I was recently asked by an associate who is unfamiliar with Bitcoin, “Why should I buy Bitcoin?”
That is actually a very good question. Why should you buy Bitcoin? Probably the best answer is the old adage, “Never put all your eggs in one basket.”
There are proponents for each of the various ways of storing assets and even money. Banks, stocks and shares, precious metals, mutual funds, the list goes on. Each has their advantages and disadvantages.
Banks and Savings
Banks these days provide little if any interest for ‘borrowing’ your money. It is a free ride for them. If you borrow money from a bank they charge you interest, but they do not return the favour when you lend them money, and make no mistake it IS a loan when you deposit funds in a bank account and those funds become theirs not yours. It is a debt the banks have with you as the creditor. If the country in which you bank has severe financial difficulties, it is your funds the bank turns to in order to compensate for their failings. If you ‘invest’ in an Interest Bearing Deposit or Mutual Fund or something similar although the security is better the actual interest is still small and unlikely to keep pace with inflation.
Stocks and Shares
The returns here are subject to the trials and tribulations of the stock market. These are subject to various market forces such as the management of the companies, the perceived value of the stock or share, influencing factors such as economic and political climates plus manipulation of the shares directly. Not something under your control by any means. It also take a lot of understanding, experience and financial acumen to be successful in trading or even just buying and holding stocks and shares, What types of shares should you buy and when? Which company? At what price? Do you hold or sell?
Of the over 1500 cryptocurrencies available, Bitcoin is the biggest and most well-known. Bitcoin has been the subject of much volatility in its price compared to the dollar. But this seems to be evening out and as the limit of 21,000,000 bitcoins that can ever be available draws closer the volatility will likely lessen and Bitcoin will stabilise out and the range of changes in its price will become smaller and smaller. There is no interest attached to owning Bitcoin and the value of it, as measured in dollars, or whatever currency you are using, is the value on the day whether buying or selling. Another important factor is that once one has a crypto currency no one can take it away from you (provided you have kept proper security of course)
Putting ALL your assets in any one of these means that one would be subject to the fluctuations occurring and just as it is possible to make a fortune in some areas, it is just as possible to lose one. Many wise people spread their assets over a number of areas. Such as ready money in the bank for current and immediate future use. A proportion in some stocks, and even here there are different stocks, what are called blue chip or ‘safe’ stocks and the more adventurous ones, and a proportion spread through the precious metals. One can buy a spread of the main or most popular crypto currencies such as Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin cash and perhaps a few others and then with all that one is likely to retain the value of one’s asset
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 and certified accountant before making any investment decisions.