Since the creation of cryptocurrencies, there has been certain controversy around Bitcoin investment. Throughout 2014 a great deal of venture-capital investments have been made into businesses associated with Bitcoins. Simultaneously, with the price fluctuation of this digital currency Bitcoin investors have been imposed with little room in the event of fraud and theft, especially after the fall of the Bitcoin exchange Mt. Gox.
Nevertheless, according to numerous specialists from various Bitcoin investment funds, this virtual currency is the highest-risk, highest return investment out there. Experts believe that either Bitcoin is going to become the global currency, the world’s payment system, the universal money transfer network and an absolute determinant of value, or not.
Bitcoin investment involving purchasing and hoarding is very different from the standard investment in a capitalistic entity. Bitcoin itself simply embodies potential, rather than a corporation, business strategy and the board of directors. With this comes the risk and the vulnerability. As any other investment, Bitcoin investing requires knowledge and skill. Investors must follow the major rule — don’t invest what you can’t afford to loose.
CoinDesk’s statistics show that in the beginning of 2013 the price of Bitcoin was approximately $13 and the same time the next year it estimated $700. Mark T. Williams, a banking and risk management expert and a professor at the Boston University School of Management, says that Bitcoin is 7 times riskier than gold, 8 times riskier than the S&P 500 (the Standard & Poor’s 500, a stock market index based on the market capitalisation of 500 large companies) and 15 times riskier than the fiat currencies.
Although, some investors feel uncomfortable with the purely virtual nature of Bitcoins, its major upside — decentralisation — appeals to many, who have come across raging governments willing to control fiat currencies. Bitcoin’s movement cannot be restricted making it powerful and highly potential. Of course, this does not fascinate governmental authorities in different countries, namely the United States. Several alerts from the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the North American Securities Administrators Association (NASAA) have been made in 2013. They have been warning about the risks of investing in Bitcoins and other virtual currencies (Peercoin, Dogecoin, and Minacoin), alerting about pyramid schemes and adding digital currencies to the list of top 10 investor threats. However, many Wall Street investors express their certainty, excitement and comfort with the risk perspectives that the Bitcoins bring.
Currently, when it comes to Bitcoins investment, the crypto community relies on a number of Bitcoin exchanges that have proven their trustworthiness and maintain a good reputation via quality service, high-level security and helpful support. CEX.IO, BitStamp, CoinBase and others are definitely among them.
Time will tell whether Bitcoin investment is a safe haven or a Russian roulette, but we do trust in crypto, don’t we?