2017 was the year when cryptocurrencies became mainstream. Bitcoin lead the race and went from trading for under $1,000 in January 2017 to an all-time high of over $20,000 in December 2017. Now everybody seems to be talking about Bitcoin, with mainstream media running nonstop sensational stories on the subject. It is obvious to me that they don’t have an idea what they are talking about. To get relevant information about cryptocurrencies, you simply can’t rely on sources like CNN or CNBC.
In this article, I will give you some basic information that will point you in the right direction. I discuss this from an investment perspective and will not go into the technical aspects. If you want to learn about blockchain technology (and you should), there are many sources available online.
Here are a few things you need to know before investing in cryptocurrencies…
1. If Bitcoin Crashes, It’s Not Because It’s A Bubble
Can Bitcoin go up to $1 million? Will Bitcoin crash down to $500? These common questions are impossible to answer. Instead, let’s have a look at some facts.
Bitcoin is not a tulip. The tulip bulb bubble is one of the most well-known market bubbles of all times. It occurred in Holland during the early 1600s. Speculation drove prices on tulip bulbs to astronomical levels. Quite often, you hear comparisons between Bitcoin and the Tulip Bulb Bubble in the media. This is not a relevant comparison, because while there was an unlimited supply of tulips, the supply of Bitcoin will always be limited to 21 million coins.
If Bitcoin goes down, it will probably happen because something better comes along. What will happen if the Swiss government decides to launch a SwissCoin, for instance? It could be backed by gold and anonymity would be 100 ...
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