With the emerging of any new financial instrument that disrupts the financial sector, it is prudent investing to hedge against potential volatility. In the case of Bitcoin and blockchain technology, it’s important to understand why people like PayPal’s Wences Casares and many other top financial sector elites are advocating investing in Bitcoin. Here is some information inspired by facts from BitcoinPlay.
Predictions And Advice For Investors
According to Casares, a director at PayPal, “the Internet doesn’t have a currency, and it desperately needs one,” and, “the biggest mistake [would] be to buy more Bitcoin than you could afford, and the biggest mistake is not to own any Bitcoin.” He then went on to say, “put 1% of your net worth in Bitcoin and forget about it for ten years”. When asked what he predicts in terms of BTC future valuation, he predicted each Bitcoin would hit a value of $1 million over the next ten years. We explore whether this is a sound investment strategy for the emerging crypto-currency sector.
Bitcoin As A Commodity
Bitcoin is a lot of things, and many would even call it a commodity. With any commodity, the price or value is usually tied directly with supply. In Bitcoin’s case, the supply is limited to 21 million Bitcoin, and as of September 2017, approximately 16.5 million BTC are in circulation already. The final Bitcoin is forecasted to be mined sometime by 2140, and over 17 million Bitcoin is expected to be in circulation over the next ten years. Why is this relevant you ask? Considering that 64% of Bitcoin has never been used and may never be used, Bitcoin is more limited than just about any commodity on earth.
Supply & Demand For Bitcoin
From an investors point of view, this means the commodity based on demand truly has an infinite potential. If a person is willing to pay for it, there are enough of those individuals on the market, and there is only a limit amount available, a Bitcoin really can potentially one day have a market value of 1 million dollars or even much more. That means, if someone is willing to pay x amount for it, then, that’s the value of the commodity.
Bitcoin hit an all-time high of 7000 dollars per BTC and has increased in value 10-fold at the least over the past year. That’s return on investment of 1000% and is driven by the fact that there is a true demand for BTC in the world market. A lot of that demand is based on people looking to get rich quick and hoping for quick and high returns. However, there is a segment of investors who use Bitcoin for a variety of reasons, including protecting anonymousness and privacy, keeping their capital hidden from governments and protecting them from unfair financial practices. This segment will exist as long as the capital markets are regulated and the demand from this sector of instruments, like Bitcoin, will likely only increase as the financial sector becomes more transparent and more digital.
Diversification Strategy
One strategy that has been employed by investors, bankers and the financial sector elite is the use of commodities to hedge against the market volatility. For example, if you own 90 dollars in stock and 10 dollars in gold, the potential loss of a stock crash would be offset by the extreme gains of gold as its history suggests. Similarly, if you were to own 1% of your net worth in Bitcoin, and somewhere down the road it’s worth a million, that’s great. If it doesn’t, and the markets remain the same, the other 99% of your portfolio should still be able to carry your investment goals forward.
Don’t Overexpose Your Portfolio
That being said, you should only invest, what you are willing to lose, in any one sector, and diversify to many independent sectors in order to protect a total loss. In the event of major market calamity, you should have the right mix of investment instruments, currencies, resources, real estate and commodities to ensure complete safety, regardless of the circumstances or possible circumstances. Investing in BTC simply adds another potential sector is diversifying your portfolio into a sector with a lot of potential for relatively small initial investment.
What Is The Minimum Investment
If many of us had invested a $100 early in the BTC global adoption, we would already have seen huge net worth gains. Some of us who got in really early would be multi-millionaires already, Today, at $7000USD a Bitcoin, the cost is high, but if you were to purchase say 1/20th of a BTC or even 1 millibitcoin (1/1000th) or 1 satoshi (1/100000000th) of a BTC, it’s still affordable, based on what your willing to invest. Therefore, any investment is better than none, and the longer you wait, the more potential capital will have to be risked to get the same returns.
1% Strategy Potential & Projections Case Study
If we were to take into consideration this strategy of investment and where to invest, say, 1% of our net worth in Bitcoin, what would be the net gain at a BTC price of 1 million? Assuming your net worth was 1 million dollars and you were to invest 10,000 dollars in BTC today, at the current market rate of 7000 per BTC, that would be 2 BTC total holding. If they were to mature to a 1 million value, the total portfolio holdings would be 2 million dollars. In ROI, that’s an increase of over 200% per year, representing a huge potential gain that far outpaces anything remotely similar in the markets today. That means a potential of increasing your entire net worth by 300% and only risking 1%.
From an investor’s point of view, this potential is incredible and can’t be ignored. The potential upside is enormous, and the downside of losing the 1% is relatively small. So, if you can afford to lose that 1%, it is a gamble that might just turn you into a millionaire sooner than anything else, investment-wise, that has been seen in history.
