7

Is Bitcoin or any other crytocurrency a wise investment? I have invested a little Bitcoin and Bitcoin Cash. They go up then down and back up. Is another crypto currency better or is this too risky for a small investor. I’m 70, just retired from Pastoring and looking for a way to supplement social security.

Bob Baerker
  • 76,304
  • 15
  • 99
  • 175
David G
  • 87
  • 3
  • 15
    It is not investing, it is speculation. Big difference. – Pete B. Jun 01 '18 at 16:43
  • 6
    If you do not understand the fundamentals of why something is valuable, I wouldn't bother calling it speculation and instead consider that gambling. – Glen Pierce Jun 02 '18 at 02:09
  • Can't add an answer because it's on hold, but.... Bitcoin takes several minutes to complete a transaction, if you don't want to pay for your transaction it can take hours, maybe days..... Because of that, and other inherent limits to the Bitcoin technology, Bitcoin essentially can't continue existing forever. If they solve those problems it might be more attractive. – xyious Jun 04 '18 at 17:14

3 Answers3

19

Bitcoin or any other crypto currency is an incredibly volatile place to put your money. Its value fluctuates significantly, increasing its risk, and its value proposition is entirely unclear.

In my opinion,the only true value of bitcoin is (a) hype; and (b) a tool for money launderers and organized crime. That is only my opinion, but to buy an asset I recommend that you truly understand and believe in the actual true value of the thing itself. The value of holding Apple shares is that you would expect Apple to continue selling products, earning income, and distributing that income in the form of dividends. The value of holding BTC is... selling BTC to someone else?

Consider that even traditional currencies are quite volatile, and are considered high risk and not for long term investment because they are a zero sum game - if Canada's economy strengthens + US's economy strengthens, someone holding either currency earned nothing. No currency is typically recommended for long-term investment, except possibly by some as a hedge against perceived risk in your own internally held currency [ie: pre-brexit vote, a UK person holding USD may have provided some diversification against the risk of exactly what happened the following month].

Grade 'Eh' Bacon
  • 42,639
  • 11
  • 107
  • 163
  • 9
    Frankly, the word "investment" in the first sentence should be in scare quotes. :) – cHao Jun 01 '18 at 17:27
  • With more and more businesses accepting bitcoin as payment method, the premise that the only value bitcoin has is hype and a tool for money laundering is an over-simplification and false pretty much across the board. One could make the same argument about gold investment. I suggest editing it out of an otherwise comprehensive and complete answer. – William Perron Jun 01 '18 at 17:37
  • 3
    @WilliamPerron, I'd go even farther than Bacon did; I'd say calling any crypto a currency is a total misuse of the word currency. Cryptos have value simply because people expect the value to increase. The mere existence of some nominal trade utility does nothing to remove the hype factor. If a crypto is anything it's an asset that so happens to have some spending utility; like if an organization developed a POS system for physical gold and 12 coffee shops installed them. I've been involved in crypto to varying degrees over the last few years but you must be realistic. – quid Jun 01 '18 at 17:55
  • 4
    @WilliamPerron More and more? Don't you mean less and less? Because many major past acceptrrs of bitcoin have since cut its service (ie: reddit.com, 4th most trafficked site in the world, Steam, world's largest gaming service, etc.), because no one wants to receive $10 in the morning that might be worth $8 the following night. – Grade 'Eh' Bacon Jun 01 '18 at 18:08
  • 4
    I think it is incredibly myopic to consider crypto currency as exclusively a tool for money laundering. It's basically a tool for anyone who anyone who wants to opt out of the traditional banking system, to avoid inflation, fraud, or simply the corruption of the global banking system. – Christian Jun 01 '18 at 18:09
  • @quid you're right, cryptocurrencies have value because people expect it to have some value, which is also the core concept behind traditional currencies. The rest of the answer is great and I have no problem with it, I'm simply suggesting the removal the primarily opinion-based statement that Bitcoin's value is completely fake. – William Perron Jun 01 '18 at 18:11
  • 2
    @WilliamPerron If someone told me they were going to invest in Beanie Babies (TM) I would say the same thing. – Grade 'Eh' Bacon Jun 01 '18 at 18:11
  • @Grade'Eh'Bacon sure, and I'd probably agree with you on that. But this statement is primarily opinion-based (you even mention that it is an opinion in your) and as such should probably be edited out of the answer. I'm not looking to engage in a lengthy argument about Bitcoin's value or lack thereof, but simply to make an already good answer better and more objective. You could edit out the first and last sentence of the first paragraph, and the answer would be just as good and convey the same message. – William Perron Jun 01 '18 at 18:13
  • 2
    cryptocurrencies have value because people expect it to have some value, which is also the core concept behind traditional currencies Is a false equivalence. Fiat currencies have value largely due to debt denominated in that currency and in most cases economies actually transacting trade in that currency. People think a crypto worth $1 will be worth $2 soon so they use their currency to buy that crypto, that's asset speculation. (Though ForEx speculation does exist, the value expectation is not cut from the same cloth) – quid Jun 01 '18 at 18:33
  • 1
    zero-sum game. – dave_thompson_085 Jun 01 '18 at 20:44
  • 2
    @dave_thompson_085 It's not even a zero sum game, because there is cost involved (tons of electric power to create bitcoin), there is fraud involved, there have been hundreds of millions of dollars destroyed through software bugs, and lots of bitcoins have just been lost. – gnasher729 Jun 02 '18 at 00:11
  • 2
    @Christian It's the only current use of Bitcoin. Legitimate uses are pushed out by the volatility, illegitimate uses can't move away as easily. – user253751 Jun 02 '18 at 07:29
  • 1
    @gnasher729: the 'zero-sum gain^Wgame' reference in Bacon's answer is for trading traditional currencies not bitcoin. – dave_thompson_085 Jun 02 '18 at 11:01
  • There is one motive I see to use cryptocurrencies rather than regular currency: with regular currency, governments can inflate the currency by massively printing more. With cryptocurrency, assuming you can't break the encryption, there is no obvious way I see to devalue the currency. Whether this makes cryptocurrency a good investment, I don't know, but cryptocurrency is designed not to let one party massively mint more currency and devalue one zorkmid of that currency. – Christos Hayward Aug 28 '20 at 12:04
  • 1
    @ChristosHayward "There is no obvious way to devalue the currency" If this was true, then it would be stable, right? But actually all crypto has proven massively volatile, sometimes inflationary, sometimes deflationary, and with profit of mining based on massive economies of scale, there are currently huge undeclared networks of miners that effectively act as a single entity, which means yes, you do need to trust the 'trustless' system to not have collusion. – Grade 'Eh' Bacon Aug 28 '20 at 14:35
  • These arguments for bitcoin argue that it can actually be used. With average transaction fees already in the double digits, bitcoin is nowhere near viable as a hedge against inflation. Especially considering that it's not even deflationary at the moment - 10% of coins are still yet to be released to the market. – yeah22 Mar 21 '21 at 20:42
1

Is bit coin or crytocurrency a wise investment?

No.

Even the few actual money managers who suggest allocating some amount of your assets to crypto place an upper limit of 1% of your assets and the rationale is FOMO (fear of missing out).

The blockchain was a real breakthrough idea. An immutable, distributed, publicly verifiable ledger is a brilliant idea with untold utility. Will bitcoin really be the specific technology that's utilized by financial markets? Will ethereum, ripple, bitcoin cash, litecoin or whatevercoin rise to real promanence? Will the existing financial markets arrange their own semiprivate networks to utilize distributed ledger records? It's hard to know. But I do know that I'd bet everything I have that I will not be buying coffee with bitcoin in 20 years.

quid
  • 48,976
  • 11
  • 99
  • 161
-1

I personally have no investments in bitcoin but any wise investor can recognize the merit of bitcoin and its systems. Bitcoin is a very promising currency as it brings us a step closer to the utopia idea of a single global currency as cryptocurrencies are not tied to a government or area. The main grievance for most careful investors is that there are very little tangible variables that we can read into that affect the price of bitcoin, the people simply decide what its worth to them and so if you want to have a successful educated investment it will be very hard to calculate risk in a bitcoin investments due to lack of reference. On the contrary, national currencies are backed by the nations prosperity and economic indicators meaning a good look at the quarterly reports from the central bank can give you a good idea of the currency's value'.

I do not want the whole outlook to be sour grapes and so the good news is that if you are interested in Bitcoin and the future of decentralized technology, you should take a look at investing in the blockchain system that Bitcoin is based on which is essentially a decentralized web of information blocks that are encrypted and spread across networks making it not only very secure but the future of autonomous technology such as self driving cars and aircraft. The yield on Blockchain investments is through the roof as investors are jumping on the Blockchain wagon. In the end, it is up to you to see what you believe in most and what you see being most profitable.

Ahmed elatrash
  • 21
  • 1