Bitcoin isn’t new anymore, but the mainstream world seems to be catching up for the very first time. The timing is strange. Even after the cryptocurrency tops its price week after week after week, people are just Googling “how to get Bitcoin” for the first time. The savvy know that since its inception, Bitcoin’s price has doubled time and time again. If you had bought even a couple of Bitcoins two years ago, you would have seen an incredible return on your money today, with BTC trading around $2500 each.
The average person does not have $2500 sitting around to by a single stinking Bitcoin. And the question remains, is there still growth potential? You see, few people really understand the complex forces that go into the uptake of Bitcoin. It’s related to privacy, international politics, and complex economic forces. With a finite amount of Bitcoin in the market (by design), it’s conceivable that the sky really is the limit. But is that a likely enough outcome to warrant investing in?
Yours truly has only ever used Bitcoin to make purchases – never as an speculative investment form. Even so, owning any amount of BTC in recent years has been profitable, even if the currency sat in your wallet for a couple of weeks. Still, with the currency soaring at heights no one ever expected before, I don’t think I’ll be trying to hitch my wagon to its star. Fortunately this is not our only option.
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There are many cryptocurrencies. Most of them are based on the same formula that Bitcoin’s brilliant creator came up with. He theorized, basically, that currency is based on trust and usage, not on its inherent value. Like the USD is no longer based on gold, Bitcoin has no fundamental inherent value either. What makes it (and the USD) work is trust and scarcity. People trust that the United States is strong, so they use its currency. There is only so much money in the country, so each denomination of national wealth has a natural value, more or less.
The same is true for cryptocurrencies. People trust them because they are decentralized, not based on the economics of any specific nation. They are also mined. Bitcoins are “extracted” from a complex computer code that only gets more difficult to crack the farther along the world’s data miners dig. It’s a limited resource, which is a key aspect of its value.
Alternative cryptocurrencies like Ethereum and Litecoin are also seeing meteoric price gains. Both of these have slightly different advantages and disadvantages, but it’s easy to see that their growth has mirrored Bitcoin’s almost completely.
If you’re interested in getting into cryptocurrencies as an investment medium, consider BTC for its ubiquity and stability, and alternatives like Ethereum and Litecoin for their growth potential. People will continue to make lots of money on cryptocurrencies, though I certainly can’t tell you where, exactly, to put your money. As always, do your own due diligence, but my instinct is that we haven’t reached the ceiling yet for cryptocurrency value.