3 Reasons to start investing in bitcoins right away
Irrespective of the plummeting bitcoin prices, bitcoin investment gurus seem to be unperturbed. The reasons for this confidence in bitcoin investments are many. Bitcoin has time and again shown us its resilience. The fact that bitcoin prices stay strong despite the hack in two major South Korean Exchanges is indicative of the fact that bitcoins are here to stay.
While investors dwell in bitcoin optimism, skeptics still continue to question the future of bitcoin investments. At a time when profound investors like Warren Buffett don’t even consider bitcoins to be a potential investment tool, it is not surprising that there have been polarised opinions on the reliability and plausibility of bitcoin investments. Moreover, other cryptocurrencies like ethereum and litecoin are making their way up in the investment world. And this has led to a slump in the popularity of bitcoins.
To add to that, the price of Bitcoin recently dropped to under $7000, which is a 10 percent drop and the lowest point the cryptocurrency has hit in two months.
It’s natural to get blinded by all the negative publicity on bitcoins around you. And this is where we would like to draw your attention to other factors that are good reasons for you to invest in bitcoins.
Bitcoins can be resilient
Bitcoins are unstoppable. Why? Take a look at what happened after the South Korean Exchange hack. Bitcoins made a stunning comeback. Firstly, whenever there is a hack in an exchange, people get scared and there is a drop in the bitcoin prices. As per Charlie Lee, the co-founder of Litecoin, there is a 5% drop in prices. Now when you calculate a 5% drop in the stock market it means a lot but in the crypto space, it doesn’t really amount to a lot in absolute values.
Other factors that can impact bitcoin prices are political unrest. Now we all know that political unrest is not known to be good for the stock market. But when it comes to bitcoin prices, it could actually be a favourable factor. Bitcoins are not backed by the government. And as per an article in Channel futures.com, the recent unrest in Asia contributed to the surge in bitcoin prices. Hence, you know that political instability can amount to a rise in bitcoin prices making it a worthy investment option for your financial profile.
Regulations could be a good thing for bitcoins
You may have come across a lot of blogs stating how the absence of regulations makes bitcoins an ideal choice for huge online transactions. But recently, many countries have tried to impose regulations on bitcoin trade. In Singapore, it is the Inland Revenue Authority of Singapore (IRAS) that has introduced tax guidelines for businesses that utilize the currency application of blockchain technology. This means that businesses that buy for long-term investment will enjoy tax-free capital gains on any profits made from the sale of digital currencies, as the IRAS applies no capital gains taxes in Singapore.
Regulations can help in providing that added sense of security for the conservative investor. Hence, regulations can at times be a good thing for boosting investments.
Possibility of exponentially high returns
Bitcoins prices are highly volatile and it is this volatility that gives investors the chance to garner high returns. From a few cents when it was introduced back in 2009, Bitcoins are now worth more than $7,000. And even though there is a slump in bitcoin prices, there is a possibility that the trends might change and bitcoin prices will gradually rise. When that happens, it will be the seasoned investors who will make maximum profits.
With all things in investment, one rule applies – high risk, high return. The risk is really the difference of opinions among large investors (e.g. Buffett versus Winklevoss) and the recent slump. But there’s one big difference between bitcoins and other investments. Bitcoins will only be mined until there are a total of 21 million bitcoins in the world. The creator of bitcoin has specially coded this into the system so that there is a maximum limit or a ‘hard cap’. What this means is that bitcoin will become a precious commodity – akin to gold. When all 21 million bitcoins will be mined, the value of each bitcoin will only start to grow. And that, dear investors, is the biggest reason to start investing in bitcoins right away!
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