What is Bitcoin and should I own some?
Bitcoin is the first of many cryptocurrencies that were developed in recent years. Cryptocurrencies are a digital currency that exist online and can be exchanged with others without the use of an intermediary such as a bank. Bitcoin was designed in a way that assures transactions are valid and accurate, and has proven to be an extremely reliable medium of exchange.
The question of whether to own Bitcoin is a complicated one. Some people feel Bitcoin is worthless while others believe it’s the future world currency and will go to $1,000,000 per coin. I believe we’re moving towards a world where cryptocurrencies and fiat currencies (such as the US dollar) will coexist for some time. I think we are a long way from fiat currencies being replaced altogether.
I recommend asking yourself these questions before deciding to buy Bitcoin;
Do you understand Bitcoin? Never invest in something you don’t understand, and Bitcoin is REALLY hard to understand. Mining, node operators and software code are some of the many things you will need to learn.
Are you chasing performance? Never chase performance. This is when you see an investment going up and want to ride the wave. Also known as Fear of Missing Out (FOMO).
Do you understand the risks to its value including the political risks? China recently banned cryptocurrency mining. Could that happen elsewhere? It’s possible.
I’m sure you want to know what I think. I’ve done my homework on all the questions above and I now own some Bitcoin, but not a lot. I understand the amount I have invested can go to zero, but I’ll be thrilled if it goes to the moon. At the end of the day there are too many variables to know for sure. Most importantly, I am not investing in Bitcoin at the detriment to my other financial goals, and I don’t think you should either.
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