The current year, 2020, was not easy. Investors in traditional instruments saw the fastest bear market in the history of modern Wall Street – a drop of 30% in a matter of minutes. True, investors with iron nerves left this apocalypse without loss, since the S & P 500 reached new highs in less than 5 months and led to sifted assets. In cryptographic space, Bitcoin showed himself well. This asset, on an annualized basis, grew by 60% and continues to outperform the stock. There are many reasons for this behavior. Experts do not get tired of listing the benefits:
Limited issue of 21 million coins, therefore, the deficit of the asset.
The expectation of a digital revolution related to people’s belief that paper money has exhausted itself. Including from the point of view of the material thing that carries dangerous influenza and Covid-19 viruses.
Bitcoin is the first virtual coin, all other altcoins have been created on its technology, while BTC is an intermediate tool for buying lesser-known crypto coins.
Our Mining-Bitcoin magazine is on the side of technology, blockchain and cryptocurrencies. But, among potential investors, there are proponents to believe that buying Bitcoin as a long-term investment is a very bad idea for many reasons. Here are just 3 of them:
Bitcoin deficiency is conditional. A coin is as rare as software code describes it. Gold is indeed limited to real reserves. And cryptocurrency can be changed. For example, it is impossible to exclude such an aspect as an agreement between developers with the support of the community in order to increase the Bitcoin token limit someday in the future. So, the deficit only seems so, but is not 100% guaranteed.
Bitcoin’s utility is another problem. More than 18.5 million coins are in circulation. About 40% belongs to a small group of early investors. The rest are used in trading. Bitcoin is little involved in the purchase and sale of goods and services.
In total, the annual turnover of BTC is equivalent to about 120 billion USD. While US GDP is 80-100 trillion USD. So, Bitcoin’s absolute usefulness in the mass of money, even if large, but only one country is negligible.
There are practically no tools to evaluate Bitcoin. Fiat assets, for example, shares, are valued on the basis of income statements, balance sheets, comments of enterprise management, presentations of existing and future products, and industry indicators. Here, investors make an informed decision.
And with cryptocurrencies there are no valuation tools. There is data regarding transactions, there is information about the volume of coins in circulation, but there are no unified tools for measuring value or utility understood by each investor.
As mentioned above, there are many other reasons to consider cryptocurrencies a bad investment. Apparently, only time will put everything in its place.