a sort of inertia sets in and it becomes more difficult and costly to create Bitcoins.

Value of currency is usually dependent on the confidence people have in it plus the rarity factor. Confidence in Bitcoin is high, especially compared to fiat currency, and the rarity of a limited supply compared to fiat currency which has, and is likely to continue to have, an inexhaustible supply due to none stop Quantative Easing (printing more paper money with no backing) will make stockpiling Bitcoin a worthwhile exercise.

Keeping this in mind it is worth looking at accumulating and storing Bitcoin for the future. The advantage is that one can accumulate Bitcoin according to one’s ability to buy it. You do not have to wait until you have enough to buy one Bitcoin. You can buy fractions of a Bitcoin and accumulate over a period of time. Accumulation 10 20 or even 30 Bitcoins over a period of time is quite feasible. And as the time when the limit on the total of Bitcoins available approaches the price is likely to rise accordingly.

This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.

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