You may be late to the Bitcoin train, but veteran investor and entrepreneur Peter Thiel says ‘people are still underestimating bitcoin’. For most new technologies, it may be wiser to be an early adopters. But that shouldn’t dishearten fresh investors making an investment in bitcoins. Like any other investment, there are several factors in play when it comes to investing in cryptoassets, or more specifically, bitcoins. There is market volatility, investor sentiment, rising competition from newer competitors, the limited quantity of the asset, governments’ sentiment, and many other unforeseen factors impact the cryptoassets’ value, all these factors make this investment a unique package and one needs to keep an eye out for each of the factors that can impact their investment.
How are Early Investors Better Off
When Bitcoin launched in the market, its value was just 15 cents. Many people however, looked the other way and made investments elsewhere. In Bitcoin folklore, there’s a true story of a person who tipped his pizza delivery boy with about 10,000 bitcoins.
No one at the time of its launch had thought that it would see such an upswing. Anyone who had bought the coin at its inception has seen their investment multiply 67,473 times.
Further, Bitcoin holders also got an equal offering of Bitcoin Cash when it was launched. Today, one Bitcoin Cash unit is currently valued at upwards of $1200 USD. This brings us to the question: is it even sensible to now make an investment in bitcoins?
Do Late Adopters Lose?
Not all has been lost. There are several factors that show us how Bitcoin is not a missed bus for newcomers into just entering the cryptoasset market. Bitcoin is the oldest and the most known asset among all other cryptoassets. There are several well-known portals and exchanges where it is available for purchase.
One need not buy a full bitcoin. You can invest say Rs. 1000 and own a fraction of a bitcoin. Since there are limited number of bitcoins which can be mined — 21 million to be precise — out of which 5–6 million bitcoins are yet to be mined, newer investors still have a shot at earning returns on their investment. The limited quantity bitcoins can never let its value fall below a minimum and can only help investors get more returns.
Bitcoin operates in a grey legal area, so we do not know what the final fate of cryptoasset or bitcoin will be. Cryptoassets have seen a fair bit of controversy because of their completely unregulated and anonymous nature. But that is also what’s revolutionary about them! They operate in a fairly democratic manner, where every miner has a say in any decision made with respect to the asset. The blockchain in itself is a very powerful and useful technology, which can aid governments and institutions to a large extent. Further, if governments decide to outlaw the bitcoin then there is another chance of your investment going sour. But, none of these are any new problems. They have been there since the inception of bitcoin.
To Bitcoin or not to Bitcoin
Here, the ideal move will be to make a judgement call on your investment as per your needs. Bitcoin investment brings with it a fair share of risks and benefits. You will have to decide if you are willing to take that risk. As discussed earlier, there are some risks that a bitcoin investment faces like the risk of it getting criminalised, and volatility. But these fears have always been there, they have now just been magnified with the burgeoning interest that the asset has attracted. These factors in no way make it a bad investment because these factors go hand in hand with any new investment.
What we need to understand that bitcoin is the oldest traded cryptoasset, which has very good return history and by all logic, will continue to perform well. Goldman Sachs believes people don’t seem to get Bitcoin’s Gold-like qualities, while Steve Wozniak has gone to say that bitcoins are better than the US Dollar and Gold!
There are several other cryptoassets in the market such as Ethereum, Bitcoin Cash, Ripple, DogeCoin, LiteCoin, etc which you can look at too. These assets are newer, cheaper, faster, and even more versatile in features than bitcoins. As an investor, you reading about these great Bitcoin alternatives might spark your interest in adopting the cryptoasset technology.
This is less about bitcoin and more about cryptoassets as a whole. This is a path-breaking product delivered by an extremely useful technology. None of us would want to be a horse to this new Ford. And I am not saying that you should take out a second mortgage on your home for this investment! Make a small investment and play with the technology enough to be prepared for the time when cryptoassets become the most natural instrument of investing for the layperson.