Bitcoin’s first transaction occurred in January 2009 and ever since that time, it’s done nothing but endure several dips in the stock market, many changes impacting world governments both big and small, and a slew of detractors who constantly pronounce Bitcoin dead while extolling the virtues of more traditional central authority-style currencies and policies. Here are the top reasons to buy Bitcoin in 2020.
As advanced as civilization is in the year 2020, most modern societies are still governed by central authorities. Not just in terms of public policy or government law, but in terms of the way money exchanges hands and what the value of that money actually is. Most members of the public, especially those living in a western society, expect to be able to trust their government.
The reality is that all forms of value have to answer to two sides of the ledger, whether it’s labelled assets and liabilities, accounts receivable and accounts payable, or debits and credits.
In a centralized monetary system, the government holds all of these transactions private. Only persons of great power, wealth and influence get to see any of the details of what’s recorded on that ledger. Those figures also get to control the laws surrounding how that money can be used, and determine what that money is worth by manipulating supply and demand.
Bitcoin isn’t owned by a central authority. The whole mission of the project is to make each individual their own bank, not just give them their own account. This is the way exchanging value in a society should be. It should move from peer-to-peer, not from intermediary to peer, and then another intermediary to another peer.
Everybody loves to invest in the latest technology darling. In the late 1990s it meant investing in anything that ended in dot-com. In 2020 it means investing in cryptocurrency. Don’t get it twisted, 2020 is not Bitcoin or cryptocurrency’s ultimate rise to fame. Most enthusiasts think that day is still to come. Nevertheless, the point is that Bitcoin gives rise to a whole new asset class. It’s an opportunity for a younger generation, and more importantly a less wealthy generation (IE not just hedge fund managers or government officials who have every advantage the common man doesn’t) to understand broader economics, the way that power and authority works, and ultimately the fact that they can become their own bankers and that they don’t have to rely on anyone else to maintain their value or exchange it for goods, services or the betterment of society in general.
During this current coronavirus epidemic, many wondered if all of the economic fallout resulting from businesses halting operations and thus governments having to hand out stimulus money would also see speculative investments like Bitcoin plummet. The price did indeed plummet in March but it turns out it wasn’t because of the epidemic. It happened because the Bitcoin halving event which lowers the new supply of Bitcoin being created this coming May, was already included in the price. Investors cast out when coronavirus happened. Yet in the few weeks since that time, the price is back up. After dropping to $3,500 USD, it’s now hovering around $7,000 USD at the time of this writing.
Bitcoin is a great hedge against other types of investments.
The cost of goods and services goes up every year. Most of the time, so does a government’s national debt. To compensate, governments print more money. In most economies and governments, the result is that prices and the value of the money supply affect each other in an inverse fashion. Ultimately though, inflation is a very much misunderstood concept that involves governments making decisions based on numbers on the ledgers that are not exactly public or transparent. Most citizens residing in a democratic environment at least trust their government enough to let this happen. The problem is that absolute power corrupts absolutely.
Inflation can have a dramatically negative effect on the society if the wrong people are in power. The best case to make this point is what’s happening in Venezuela.
Contrast a government’s idea of inflation and how to control it with how Bitcoin approach is things. Consider for a moment that Bitcoin transactions are grouped into blocks which are then validated by computers securing the network that solve cryptographic puzzles in order to confirm transactions.
The inventor/inventors of Bitcoin program to the network so that each time 210,000 blocks of transactions are validated, nodes receiving a Bitcoin reward for validating those transactions will receive half as much as they did before that 210,000th block.
The next time the network reaches 210,000 blocks will be sometime in May 2020. This means that the number of Bitcoin’s being rewarded for successfully completing a cryptographic puzzle will move from 12.5 BTC to 6.25 BTC.
As basic economics teaches, when the supply of a scarce commodity goes down, the demand goes up. Bitcoin’s price dip this past March may or may not have had something to do with the coronavirus pandemic. But it most certainly had something to do with the fact that a student investors inflated the price well before the reward cut in half. They pushed it all the way near the $11,000 mark. Now the price has found a happy medium a little bit lower down.
The fact that the reward that comes with solving cryptographic puzzles cut in half every 210,000 blocks is not just a coincidence. There will only ever be 21 million Bitcoins in existence and the last Bitcoin ever will work its way into circulation in the year 2140. No more Bitcoin’s after that year means plenty of value for investors who stay in. The only downside? None of us will be here in 2140, unless of course Elon musk or another genius figures out aging.
No manipulation of supply and demand means a more stable currency investment in the long run.
Bitcoin is proving time and time again that it is a store of value, even though detractors say digital gold doesn’t necessarily match the properties of the actual precious metal gold. All one needs to do to see that it’s a store of value is look at the fact the project is worth $126 billion. Not only that, it’s being used more and more by major corporations and institutions, so it’s not just the average computer geek that’s interested in using it to exchange value between people.
As more and more fiat currencies around the world proved to be unstable, Bitcoin’s growth will only accelerate. Add to that the fact that every time 210,000 blocks get mined, the new supply being created cuts in half. That virtually assures that in the long run the value of Bitcoin will not only continue to rise, but the volatility of it will continue to stabilize.
A proven store of value not named gold, oil or Benjamin Franklins is a great alternative to government-backed assets.
One of the chief concerns with developing a monetary system, whether it’s created using paper money or a digital public ledger, is that the people running that system have to be up to prove that the money or value can’t be duplicated or counterfeited. Of course, national governments can confiscate money, but no self-respecting citizen would want their money to be taken away from them.
That’s why it’s so important to know that Bitcoin is backed by a blockchain, which is a public ledger secured by a network of computers that anyone can join. This network of computers solves cryptographic puzzles that ensure Bitcoin transactions are indeed valid, and that Bitcoins can’t be spent more than once.
The kicker to the whole thing is the fact that each user on the network can secure his or her Bitcoin’s using private keys, a string of characters most commonly protected by a 12 or 24 word password that only the user knows. This means that as long as that user doesn’t share their private keys with other people, police and government regulators included, nobody can confiscate their Bitcoin.
While we take the protection of money and personal property for granted in Western society, the reality is that in many places around the world, governments are authoritarian in nature and will do what they can to control people.
What’s also important is that during natural disasters, pandemics or global economic collapses, most governments are empowered to take control of money and resources in ways that most people don’t think about and tell those emergencies arise.
This is what makes the ability to be one’s own bank so valuable. The user’s value is the user’s value and nobody else’s, even in extreme circumstances.
Control over one’s own money is the ultimate form of safety and security for investors.
Hot off the press is the fact that the Toronto Stock Exchange just approved the trading of The Bitcoin Fund. The fund is currently worth it just $14 million and relative to the entire value of the cryptocurrency industry, that’s not much. But it’s the fact that such a fund exists and will be available on a major exchange that is a big deal.
The fund will trade under the stock symbol QBTC.U. It’s currently trading at $11 per share. Given Easter weekend has just passed, it will be interesting to see how this fund trades in the early going. Will it mimic the up-and-down movement of actual cryptocurrencies? Or will investors used to traditional stock market investing more so than cryptocurrency investing gain considerable control over the price? Only time will tell.
The bottom line is in 2008 when Satoshi Nakamoto first published the Bitcoin whitepaper, nobody would have seen this coming. Add that to the fact that major businesses like Overstock.com and Starbucks are either using or planning to implement the acceptance of cryptocurrency in the future, and Bitcoin is sure to become more and more mainstream as time passes on.
That trend has already been happening for the last 12 years, and with more and more nations aiming to digitize government-backed currency, pretty soon the average consumer will put two and two together and realize that using digitized currency that isn’t backed by a government is actually better for the individual.
Institutional investment in Bitcoin means mass adoption in this new asset class is inevitable. That means greater profits for investors is also inevitable.
In July 2012, Bitcoin’s value peaked at just over $9 per coin. As mentioned earlier, the current value is around $7,000. Not that its value appreciation has always been linear, but year over year, Bitcoin increases in value. This is considered one of the top reasons to buy Bitcoin amongst casual observers.
The amount of price appreciation the project has experienced over the last 12 years is certainly mind blowing, but even breaking it down into smaller increments, the numbers are still impressive. Consider that just two years after hovering around the $10 mark, Bitcoin’s value skyrocket it all the way to $581.
By the end of 2017, investors saw the price move all the way up to close to $15,000 USD. In what other kind of investing can a high risk, high reward player earn that much?
All of this is to say that even though past history doesn’t necessarily guarantee future performance, one would have to think that with the new supply of Bitcoin’s shrinking every few years, the price will eventually pop again. Price appreciation equals money in the bank. The digital, non-government controlled bank that is.
Armed with the above eight reasons to buy Bitcoin, there’s no better time than now to get started. It’s important not to bother with trying to time the market. That doesn’t work in stocks, bonds, mutual funds or any other form of investing and it doesn’t work and cryptocurrency is a long-term strategy.
The prudent Bitcoin investor should dollar cost average their plunge into Bitcoin and other digital currencies for all the reasons in this post and many more. The best and most convenient way to do that is to use Bitbuy.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency. The opinions expressed in this piece are those of the writer, and not Bitbuy or First Ledger Corp.