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With Bitcoin possibly on its way to $5000-mark, does it still make sense for ordinary investors to jump in?
The blue chip brokerage house Fidelity has allowed its customers to create their own Bitcoin accounts, further accelerating Bitcoin’s bull run. The price of the digital currency hit the $4000-mark this week following the anointment by the mainstream media of the currency as a new asset class.
Other industry players and experts are predicting a brighter future for Bitcoin. According to an analyst from Standpoint Research, the price of the virtual currency can reach the $5,000-mark by 2018.
These rosy predictions about Bitcoin create the question on whether ordinary investors should invest part of their savings, or even their retirement accounts, into the cryptocurrency.
To help the ordinary investors in deciding whether they will invest their hard-earned money into the digital currency, here are three reasons to invest or not to invest in the cryptocurrency.
It’s gaining mainstream credibility as industry players consider it as the new gold – Bitcoin has many of the same qualities of gold, whose value is not controlled by governments.
Many investors and finance industry experts are serious about the promise of Bitcoin – A large number of mainstream investors and entrepreneurs already consider Bitcoin and other cryptocurrencies as a legitimate asset class.
There is only a limited amount of Bitcoin – There are only 21 million Bitcoin tokens to be mined and no new tokens will appear until after 2140. This makes Bitcoin a deflationary currency whose value increases naturally with time.
Bitcoin only exists on computers – Cryptocurrencies like Bitcoin are just a piece of code on the Internet and they are thus intangible. Then again, the money in your bank account also only exists as number on a computer.
Bitcoin is very volatile – In the ten years it has existed, Bitcoin has been prone to major bubbles and painful crashes.
Many Bitcoin users are shadowy figures – Despite the belief by many that Bitcoin could replace cash in the future, the digital currency is also known for purchasing drugs and paying extortion fees on the Internet.
Those who are looking to hop on should remember to invest for the long term, and never to invest more than they can afford to lose. Right now, cryptocurrency continues to climb and it looks like there is no way to lose. That sort of thinking is extremely dangerous and prospective investors should exercise caution, whatever they chose.
Read more: How to Buy Bitcoin: Best Practices, Where to Buy, Tips
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