Ten years ago, only a few internet diehards and financial geeks had heard of bitcoin. It was an obscure digital technology and nobody really understood how it worked.
Now, though, things are changing. Practically everybody has heard of the digital currency, and millions of people now have it in their portfolio.
But what’s going on? Why is everyone talking about it? What makes bitcoin so special?
In this post, we endeavour to find out. We take a look at why all your friends are talking about it, and whether you should dive in and get involved yourself.
It’s A Part Of Their Identity
Bitcoin isn’t just another asset, like a bond, stock or share. Instead, it says a lot about the person owning it. Becoming a bitcoin fan actually forms part of your identity. People who do it feel like they are creating a new financial system that gets rid of government control.
What’s more, there is a general bitcoin subculture. When you purchase bitcoin, you’re essentially buying into the future. You’re using your dollars to vote on how you would like the economy to appear in the future.
It’s A Bit Like Gold
Another reason people trade on the crypto OTC market is because it is a little bit like gold. Bitcoin is a store of value that isn’t at risk of inflation. In fact, for holders of bitcoin, the opposite is true. The currency continues to rise in value all the time and, according to some estimates, will eventually hit a whopping $150,000.
What makes it like gold? Simple: there’s a limited supply. If you hold bitcoin, nobody can inflate away your wealth.
It’s Exciting
People get hooked on bitcoin because it is exciting too. As an outsider, you might recoil from the volatility, but a lot of people love it. Whether the price goes up or down, there is always something interesting to say about it.
Nobody quite knows how much the value of bitcoin will rise. Some believe that it will go up to stratospheric levels – perhaps $1 million per coin – while others think that it has probably already plateaued. What you think will happen depends on your reading of the situation. And that’s what makes it so interesting: we won’t know who was right until all is said and done.
People Don’t Want To Miss Out
Bitcoin is producing a lot of wealthy people. Those who bought coins for a few dollars are now sitting on massive winnings.
For that reason, other people don’t want to miss out. They’re all piling into the asset, hoping to ride it up like those early buyers.
This fear of missing out is driving a lot of decision-making. If there are profits on the table, then investors want them.
It’s A Form Of Hope
Some people feel locked out of conventional capital markets. While buying shares is relatively easy, it can be expensive in terms of fees. Often, you need a few tens of thousands of dollars in your brokerage account for it to be worth it. Furthermore, it can take years to save up for a deposit on a house – one of the reasons around 30 to 40 percent of people continue to rent.
Bitcoin, therefore, is a form of hope. It could potentially go to the moon, offering those without access to conventional capital markets a way of getting their foot in the door.
It’s Easy To Buy
It’s much easier than you might think to get hold of bitcoin – or any other digital currency for that matter. What makes it so simple is the availability of exchange services. Once you set up a digital account, you have a low-cost way to access bitcoin.
The Price Is Going Up
Bitcoin prices tend to jump up and down a lot. What’s interesting, though, is that after each mania, the digital currency settles into a higher baseline value. So while there is a lot of volatility, people tend to gain over the long-term. People who hold the currency for five years typically make a 1000 percent return or more.
These types of returns are exciting because they are so difficult to find elsewhere. Stock and bond investments will never get you to that level, unless you get lucky and pick the 1 percent of companies capable of that level of performance.
Remember, since 2010, the price of bitcoin rose from just a few cents to tens of thousands of dollars. It could go from where it is today to several million, depending on uptake.
This is a collaborative post
