From time to time, I get asked about Bitcoin, and other emerging investment opportunities. I don’t think it’s necessarily, a bad investment, but being an “early adopter” on this kind of currency investment isn’t for everyone. It’s still pretty early in the life of Bitcoin, and it’s gone up tremendously ( fallen tremendously). The ride is far too wild for a majority of investors. If you have the kind of money, the risk tolerance, and you’ll still be able to eat should it crash to nothing -then absolutely, go for it. https://charts.bitcoin.com/chart/price
However, things to think about: There’s nothing truly backing it up. Nothing tangible, anyway. It’s completely made up. Really. If the digital apocalypse happens ( or if something better comes along in the near future, which at the rate technology is advancing, it’s certainly possible), it could be gone/worthless faster than Demetri can press the “enter” key on his laptop. With it being a digital currency, and it’s value, trade, and use are completely electronic; it’s more susceptible to things like terrorist attacks, manipulation, and government meddling. ( Also, having a slow computer and network doesn’t help either). If a foreign government attacks an electric grid, ( or of there’s an electromagnetic pulse from the Sun) that currency is immediately worthless. We’ve already heard about bitcoin disappearing under odd circumstances from “digital wallets”. It personally seems a bit too much like the Sims.
Also, if it were adopted at mass-scale, savvy tech-involved governments, would move to manipulate it. Some world governments have already gone back and forth on the legality of it’s trade, making it even less stable. I can’t help but think that there’s been meddling from some of the usual suspects: ( cough.. Russia…cough…, North Korea…cough… cough).
Tech companies, and the companies that are dependent on them, are far more vulnerable than a company who plays mostly with physical assets. When their main value to the public, is their platform and data, and that data is completely reliant on a vulnerable electronic backbone, you should think twice about betting the entire house on it ( maybe the dining room….bet the dining room… no one uses it, even though there’s some nice stuff in there).
The stock market is beyond measuring value. In some extremely odd way it measures the Psychology of human value. For a period of time, it really gives a deep look into what humans find valuable. Titanic ideas and companies ( word chosen intentionally) come in, produce something extremely valuable for a period; the World goes crazy for it; they make a ton of money; something better comes a long – or – they don’t adapt or diversify; they die; someone else gets rich.
Keep in mind- this isn’t not a suggestion to not invest in technology or Bitcoin – quite the contrary really. The stock market, futures market, currency, and investing in general, is a weird place- you can’t afford to be too trendy, but you can’t afford to not recognize the trends either. It’s a tough balancing act that few can truly leverage.
(note: Since this is largely the downside to Bitcoin, the goal is to write a follow-up on it’s positive aspects….. hence the ‘pt 1’ in the title.)
Andrew L Hamilton 