The most trending question now is should you invest in Bitcoin now that it is at its current low price after its high point?
In theory, it makes perfect sense to invest in Bitcoin, however, those who aren’t prudent with investing may find it necessary to find out more.
According to Warren Buffett “the oracle of mar”, something is worth investing in if you are proud to own it for 5 years or more.
In addition to the above, you must have an intricate understanding of how the said investment makes money.
With such a background, an investor will quickly assert whether he should invest in Bitcoin or not.
Practically speaking, investing in Bitcoin may not be feasible for many individuals, not because of the price.
It’s hard to invest in Bitcoin because of how it works, for example, if you’re using an app you must keep all the details somewhere safe.
Short of doing the above, you will have never have your money back, since all your transactions will be locked to the app.
More so, given that the transactions are anonymous, the chances of never getting a refund for a wrong transaction are high.
Coupled with the above, you will have to learn the impact of this affair on the environment.
The laws of thermodynamics may then come into play that is energy can’t be created but is transferred.
Therefore with such hind knowledge, it would be very hard for an individual to rash into investing in Bitcoin.
All is not doom and gloomy for the rest of the world, as long as you never have to sell your phone or lose it, investing in Bitcoin is cool.
According to the creator of Bitcoin, as more Bitcoin is mined the cost of mining it increases exponentially.
This implies that after a certain period mining will become prohibitively expensive.
This implies that unless the various mining centres come together, it will be hard to generate new Bitcoin.
This in itself acts as a double-edged sword given that as more Bitcoin is lost, new Bitcoin must be minted to fix the shortage or you must increase the price of the Bitcoin.
Should you invest in Bitcoin?
You can invest in Bitcoin if you can answer the following questions;
- Do you understand the business in a layman’s language?
- Is it predictable and does it have proven earnings?
- Does the business or investment have an economic moat?
- Can it be bought at a reasonable price?
If you find that you can’t answer these questions in less than 5 minutes, you my friend will have a headache owing Bitcoin.
By an investment being predicate we mean it shouldn’t have an operating loss in any fiscal year during your investment; otherwise, it would be considered unpredictable.
Regarding the economic moat, this would imply that an investment has a competitive advantage over its competition and the ability to charge a premium for its products or services without losing business to lower-cost alternatives.
Using only two questions, one would easily and rather quickly realise that investing in Bitcoin is not a great idea, unless if you want to facilitate a transaction.
This can’t be far from the truth given that Elon Musk just informed the public that Tesla won’t be accepting any purchases in Bitcoin.
Don’t invest in Bitcoin, however, own a Bitcoin if you intend to buy a product online and the only acceptable currency is Bitcoin.
Beyond such a theory you will get sleepless nights, with higher chances of losing money.
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