Since the concept of investing money to generate dividends first came about, investors across the globe have put their money in traditional investment instruments like gold, equity, art, automobiles, fixed/bank/post office deposits, business prospects, and real estate etc. In recent times, several comparatively non-traditional avenues like start-ups and P2P lending have also been high on the priority list for investors, who are looking to diversify their investments across various segments and generate robust yields. But perhaps no other investment opportunity has attracted as heavy an interest as the nascent cryptocurrency of Bitcoin.
One of the most popular and widely narrated stories about Bitcoin on the Internet is that of Campbell Simpson. An Australian who had bought around 1,400 Bitcoins for a total of $25 in 2010 and saved the data file containing the long cryptographic hash string on an external hard drive. Two years later, when moving houses, he threw away the hard drive while cleaning away the stuff that he didn’t need — all because he found the click that the drive made when used annoying. Today, those Bitcoins would have been worth anywhere upwards of $4.8 million. Talk about throwing away a fortune.
Bitcoin: A lucrative investment opportunity
This aforementioned example is just one of many such anecdotes pertaining to Bitcoin that underline just how much potential the cryptocurrency has. But let’s not be swayed by personal accounts of individuals in far-off lands or the latest gossip from the Internet. Think of numbers — the only factor that you consider while making an investment decision. And Bitcoin has a lot of numbers supporting its case.
Consider this: there are just over 16 million Bitcoins in circulation at present, with the entire Bitcoin economy estimated to be worth somewhere in the region of $45 billion. It is the leading cryptocurrency in the world at present and accounts for almost half the market share for cryptocurrencies. It is, as of July 25, trading in the region of $2,500 per coin. If you’d bought $100 worth of Bitcoins around seven years ago, your investment would have potentially been worth upwards of $80 million. Even compared to last year, the valuation growth registered by Bitcoin has been more than 120 percent. No other investment instrument has generated dividends in the same ratio over the same time period.
These factors, however, are little more than garnish for the real reason why you should be looking to invest in Bitcoin: its exclusivity. The self-regulating blockchain algorithm employed ensures that there can be no more than 21 million Bitcoins in circulation at any given instant. What this means is that digital cryptocurrencies like Bitcoin cannot be diluted like paper-based currencies. Once all the Bitcoins are mined and released in the system, the immutable laws of supply and demand will ensure that the increase in their valuation remains on a largely upward trajectory.
Favourable regulation and mass acceptance to drive valuation growth
Globally, Bitcoin valuation is also expected to be boosted by favourable policies and regulations, which will promote even greater adoption of the cryptocurrency. Leading global organisations like Amazon, Expedia, Tesla Motors, Subway, and Victoria’s Secret are already accepting Bitcoins as a payment method; transactions in Bitcoins already exceed transactions made through PayPal. Users, too, increasingly prefer the medium for its convenient and seamless usage, which doesn’t require them to pay heavy fees for cross-border transactions.
The cryptocurrency is also registering heavy traction in countries like Venezuela and Zimbabwe, which have seen the value of their currency completely wiped off in recent times due to poor financial regulation and rising inflation. Japan has gone one step ahead, recently passing a legislation that allows the country’s traders to accept Bitcoin as a legal currency.
Of course, like any other investment avenue, there are some risks associated with Bitcoin investment as well. The Bitcoin market is prone to volatility, with massive fluctuations in its valuation due some uncertainty regarding its regulatory and legal status. The outlook, however, has largely been positive. Several business entities in India have recently come together to form Digital Assets and Blockchain Foundation India (DABFI), advocating and popularising the use of cryptocurrency-based digital payments tools in the country. Indian consumers and investors have been demonstrating increased interest in this innovative technology off late. With the global Bitcoin ecosystem achieving consolidation and maturity, the time is ripe for investors to cash in on this tremendous investment opportunity.