GOLD BUBBLE
Nowadays one of the biggest trends in tech and banking are cryptocurrencies. The best known is called Bitcoin. Just recently its value skyrocketed reaching over 5500$. Bitcoin is doing very well on the market despite the fact it has been there for just 7 years. The chart below shows its value between 2010 and 2017.
Source: https://www.coindesk.com/price/
Let's go through the chart. You can spot that for the first 4 years there is little change in the price of bitcoin. It started with worth for 0.06$. The first bigger peak happened in 2014 when its value went up to around 1000$ which was just a temporary raise and you can see it was constantly falling until late 2016. The end of 2016 and 2017 year present a constant rise of the Bitcoin's price. Currently the currency is priced around 5500$. It's a huge amount. Imagine investing in bitcoins when it was as cheap as 0.10$. Imagine investing in bitcoins even when the price was around 1000$. In both cases you would gain a high profit if you sold it now.
The price of the Bitcoin is definitely a huge advantage, but there are also cons of it. Many financial institutions are advising not to invest in this currency. The National Bank of Poland issued official advice for investors to keep their money out of Bitcoin. Although the it's highly profitable it's also very risky. The Bitcoin is not supervised by banks. It is said that the Bitcoin is widely used by criminal minds to conduct money laundry or is used as a safe payment method (it's much easier to avoid transaction being tracked when it’s done in Bitcoins). Financial giants around the world are convinced the Bitcoin price will fall and it will fall to the ground. They said it's another financial bubbles which already happened in the past. This particular one is bigger than any other before and it can have serious consequences. According to them it's just a matter of time.
Taking everything into consideration, it's hard to say if you should or shouldn't invest in the Bitcoin. On the one hand, the price changes, the demand gives you the right to buy a few bitcoins and earn easy money. Even national institutions around the world are slowly accepting payment in this particular cryptocurrency. On the other hand many financial experts say although you earn money in a short period, afterwards you lose much more than you have earned. It's up to you to make a choice!
I encourage you to read the article about Bitcoin (link in the sources at the bottom) and answer the questions.
- Do you think the Bitcoin is the next financial bubble?
- Would you invest in it?
Sources: https://www.theguardian.com/technology/2017/oct/12/bitcoin-price-5000-cryptocurrency-gold-bubble
Bitcoin definetly is some kind of a bubble and I wouldn't risk my money investing in it. However whole idea behind this currency is very interesting and attracting many companies and countries. Some countries decided to create their own coins (Russia and Estonia) and companies like IBM, Fujitsu, Bosch and many more are very interested in blockchain - technology connected to another cryptocurrency, Etherum. They are searching for business use for it and started Hyperedger project: https://www.hyperledger.org/
ReplyDeleteIndeed technology is very interesting and innovative. I think the blockchain is the real benefit from whole Bitcoin movement.
DeleteI’m not well informed about bitcoins so it’s not my business to judge it. But I think that there was always some “financial stuff” which make people think that they can get rich in short period of time. It’s like part of humans natural habits. I believe that hard earned money smells better than these “bubbles”. I’m sure that I’ll never invest in cryptocurrency. I know person who was playing on forex like platform. He bought part of one bitcoin for few bucks. Loses everything by two days thanks to Chinese government decision to ban cryptocurrencies. It shows how unstable it is. It was valued at about 5000$ to fall down to 3000$. And now it’s going to reach 6000$ level. Rollercoaster…
ReplyDeleteExactly, you can predcit what will happen with the Bitcoin in even short future. Few buck it's not much and if you have spare many you can invest small amount just to gain experienece.
DeleteThanks for the topic, I love it. 3 times I tried to buy bitcoin. The first time it cost 20$, second time 1000$. And finally I bought it as it cost 4000$. Big difference because of my colleagues. They said it was a bubble that was not worth it. So i listened to them. If I did not do it I would have 50 times more than now. This is terrible. Now I have a bitcoin in my wallet and I also play in the stock market.
ReplyDeleteI think that this currency the price will increase. Also remember that if someone forgets their token, then the money is lost. So the price then also increases, because there is less money in the market
Probably everyone regret not doing certain things in the past, like you not investing in the Bitcoin before. Well, you can never say if the Bitcoin would behave the same if you have invested in it (butterfly effect :)).
DeleteShort but informative, thanks for that :) I myself do not know much about bitcoin, i considered digging some when there still was something to dig. I never did it because i did not search deep enough to finish configuring the hardware. I don't think i will invest in it. There are some stories of bitcoin "banks" being cleared by its creators and because you can't track that money it is "safe" to steal it.
ReplyDeleteI am not aware if you can 'steal't it, but for sure is hard to trace transactions, so it's often used on back market. Not sure if you know, but actually price of graphics cards raised due to the Bitcoin diggers. At least you haven't taken part in it.
DeleteAside from technical aspects of Bitcoin, there's one thing I think others miss here: money without trust is nothing. If no one would trust National Bank of Poland with the money it issues, it would be just a piece of paper (or piece of metal, depending if it's a bank note or a coin).
ReplyDeleteThe reason why Bitcoin price skyrockets is the belief that people have in its decentralized, international nature.
What I believe is that Bitcoin will remain on market and its price will start to stabilize with time and being recognized by countries and its officials.
I would like to point you in the opposite direction though - local currencies!
There is a documentary still airing on TV on Planete channel, that revolves around this topic (I can't find it now I'm afraid :( ). However, you can read about one of local currencies (Bristol pound) in Guardian here: https://www.theguardian.com/local-government-network/2013/jun/17/bristol-pound-local-currencies
It's fascinating, because aside from national currencies and Bitcoin, you can see it's physical value, because it's usable only locally and promotes only local businesses and local communities.
I can see you point. What's more you have second thoughts when national institutions warn you about the Bitcoin, like National Bank of Poland did.
DeleteThanks for the link! I wasn't aware such a thing like local currency exist.
Thanks! I would really recommend to try hunting down documentary about local currencies on Planete+, it should still be aired.
DeleteAnd I'd probably invest in local currencies (or more precisely consume goods using it) rather than investing in Bitcoin, but it's currently impossible in Poland.
Maybe for both anwsers I'll anwser by two words Deep Web -I'm sure you know what I mean. I think that's very high risk to invest in Bitcoin especially that new value's comes from it ieg. Badacoin's (or something like that). I don't think that I'd invest in it, but you are right they are high value, but this value isn't strong enough.
ReplyDeleteI agree with you. Although the Bitcoin has hihg value, it seems not to be strong enough to maintain the value for long period.
DeleteMarek, thanks for interesting link. I completely agree with you. Blockchain is advanced technology, but become popular. This is usage not only for virtual currency, but also to transport secure data. It is awesome.
ReplyDeleteOn the other hand In my opinion bitcoin is a bubble. I am a fan of freedom of the economic, but rate of exchange this currency is unpredictable. It does not depend on the state of the world economy. I prefer invest my money in own business and stock market. In my opinion small invests must by in the same currency in which we make money.
Good approach, I also think investing in the Bitcoin is kind of lottery and I prefer satble instruments when it comes to investing.
DeleteWhat I like about bitcoin is that its quantity is limited. You will not be able to 'print' ;) more bitcoins in the future. This is the possible reason why its value suddenly increased. We get closer to the extraction of all bitcoins. According to http://www.bitcoinblockhalf.com/ nearly 80% of all bitcoins have already been mined. Of course, it is possible that when the resources are over, the interest in the bitcoin will drop, and consequently its value will fall.
ReplyDeleteIn addition, I recommend reading http://www.investopedia.com/news/what-happens-bitcoin-after-all-21-million-are-mined/
Thanks Mateusz. I wasn't aware that Bitcoin's quantity is limited to certain limit. Let see what will happend after 100% of the Bitcoins will be mined. Maybe you're right with your predictions.
Delete1. I don’t know, I’m confused. I’ve heard a lot about Bitcoin but I’ve never thought about it for more than a few seconds. What is new for me it’s a cryptocurrency and it’s curious. I think it’s a very interesting topic. It’s also have a big potential to be not a bubble, maybe Bitcoin could be the next financial bubble but I think that cryptocurrency not. That’s the future. People are getting things digitalized, so cashless payments it’s not enough. As we can see the next step is to make another, global currencies, which management should be not complicated so real currencies.
ReplyDelete2. I’m not sure if now is the right moment because it’s relatively new, despite the fact that Bitcoin exists for over 5 years. I’m sure I’ll be following the topic. You makes me curious. I’m sure that invest in Bitcoin now it could be the good moment to earn some extra money.
Łukasz, thanks for comment. I also think that cryptocurrencies will have a lot of influenece in future. I would say the Bitcoin is kindof test drive for whole cryptocurreny idea and it's marvelous feedback for now.
DeleteBitcoin, even though it is still rather niche, seems to be the most popular alternative currency. It is being accepted by some websites and online stores, it can also be exchanged at online exchange platforms. The currency is based solely on the trust that its users give it. The problem is that people are not honest. Well, me and you, dear Readers, we are certainly are, just like our friends. Unfortunately, there is not guarantee that all bitcoin users are equally fair. What does that mean? It entails the risk that the value of bitcoin is not naturally determined by the people interested in developing and using the new currency but rather is a result of inflating its rate by people interested in creating a speculative bubble. Bitcoin has created an alternative market and if it takes too much tax revenue away from the state budgets, it may simply be banned which may make its users panic and quickly sell their Bitcoin. In my opinion, there is no escape from state-controlled currency.
ReplyDeleteI even heard rumors that Bitcoin's 'investors' get with touch with each other and sell a lot of Bitcoin at once to lower its price. Then they buy back even more, but they're paying lower prices.
Delete1. Yes I do think that the bitcoin is the new financial bubble. I think its extremely risky to invest in that cryptocurrency. It is really unstable and You can lose a fortune within hours.
ReplyDelete2. I definitely would not invest in it. Too much risk. Besides that in order to invest in Bitcoin right now, You would need to have a lot of money.
Totally agree with you. Thanks for comment.
DeleteI think that Bitcoin is very interesting thing. It could be the next financial bubble. The times are changing. Civilization goes forward. Every day brings new possibilities. 20 years ago some things were not tipical that they are nowadays. For example it wasn't popular to pay by credit card. The same is with Bitcoin. It becomes popular and known every day. That's not wird that some investors or developers are using it. But it's still very risky to invest in it. The prize of bitcoin is not constant. It's changing. So there is no possibility to predict it. The same is with possible corrupiton or dishonest actions. You can't predict it to. This things could happend or could not exist. That's why investing in Bitcoin is difficult topic for me. I like constant things. It's not.
ReplyDeleteOh, I'm careful with Bitcoin. This could be the financial bubble, I'm a pretty cautious person and I'm skeptical about such solutions. Maybe, if I had totally free cash then I would try a small amount. However, at this moment I will watch as Bitcoin continues to evolve.
ReplyDeleteI still look a little sad in the past when bitcoin was worth 6$ and I was wondering
ReplyDeletewith friend if we should buy some. Now its more risky. Or maybe more expensive.
Cheers
Unfortunately I know almost nothing about Bitcoin and cryptocurrencies (I wasn't even aware that such term exists). From what you've written one can tell it's really risky to invest in and I wouldn't on Earth do that. Seems like a complete financial bubble, but who knows - only time will tell what's it going to evolve into.
ReplyDeleteEvery new ideas and trends can be intrested but for me this is abstract.
ReplyDeleteI have a problem with my daily budget. I don't remember about payment for bills... And i never know how many i have and how much i needs until the end of the month...
Bitcoin it isn't for me