Since its rapid rise from $100 to the $1,000+ levels, Bitcoins have started to pique the interest of traders across the globe.
Those who have bought early were glad that they did. Those who just discovered it are left wondering if it still holds any potential.
We explore Bitcoin Investing in this section.
But, first up let’s take a look at what everyone’s favourite investor thinks about it:
What Does Warren Buffet Have to Say About Bitcoins?
Warren Buffett is convinced that Bitcoins are not viable as a currency and won’t be surprised if they are not around in 10 or 20 years. It’s not a store of value and it’s been a very speculative instrument. He compares it to the Tulip bulb bubble which crashed a long time ago.
It would be interesting to see how the Bitcoins fare over time. However, Bitcoins are unlikely to be continue to grow without being regulated.
The government central banks of different countries would have to come together to create a framework as Bitcoins have the ability to transcend geographical boundaries.
Risks of Bitcoins
Now that we have our foundations covered, let’s look into the potential danger of bitcoins.
MAS has released their view on Bitcoins and Cryptocurrencies on Aug 2017. They are monitoring the scene, and will regulate cryptocurrencies if they are related to products that fall under the Securities and Futures Act (Cap. 289) (SFA).
One of the potential problems is for Bitcoins to be used for money laundering. Speculators have also targeted the Bitcoin, causing the price to fluctuate wildly.
Bitcoin wallets and exchanges have also been unstable and subject to hackers, the most famous one being the Mt Gox exchange which went bankrupt after coins disappeared.
One of the concerns raised in MAS’ press release, is the use of ICOs in money laundering and terrorist financing due to the anonymous nature of cryptocurrencies.
As a relatively new concept and investment tool, Bitcoins and cryptocurrencies in Singapore are still highly speculative.
Prices are highly volatile and is vulnerable to changes in the economy, countries policies against cryptocurrencies and much more.
As an investor, you will need to be able to stomach the volatility and risks. You should do your own due diligence and practice sound capital allocation.
As Bitcoins and Cryptocurrencies gain popularity for its rapid growth, we may see scams targeting the less informed appearing.
It is important to understand how Bitcoins and cryptocurrencies work, in order to avoid being a victim.
The Future of Bitcoins?
With both sides of the argument presented to you above, we move on to look at the potential future of Bitcoins in our current economy.
Would it be a viable investment tool for investors? Would it really be able to become the currency of the future? And, how else can investors manage Bitcoins in their portfolio?
Bitcoin As An Investment Tool
Bitcoin and cryptocurrency have gained traction this year. We’ve seen them scaling new heights as investors were bullish on its development.
As an investment, Bitcoin may not be as ‘undervalued’ as it was back in 2016.
As a currency, it is still unstable due to its extreme volatility.
As a trading tool, it seem to have just picked up interest amongst traders.
Trading platforms like IG and Thinkorswim have started to allow traders to trade Bitcoins through CFDs and Options too.
As with any investment, you will need to understand the vehicle that you are investing in, and know the risks that you are taking.
So…should I buy bitcoins now?
As a replacement to physical currencies, Bitcoin does have some way to go. Although certain merchants have already started to accept Bitcoin payments, they are still rarely used, and usually on used on an experimental basis.
As mentioned above, Bitcoin prices have been extremely volatile. This hardly gives anybody the confidence to use it as a currency.
It will be a long while before virtual currencies will become accepted in kopitiams, supermarkets and for MRT rides. Most merchants are accepting Bitcoins in pursuit of the novelty factor in marketing their brand.
Early adopters might want to purchase some Bitcoins and learn along the way.
As an investment, investors should put in a few more hours of work to understand the Bitcoin and cryptocurrency situation before deciding if they should be investing in it.