It’s hard to ignore digital currencies these days. With headlines like “If You Bought $5 of Bitcoin 7 Years Ago, You’d Be $4.4 Million Richer” all over the internet, it’s forcing many of us to contemplate whether we should put some of our hard earned money into cryptocurrencies.
But then, just as you are about to take the plunge, your eye catches “Bitcoin is a fraud” or “ICO’s are an absolute scam”. I don’t blame you if it’s making your head spin.
The truth is that many of the concepts or objects we can’t live without today were completely ridiculed when they first became popular.
Influential scientists and supposed experts, like top engineers, thought the lightbulb was an absolute sham when Thomas Edison was developing the first practical light bulb. Similarly, the first person to walk around with an umbrella in British streets was hurled with trash, and for a long time, many people had an actual fear of personal computers.
It’s a similar story with crypto coins. We’ll look at two aspects of investing, namely price volatility and risk, which many investors consider when sizing up investment opportunities, to see why investing in digital currencies is a much better idea than you might think.
Price volatility
The first thing all opposers to cryptocurrency investing will tell you is that it’s too volatile. But compared to more settled commodities like gold, in the long run, it’s not as volatile as the naysayers would have you believe.
At its lowest point in 2017, Bitcoin traded at just below $800. This is compared to the highest every $5,770 of today, October 13, which is a difference of about 720%. Saying that Bitcoin hasn’t traded below $1,000 in 7 months, and even then it was just for 4 short days. It has its ups and downs but overall, in the long run, it’s on an upwards trajectory, slowly climbing back to that all-time high and beyond.
It is important to remember that in the short-term, all investments will show some sort of volatility. What the price does in the long-run is what matters most to serious investors.
If we look at the price of Gold (which some would suggest is one of the best long-term investments), it paints a far more volatile picture over the last year.
Ethereum traded at $7.98 on the 1st of January 2017. At its highest in June, it reached $410, that’s a 5,137% difference. Like Bitcoin, Ethereum has its ups and downs but again, it’s on an upwards trajectory overall in the long-run.
Granted, these are just two of the more than 1,000 cryptocurrencies on the market today, but if you are new to investing in digital coins, this is likely where you’ll start.
Risk
When investors look at risk, they’ll often compare it to the potential reward to see if the investment is worth it. Also remember, there’s not one investment on this planet that doesn’t carry some sort of risk.
Saxo Bank analyst, Kay Van-Petersen, predicts that in 10 years’ time cryptocurrencies will account for 10% of the average daily volume of fiat currency trade and that the price of Bitcoin will hit $100,000. That means if you invest in one Bitcoin today at $4,800, your investment will increase by more than 2,000% in 10 years. No other investment can come close to this kind of potential return.
Investing Haven predicts Ethereum will to rise to $1,000 for 2018 and beyond. That means you can potentially more than double your return in a few short months, with a steady increase predicted over the long run.
In both instances, the risk is well worth the potential return.
If in doubt, look at what the people in the know are doing
If you’re still on the fence and unsure whether or not investing in cryptocurrencies are a good idea, take the emotion out of it and look at what the experts are doing. These people are known for making wise investment choices.
Richard Branson, for example, is a big supporter of Bitcoin and the underlying technology, Blockchain, while Bill Gates has long been shouting the praises of digital coins, calling it “better than currency.”
Billionaire, Tim Draper has said to have made more than $110 million with his Bitcoin investments and hedge fund manager, Michael Novogratz, said he’d happily invest 10% of his net worth in digital currencies, including Bitcoin and Ethereum.
Conclusion
Of course, as with any investment, it’s never wise to put all your money into one basket but as part of a balanced portfolio, cryptocurrencies are a worthwhile consideration.
Campbell Harvey, a professor of finance at Duke University, said: “For me, though, I look at Bitcoin not just as a currency, but what it could do in the future in other applications.”
And that’s the unique selling point of digital coins, and why it’s likely to increase in value over time. It goes beyond just a currency. It has the potential to revolutionize all industries as we know it.
When looking to invest in cryptocurrencies, look a bit further than the surface facts that most skeptics will happily shout about and realize that investing in digital currencies is a better idea than you might think. Also, make sure you’ve chosen the right platform to do so.
To find out more go to https://tokenbox.io
About the author: Vladimir Smerkis, the managing partner of Tokenbox
