Sunday is a good time for reflection. Below are some Q&As about Bitcoin. Check it out!
- Should we buy Bitcoin or any other digital currency? Why or why not? Should we consider a short position instead? Is bitcoin a long-term investment asset or a short-term trade?
Yes, I think we should buy Bitcoin. Because blockchain is a huge trend in fintech field and digital currency is a very important part of it. Although there are regulations coming up to restrict the trade and flow of the digital currency, policies that support the development of digital currency are issued as well. In early stage, there are opportunities to gain profits from the trade. However, we should consider it as a short position since it’s so volatile. The unsettled debate over digital currency will make bitcoin hard to be treated as a long-term investment asset although big believers are there.
- Is bitcoin an asset, a commodity, or a currency? Does it matter? How does one buy bitcoins? How are they created? Why were they created in the first place? What are they used for?
Bitcoin is none of an asset, a commodity or a currency despite its similar functionality to all of them, but it doesn’t matter. It is a product of a new encrypted payment technology and has its value of exist. The process of buying bitcoins is very simple and direct: Go online, find a wallet provider, link the wallet with a bank account and purchase bitcoin through the wallet application. Bitcoins were created as an alternative to payment system in the peer-to-peer payment field with the purpose of transaction without the need of a trusted third party. The initial goal of creating bitcoin is to supplement the short coming of current payment system, to make the payment more private and convenient.
- How is bitcoin separate from blockchain?
Blockchain was a platform technology allowing any network of users to track and trade virtually anything of value. Bitcoin was the required medium of exchange to use one specific public blockchain.
- Why has the price of bitcoin increased over 500% in such a short amount of time? What factors may be behind its sharp rise in price? What are the potential risks of buying bitcoin at this time?
The reasons that price of bitcoin has increased over 5 times in such a short amount of time are various. The factors may include:
- The wider spread of the blockchain & digital currency knowledge
- Bitcoin can be used to pay as an alternative currency
- The rise of speculators or investors in this field contributed to the volatility
- The support of capital powers
The potential risks of buying bitcoin at this time are:
- The regulations were issued to ban the trade
- The free fall of the bitcoin price since it has no intrinsic value
- The risk from wallet platform being hacked and losing bitcoin
- What is the regulatory response thus far regarding bitcoin? How should we factor in potential regulation into his investment thesis?
Regarding bitcoin, the regulatory response is very direct and serious. Seeing the potential risks of trading bitcoin, some governments already showed their attitudes to prevent bitcoin from further growing. Indeed, the price of bitcoin fell when a related regulation came to effect. Therefore, we should factor the potential regulations into our investment thesis, taking the risks of price fall into account.
Congratulations @brokenpanda007! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :
Click here to view your Board
If you no longer want to receive notifications, reply to this comment with the word
STOPTo support your work, I also upvoted your post!