Cryptocurrencies are on everyone’s lips. Because? Cryptocurrency investors such as Bitcoin expect, in the long term, this replaces the dollar and the euro as a value deposit. But is sure to invest in it?
First, it is necessary to define the concepts as a context. Cryptocurrencies are a digital currency system. The best known is the bitcoin , but there are also other coins such as Ripple or Ethereum. Bitcoin has a value higher than other cryptocurrencies, therefore, it enjoys the greatest recognition in the market.
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1. Bitcoin volatility, positive and negative aspect
Recently, we have seen how Bitcoin has lost more than 30% of its value in a week. Is it advisable to invest in cryptocurrencies?
Cryptocurrencies have a high degree of instability . Proof of this is that Bitcoin reached a value greater than USD 19,850 in December. Practically a month later, its value has fallen by just over USD 11,000. This volatility in cryptocurrency values implies a clear level of risk. Therefore, first, cryptocurrency investment is only advisable for those actors with deep market experience.
This volatility can be very profitable for speculators that make long -term investments. But as we have commented, the unpredictable character of Bitcoin makes it a very risky practice.
2. Cryptocurrencies: This was its appearance in the market
Socially, cryptocurrencies have revolutionized the economic system. Bitcoin has meant the appearance of a global, decentralized monetary system of large companies and without the control of states and multinationals.
Despite its relevance, the appearance of cryptocurrencies is relatively young. Next we will chronologically expose how its irruption and evolution in the market.
- 1998: The first cryptocurrencies (B-Money and Bit Gold) arise, although they do not appear in the market. The idea that there is a possible opportunity in the future already arises.
- 2008: A decade later Bitcoin arises as a monetary system, although it is not made public during that year.
- Bitcoin is made available to the public.
- 2010: First transaction with cryptocurrencies. Two pizzas for 10,000 bitcoins are exchanged. It is estimated that today, that amount is worth 100 million dollars!
- 2013: Bitcoin instability begins. In 2013, its value descends from USD 1,000 to USD 300.
- 2015: Bitcoin continues its upward trend and returns to a USD 1,000.
- 2017 and beginning of 2018: Bitcoin reaches almost USD 20,000 and in a month it declines almost 50% of its value (USD 11,000).
3. Issue and withdrawal commissions make their use unfeasible
The commissions when using bitcoins are very high in relation to their profitability. Therefore, the use of these cryptocurrencies is not currently viable. The change for the traditional currency of each country is estimated around 15% commission.
On the other hand, if we do not use cryptocurrencies for transactions with other countries, another option is the investment . However, it also has a kind of “tax” due to the intermediaries that manage the different operations with Bitcoins.
4. The lack of stability, main stumbling block of cryptocurrencies
Only during the past week, Bitcoin reduced its value by 30%. This instability is unpredictable and makes it lose in comparison with safer values such as the dollar or the euro. Who will dare to ask for a loan in Bitcoins or to pay daily with that currency?
5. In short, do I invest in cryptocurrencies?
Our advice is that it is only investing in Bitcoin in the event that you are an expert knowledgeable , both of the market and cryptocurrencies. Bitcoin has demonstrated a very unstable trend since its appearance.
For short -term investments, it is such a volatile market that makes it unpredictable, both positive and negative.
For long -term investments, we do not believe in the long -term value of Bitcoin, in addition to that there are many other safer and reliable assets, and with greater long -term profitability.
Verum Management informs you about all the news about the financial market. For any consultation, our technical team is available to info@verumasesores.com .
