Bitcoin may be worth another look now that the bubble’s burst and its price has settled down, an article in the Financial Post said.
It added that the Bitcoin network has worked for 10 years without interruption has more than 32 million wallet addresses and is adding hundreds of thousands of new holders per month. With the bubble burst, and what appears to be the end of the so-called Crypto Winter pricing decline, now may be the time for investors to do some research into how to add this new asset class to their portfolios in a prudent manner.
Bitcoin is a cryptocurrency; it is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries
“We all know now that the cryptocurrency bubble burst last year, with the price of BTC, which briefly peaked at more than US$19,000 near the end of 2017, bottoming out at a little less than US$3,200 12 months later. With prices back above US$10,000, the question for many now is whether Bitcoin is more like the Amazon.com Inc. of this era or another Pets.com.” Arthur Salzer said in a special article for the FP.
He added that the truth is that Bitcoin is open-source software and is more akin to the internet, so it’s a mistake to compare it to a company or a stock and that the chairman of the U.S. Securities and Exchange Commission has publicly said Bitcoin is not a security,
From a user perspective, Bitcoin has been compared to digital gold, in that it is global, immutable and a store of value. This latter characteristic of preserving the value of one’s savings against inflation is why people invest in asset classes such as gold, real estate and, to a degree, public stocks. But Bitcoin is an asset class that is uncorrelated to these other asset classes, so it can provide diversification and the potential to improve portfolio returns for a given level of volatility.
Investors can purchase and have custody directly through hot wallets, which are connected to the internet, making the funds highly accessible, but more vulnerable to phishing or hacking. Alternatively, cold, or paper wallets, are not connected to the internet and are, therefore, highly secure, albeit the funds are less accessible, he said describing Bitcoins characteristics.
However, a savvy investor should be leery of holding Bitcoin as a long-term investment at an exchange since there have been reports of hacks at various exchanges across the world.
For example, there have been hacks of exchanges such as Mt. Gox as well as a recent scandal involving QuadrigaCX, a Canadian crypto exchange currently in creditor protection due to what could be fraud or the operation of a fractional reserve system.
So if you are looking for a new venture that comes with risks and thrills, then investing in Bitcoin could be your thing.