Bitcoins – Best Investment Opportunity
Bitcoins are digital cryptocurrency, a new technology and anyone who is aware of it has this question in mind – Why to invest in Bitcoins? One simple reason could be the past history which shows how the value of Bitcoin increased, how the transactions increased and how the whole technology is decentralised without the interference of any third party. However there is much more to it. Lets get into it and see the insights of Bitcoin to know it better and understand the potential opportunities to invest in Bitcoins.
Value of Bitcoin
Value of Bitcoin has gone up from hardly few cents in 2009 to around USD 539 (June 2016) in 7 years (2009 – 2016) which probably no other commodity or currency has escalated ever. Of course if something is for the masses, steep rise is inevitable but only if the masses accept it. This increase of price definitely shows that masses have accepted Bitcoin. This shows the “DEMAND” that has been created over the period. Hence the logic to invest in bitcoins.
Source : www.blockchain.info
2. Limited Supply :
We all know that Bitcoins cannot be ever created beyond 21 million. This creates a big limitation which will surge the value of Bitcoin as and when demand goes up. Demand is consistently going up due to more and more people using it, more and more merchants using it. Such limited supply will ensure that demand is always more than supply, hence making sense to invest in bitcoins.
It is deemed to be First Global Currency as it already has its presence over 180 countries across the globe. People are taking out their money from saving accounts and buying bitcoins just to ensure that their money doesnt go waste due to bank insolvency. In 2011-12 many Amercians did invest in bitcoins after taking out money from their saving account.
4.Major Investments :
Companies ranging from Goldman Sachs toAmerican Express, fromNasdaq to Kleiner Perkins all had decided to invest in bitcoins and as such been investing in Bitcoin Start ups and Venture Capital investments. These Venture Capital investments haved touched figure of USD 1.46 billion in 2012 to USD 5.75 billion in 2015. See herebelow some investments so far in 2016.
Bitcoin Venture Capital Investments
Bitcoin Venture Investments : Source : www.coindesk.com
Track of Transactions per day :
We can see here below graph showing number of transaction of Bitcoin taking place each day. As can be seen, the number of transactions is increasing day by day and over a period it has taken a steep rise indicating that demand for Bitcoin has been drastically increasing. Such increase in transactions also justifies our claim to invest in bitcoins.
Even as of today, survey tells that 50% of transactions happening are for the purpose of investments. By 2025 it is expected that 67% of transactions will be for purchase of products and services while only 33% will be for investments. This information might be futuristic but the graph above is for past actual data and it clearly indicates that since July’12 the demand has been drastically increasing resulting in more transactions and steep increase in prices. More transactions, more demand of course call for more to invest in Bitcoins.
Market Capitalisation of Bitcoins:
As we speak, Bitcoin has market capitalization of over 9 billion USD. This is a significant figure considering the kind of price it reached over a small period of time. Total number of people possessing Bitcoin is hardly 2-3 million. This shows the potential of Bitcoins that they can reach. Bitcoins can siphon market share of Gold which runs into trillions of USD. Recent surge in bitcoin prices (25th May to 5th June) was due to Chinese investing in Bitcoin on hearing news of Yuan devaluation. Around 80% of transaction that took place resulting in surge of Bitcoin prices were in Yuan (hence from China)
Manipulation of Currency – next to impossible:
With Bitcoins you cannot manipulate market price, nor manipulate a transaction. A transaction once done, cannot be reversed. There is no middle man like Banks or Financial Institutions who can influence the market, prices or even regulate transaction. Hence Bitcoin transactions are clean, fast, cheap, transparent and non-reversible. When you invest in Bitcoins, you are assured that you will not be cheated. All you need to be careful about is sending bitcoin to right wallet addresss. Similarly you need to be careful in giving your wallet address whenever yo have to receive bitcoins.
More and More Merchants will start accepting Bitcoins:
At present there are very few stores who directly accepts Bitcoins as mode of payment. There are indirect ways such as buying an Amazon gift card from egifter.com with bitcoins and then to use the amazon gift card to purchase anything from Amazon. The day every online store and brick & mortar stores start accepting bitcoins from direct customers, it will be a revolution. According to one survey by Goldman Sachs and the Electronic Trasactions Association, only 2% of merchants are accepting Bitcoin currently. However the survey says, another 25% will start accepting in next two years. It is estimated that in terms of absolute figures, 160,000 merchants are already accepting Bitcoin but by 2017, this number will reach 1.8 million.
Some efforts in this direction is being done by exchanges in different countries. For example in India Unocoin exchange has tied up with Mobikwik mobile wallet company. Now Mobikwik wallet can be topped up with Bitcoins. Mobikwik is asssociated with all top end online stores and many brick and mortar stores. See my earlier post :What you can buy with Bitcoins in India
According to Wences Casares, CEO of Xapo, a Bitcoin exchange, most of the users of Bitcoins in US and other developed countries are only holding Bitcoins as an investment. Whereas users of Bitcoins in developing countries, where Bitcoin is still emerging, people are using Bitcoins in their day to day transactions. They are paying with Bitcoins and this volume is quite high and growing.
9.Bitcoin has advantage over other digital currencies:
Bitcoin has gained too much popularity and there is no comparison with other digital currencies. That is why the difference between value of a Bitcoin and any other currency is very high. Major difference that has given Bitcoin an edge over all other digital currencies is the fact that Bitcoin is decentralised. There is no agency or government controlling Bitcoins. All other digital currencies are associated with some owner or group. Decentralisation of Bitcoins makes possessors of Bitcoins feel safe and sound. They don’t have to be dependent on any third party or agency while transferring their Bitcoins. Nor do they have to pay large transaction fees. They are also protected against Bank Insolvency.
It is because of decentralisation of Bitcoin, that no country can say it is their currency, no matter where the Bitcoins have been mined. As such Bitcoin is called global currency since it doesn’t belong to any one country. So if you invest in Bitcoins, you are not investing in any foreign currency.
Govt Regulations so far Positive:
This is a big question in everyone’s mind since for any country, its government’s regulation on digital currencies could have an impact on use of that currency in the respective country. So far Bitcoins are getting positive response in US and European Countries.
In US International Revenue Service is considering Bitcoins as Property for tax purposes. Commodities Future Trading Commission is considering Bitcoins as a Commodity. There are already so many Bitcoin exchanges like Coinbase, BitPay, Xapo and Circle which are running smoothly and people are having no problems in transacting with Bitcoins. Several ATMs have also opened in US facilitating conversion of Bitcoins into USD and vice versa.
Similarly in Europe, there are so many Exchanges in different countries, most important of which is Bitstamp, which recently got permission to trade across Europe. Besides Europeans had a reason so far as Bitcoin is exempted from VAT (Value Added Tax). France Govt is considering to declare Bitcoin as a currency. If they do so, then income from Bitcoin will be taxable but then Bitcoin will have full fledge currency recognition.
In Australia, Govt considers Bitcoin as a property. As such all purchases made from Bitcoins are considered to be Barter. The Govt has also released tax guidelines for individuals and businesses using Bitcoins.
In many countries like China, Financial institutions and banks are banned from trading in Bitcoin. However private parties can trade in Bitcoin.
In India, Govt is still observing. Reserve Bank of India is not regulating Bitcoins. Income through sale of bitcoins comes under capital gains. Govt doesn’t allow payments to come from overseas in Bitcoins.
Very small percentage across the world trading in Bitcoins so far. Huge Potential on the way :
Considering all the advantages of trading in Bitcoin, we are still at the beginning era of this unique currency, deemed to be Global Currency of the Future. More countries are yet to be exposed to Bitcoin awareness, Trillions of consumers across the globe are yet to start purchasing Bitcoins and using them. The statistics shows that all this is going on in positive direction which itself means a clear BUY for this digital currency as a long term investment.
Financial Charts :
You can see gradual increase in prices starting from USD 230 in May’15 reaching to USD 579.19 in June’16. This is the potential of Bitcoins. It is soon expected to reach USD 650 levels. Halving is expected in July this year. It is due to this halving that we see steep rise at the end of May and start of June period. After halving in July, only 1800 bitcoins will be produced per day for next 4 years. Considering these facts, again it’s a clear BUY from investments point of view. Those who invest in Bitcoins, knows that this is the future of currency. You just keep holding it and you get appreciation over time.