Bitcoin is the leading digital currency created in 2008 in response to the instability of the traditional global banking system.
In 2009 the global credit markets restricted lending to companies and individuals with strong credit profiles. The lack of access to credit caused the global economy to slide into a deep recession. Bitcoin was designed to allow a decentralized form of currency not controlled by a single country or government to compete with paper money.
In the past 13 years Bitcoin has significantly increased in value and acceptance while paper dollars have declined in value. Holders of Bitcoin are able to exchange the “Cryptocurrency” for goods and services in a world not restricted by local currencies and governments. The internet allows transactions to occur from one trusted source to another. Governments are beginning to track this activity and are attempting to figure out how to tax these transactions.
Should You Invest in Bitcoin?
Banks and brokerage firms are beginning to allow their clients to maintain “Cryptocurrency” accounts within the bank. JP Morgan Chase has provided a level of credibility and access that suggests Cryptos are here to stay. An investor’s appetite for this young cutting edge currency must allow for the volatile swings in value as the user base grows and vendors increase acceptance. In January 2020 Bitcoin was valued at approximately $6000USD per coin. Today that same coin is worth approximately $50,000USD. As governments around the world print more paper dollars backed only by government guarantees, it is widely assumed the next round of inflation will have a negative impact on those who store their net worth in paper dollars.
In the past 24 months the US Treasury has printed approximately $7 Trillion Dollars and injected those dollars into our banking system in an effort to stimulate lending. It is the best way to avoid recession with the tools available. Bitcoin is like real estate in one regard: there will not be any more coins created so the value vs. paper dollars should appreciate over time.
Bitcoin is not the only digital currency; others include Litecoin, Polkadot, Stellar and Chainlink to name a few. There are ways to invest in crypto currencies that allow an investor to diversify risk. Electronically Traded Funds (ETFs) are beginning to appear on the NYSE and the NASDAQ. With some practical knowledge and direction from your broker or banker an investor can begin to invest with a higher degree of safety and confidence. As our governments around the world continue to print paper dollars now may be a good time to learn about Bitcoin and begin to invest. In the past gold would provide the best hedge against inflation but today add Bitcoin to your array of options to invest!
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