Disclosure: This article is for information purposes only and should not be considered as investment or tax advice.
When any investment option skyrockets in price this question will always be asked: “Is it too late to buy?” In the cryptocurrency world this question has become increasingly prevalent, as many offerings have posted never before seen growth. The rapid price increases of Bitcoin and other tokens are fueled by several factors. Therefore, a decision is difficult to make.
An easy answer to give would be “both.” Depending on your reasons for purchasing Bitcoin, there are indicators supporting either decision. The environment is increasingly becoming accepted, there are plenty of headlines surrounding it, and the world’s population has lost faith in the established banking system.
The most important aspect of Bitcoin is blockchain technology. Mass adoption of Bitcoin would be driven by governments and multinational corporations realizing the value of this tech in regards to international trade. Many migrant workers discovered this long ago.
As a speculative investor looking for short-term returns, Bitcoin is still an option. Futures trading allows an investor to profit in a bear, flat, or bull market. However, as institutional investors become more involved it will be difficult to see returns as a DIY investor. Because of this, being plugged in to alt-coin news is probably a speculative investors best bet to make strong gains.
Bitcoin as a Currency
A believer in the widespread adoption of Bitcoin as a digital currency would say it is definitely not too late too purchase Bitcoin. According to one investment bank’s director, if Bitcoin was adopted as the main medium of international trade a single coin would be worth $1 million USD. As you can see in Figure 1, if Bitcoin was used to replace 100% of the estimated $10 trillion international exchange, it would need to be worth $476,190/coin. That’s roughly 50x the value of BTC at time of writing.
Of course, other cryptocurrencies are already beginning to fill this void. The projected valuation in the chart would really be the valuation of whatever coin international organizations adopted. Bitcoin, being the original, is well-known to the public, but alternative such as Ripple do exist.
This example excludes Bitcoin’s use in any other transaction. While a global estimate of the value of day-to-day transactions would be very difficult to make, it is clearly of an amount to push cryptocurrency prices even higher.
Bitcoin as “Gold”
For those investors that are committed to the cryptocurrency market as a whole, Bitcoin has often been viewed as the ‘gold standard.’ While comparing anything in the cryptocurrency market to the modern stability of gold is a stretch, there are reasons the view is appropriate. Bitcoin is the oldest form of cryptocurrency, it has the highest market cap, and it is the building block for the entirety of the cryptocurrency environment. These characteristics are all shared with gold and the traditional currency market. With most modern currencies not even being backed by gold or silver anymore, it is as if Bitcoin skipped that step in its evolution as an accepted store of value.
Bitcoin and blockchain technology as a whole most likely have a bright future ahead. Adoption into international trade appears to be the most lucrative path, but also the one with the most obstacles. Governments and central banks will not willingly give up control of the monetary system and major speculative investors will play turmoil with the price of cryptos in the near-term. The long term prospects offered by Bitcoin and other tokens are very real and should not be overlooked. However, a safer approach may be to choose traditional investments in organizations that release blockchain related technology. As always, the choice is yours.