This is just a personal opinion.
You might think I am talking a load of crap. You might be invested in BitCoin, so you will definitely think I am talking a load of crap. I mean, BitCoin has reached new heights in value – way over 10 times growth in exchange price in a year… I must be mad, right?
BitCoin is in a bubble. There, I said it.
BitCoin as a crypto-currency is ‘mined’ from high-power computers, or rigs (BitCoin miners.) Underneath it all, it’s an exchange of electricity power (which should cost less to mine than what the product is worth.)
Because it can exist free of a single government and be exchanged cross border, it is unshackled by local politics.
But here is the thing. Like ‘bubbles’ of the past (Tulips in the 17th Century; DotCom bubble in the late nineties; Ty Beanie Babies; etc) it’s the hype and the ‘me-toos’ who are driving up the prices. It seems that everybody wants a piece of the action. Driven by scarcity.
If you’re in BitCoin now – then well done. Hopefully, at today’s price, you can sell and make buckets of real cash that you can go into any store and buy stuff with. Go sell it. Buy yourself a yacht, or save for your kid’s education. Turn this fad into something amazing right now and don’t look back.
If you’re thinking about BitCoin as a long-term investment, then you should think again. Here’s why.
1. BitCoin doesn’t have real real value.
As no government warrants it, then who will back up its value with their gold? There isn’t a real value to it, other than what somebody is prepared to pay for it today. If, tomorrow, there are no buyers, then it is worthless.
2. BitCoin will be made Obsolete.
Heard of quantum computers? Don’t think for a minute that they’re a figment of some scientist’s imagination. Soon enough (and I mean soon), quantum computers will be mining new BitCoin as if they were shelling peas. So what? Well – the market will be flooded. And when a market is flooded by something that has no intrinsic value, then the value and price of the market is severely reduced. It will be inflation like you have never seen it. Post-war Germany will look like a billionaire’s club, by comparison.
3. BitCoin is driven by hype and coolness
BitCoin: is cool.
Flipping the bird to long standing institutions who have screwed us over: is cool.
Just mentioning it in conversation: is cool.
Losing your shirt: is not cool.
Like Tamagotchis, Furbys, Cabbage-Patch Kids, Loom-Bands, Fidget-Spinners, cool things stop being cool quickly, and viciously. And then you find them in markets for rock-bottom prices.
People will defend BitCoin
Sure – and I expect a backlash from my views. Investors are financially invested, and also emotionally invested. They’ve been telling their friends how they’ve made 1,000% gains overnight – and have probably advised their friends and grandmothers to do the same. They have a lot to lose – not just their cash, but their friends, family and reputation. Some investors will find the fallout on their families and friends more shameful than the loss in their wallet. So of course they will defend it.
BitCoin as Payment
Is accepting BitCoin as a payment so bad, if it is immediately converted into ‘proper’ money? There may seem like no harm in taking other people’s BitCoins and exchanging it for the real stuff, but then our banks take on the risk. Somebody, somewhere takes the risk. Sure, banks should know better… but some less scrupulous banks have been proven unwise in the recent past.
To Close on My Humble Opinion
Get out as soon as you can. Realize your gains and live your dreams. Greed will get the better of you otherwise!