Bitcoin has been heralded as the currency of the future. So, is Bitcoin a good investment in 2017?
Polar points of view
When considering Bitcoin as an investment medium, there are two schools of thought. Fans of Bitcoin see the lack of a centralized overseer as key to any asset’s value, and because of this, Bitcoin is poised to become much more valuable in the future. However, traditionalists prefer to trust in the more familiar government institutions and banks and would probably steer would-be investors away from Bitcoin.
How to determine Bitcoin’s value as an investment asset
Although assessing how good any potential investment will be is to some extent just a guessing game, there are a few ways of determining an asset’s worth.
One good indicator of Bitcoin’s worth as an investment is its rise against the US dollar. In recent months, Bitcoin prices have eclipsed $1,000 and have even extended beyond $1,500. In fact, if you had bought Bitcoin a few years ago when its value was around $150, you would now be celebrating your decision to invest.
A further underpinning concept behind Bitcoin as an investment is the finite number of tokens – 21,000,000. This means that the currency’s value may stay consistent or could increase relative to other types of infinitely printed currency.
Other good investment indicators include Bitcoin’s growing popularity, its security, and its network effects.
Word of caution for investors
Although there are undoubtedly positives around investing in Bitcoin, caution should be exercised and Bitcoin should be limited to a small portion of your overall portfolio. This is because Bitcoin has a tendency to demonstrate wild fluctuations in price, which would undermine investors’ confidence in the currency as a reliable long-term money maker.
For those who are seeking to invest in a future currency and are willing to take a risk that its popularity continues to grow, Bitcoin appears to present a good investment opportunity.
However, due to Bitcoin’s current volatility, it would be prudent not to invest more than you are prepared to lose, as the future can rarely be predicted with certainty.