It may seem like a digital currency is still eons away, but the truth is, it has already been adopted by many businesses and used for a number of different transactions.
The Bitcoin is the talk of the town, and everybody wants a piece of the action. However, is it a wise decision to invest in this volatile currency? Should you include this investment in your retirement portfolio?
The Bitcoin is used in two different contexts, the first as a currency and a means for transaction and the second as an investment opportunity. However it is important to note, that without the mainstream use of the Bitcoin, it will essentially become a worthless investment.
Pros
One of the most important pieces of information that can be given to an investor is that diversification is key. While it may not be a wise move to put all your stakes on the new cryptocurrency, it won’t be too reckless if you invested a smaller percentage.
The Bitcoin has soared over the last two years. In 2012 each Bitcoin was valued at $5.48, this year it has been valued over $1,000 per coin. While a number of analysts do not think the currency will withstand the test of time, many others suggest that its upward trend over the last few years indicate otherwise.
Though many may be hesitant to invest in a currency that is purely digital, it is important to consider that many nations have already digitized the majority of their currencies. For example, as of July 2013 approximately $10.5 circulated the globe, of this total sum only $1.2 trillion have physical form. The rest, which happens to be the majority, is essentially digital currency.
Seeing how many transactions are already taking place over the internet, Bitcoin supporters feel that the future will only hold digital currency and without any governments regulating the Bitcoin, they believe that people will favour using the Bitcoin over other currencies.
Cons
While the above may seem like a tempting incentive to looking into investing right away, it is important to note there are a few reasons to think twice.
As mentioned, this January the Bitcoin reached a high of $1,040. However, in the first week of the month alone, the currency bounced back and forth slumping down to $800.
It is a very volatile market, however lucrative the rewards may seem, it is important to note that the investment could go both ways.
While some economists predict that in the near future the Bitcoin may reach $98,500 each, others predict that by the middle of 2014, it may fall fast and hard back down to $10 per coin.
Though the future of this currency is still uncertain, it is definitely something that should be explored as it may turn out to be a rewarding investment opportunity.
