Bitcoin - WHY?
Ok, first things first: I am not an expert on bitcoin and I am not an expert on investing, what I can do is think rationally, and recent burst of bitcoin value got me really interested. Recently I saw very interesting webinar about bitcoin and investing in it, which I will try to sum up here along with my own thoughts.
Let's start with the one thing that got my attention when the bitcoin started it's climb, what is the real value of this so called cryptocurrency? I have the basic understanding of money, and that now it's basically just a concept and it's value lies really in the economy of the country - very big simplification, but it has worked for me just fine, until I started thinking about bitcoin. Because from what I understand it's value lies in amount of people that use it - also big simplification, but let me just go with it.
Innovation, innovation, innovation
So if the biggest value lies in people who use it, why would you wont to use it? Ok, the basics look very tempting - no bank has control over it and transaction costs are lower, compared to traditional banking systems. However the structural costs are quite big in case of bitcoin. Here are some maths, don't worry I'll keep it simple - 1 block of transaction contains around 1800 transactions and computing power to resolve those transactions is worth 12,5 BTC, which in today’s money is around 48812 dollars, which translates to 25 dollars cost for ONE transaction - that is not innovation - that is just expensive.
Just not stable enough...
Let's look from another perspective, the value lies in people who use it, so the value goes up every time somebody accepts payment in this currency, like some big company or internet shop. But what do they do as soon as they accept the transaction? They exchange this currency to dollar, euro. Why? Because Bitcoin is not stable enough, and why is it not stable? It is too small to be stable it's overall valuation is not big enough to be stable.
Like I said in the beginning I am not an expert on investing nor on bitcoin, but those two points from webinar I saw really convinced me that there are no miracles in investing. On the other hand it is new and very interesting technology. I personally would not invest in it until it is more stable and the prices of one transaction are more close to what I would call acceptable value.
That's it, feel free to comment, I'm really interested in Your opinions.
Definitely not a bubble haha
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STOPGood article. I was about to post a similair thread. The crypto space brings the biggest group of uneducated investors with it. This group will only grow. We really need more insights in the market and previous investment results. Do you know this interesting site? https://www.coincheckup.com Every single coin can be analysed here based on: the team, the product, advisors, community, the business and the business model and much more. For example: https://www.coincheckup.com/coins/Bitcoin#analysis To see the: Bitcoin Investment research.
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