Is Bitcoin A Worthwhile Investment Option?
A couple years ago the U.S. Commodities Futures Trading Commission designated Bitcoin as a commodity, which was a somewhat unexpected decision. Until that point few had questioned the notion that Bitcoin was in fact an alternative currency, its primary use being for the exchange of wealth. There’s still debate over whether or not Bitcoin is a commodity, but since the designation by the CFTC, the idea has begun to seem more logical.
In part, that’s because if you had bought a single Bitcoin around the time of the CFTC’s ruling, when that Bitcoin was worth roughly $230, you’d be able to sell it for about $3,850 today, when Bitcoin is worth roughly $4,080. (Just for fun, if you’d bought 100 Bitcoins back then, for $23,000, you could sell them today for about $385,000!) With these kinds of numbers and this sort of growth it’s easy to say in the summer of 2017 that Bitcoin is a valuable commodity. But making investment decisions with perfect hindsight is never a good idea. Now it’s fair to ask the question of if Bitcoin is a worthwhile investment option.
The first step in answering the question is to address the practical side of things. A few years ago, the idea of acquiring and storing Bitcoin was still very foreign to a lot of people. Now, the currency has gotten a bit more accessible. It’s become clearer that you don’t actually store Bitcoin, but rather private digital keys that access Bitcoin addresses—which basically means accessing your store of digital currency. The keys are kept in Bitcoin wallets, and it’s these that have grown more sophisticated. There are more options, and those options are generally more intuitive for the average user. Buying and “storing” Bitcoin is simpler in 2017. That alone makes investment more appealing for a lot of us.
Now comes the trickier part of the question. It’s more accessible, yes, and an investment is more feasible. But is it a wise idea?
No one can say for sure, but opinions are split across the board. Reasons that Bitcoin looks like a smart investment to people include that major investors are getting on board. Also it’s assumed that the finite amount of Bitcoin will keep demand high even after it’s all mined. Furthermore, some people are considering Bitcoin to be the new gold in that it has the potential to stay strong even when state currencies falter. Reasons to stay away tend to include that there’s a shady side to Bitcoin dealing, with a lot of black market transactions taking place. It’s also remained incredibly volatile despite its overall upward trajectory. On top of that its strictly digital existence can still be unnerving, in that it’s not backed by any kind of institution.
That’s inconclusive, of course, but such is the nature of investable assets. What we can say for sure at this point is that Bitcoin can and should be viewed as a commodity. The evaluation of whether or not to buy in should be decided based on each person’s particular situation and read on the market.