I thought that it is good idea to record how I research and learn from Bitcoin and Cryptocurrency.
What is What’s a cryptocurrency?
A cryptocurrency is a digital asset stored on blockchain technology that serves as a type of currency or store of value. Unlike traditional currencies, cryptocurrencies aren’t backed by major governments or developed economies. This decentralisation means that blockchain technology validates these digital transactions without oversight or intermediaries. While cryptocurrencies are generally meant to serve as a medium of exchange, much of the attention they receive is as a financial investment.
Technology
Cryptocurrencies are stored and transferred on an online ledger known as blockchain, which is distributed on a peer-to-peer network. These ledgers are public and once transactions are recorded, they can’t be changed. Blockchain technology offers key benefits such as accuracy, transparency, and speed.
What famous investors think of Bitcoin
Warren Buffet
The billionaire investor doesn’t like Bitcoin because he considers it an unproductive asset. Buffett has a well-known preference for stocks of corporations whose value — and cash flow — come from producing things. But cryptocurrencies don’t have real value, Buffett said in a CNBC interview in 2020
Bill Gate:
In an interview with Bloomberg Television, Gates commented that “Elon has tons of money and he’s very sophisticated, so I don’t worry that his Bitcoin will sort of randomly go up or down.” However, while the Microsoft founder made clear that he wasn’t concerned that Musk’s fortunes would rise or fall with the cryptocurrency, he did warn others who might be considering a large investment in the virtual coin.
“I do think people get bought into these manias who may not have as much money to spare,” Gates said. “My general thought would be that if you have less money than Elon, you should probably watch out.”
Cryptocurrency risk
News such as first EFT Cryptocurrency will help cryptocurrency hit the roof and the value comes volatility. It really encourage people to do short term trading such as impulsive buying and selling
Risk without reward. Unlike stocks and bonds, cryptocurrencies don’t pay dividends or cash payments, and therefore don’t offer any intrinsic value for the sizable amount of risk the investor takes on.
Who’s in charge here? Cryptocurrencies are largely unregulated, without the backing of major governments or economies. This lack of regulation makes it unlikely that cryptocurrencies will be able to achieve the value and quality of other currencies. Additionally, the anonymity of the digital transactions lends them to possible illegal activity.
Cybersecurity scares. Cryptocurrency exchanges are subject to breaches, disruptions, and failures that can jeopardise investors and their personal information. Since cryptocurrencies aren’t currently backed by any major governments, investors are unlikely to recover lost funds.
What I learn and thoughts about Bitcoin
From learning process, I still have some mainly concern for the following questions.
1, Cryptocurrency only exist in digital world and how can you value Cryptocurrency such as Bitcoin?
If you can not value it and the price just speculation and perceive value. Because it is not created any products or service such as company. You can only assume next investor will pay more than you paid for Bitcoin.
2, They said that Bitcoin is limited supply. This is one reason the price is keep going to increase. Because it is limited and will finish one day.
3, For Cryptocurrency, the main source of value lies in its restricted supply and increasing demand. The investor will wish to hold Cryptocurrency longer enough till the next investors pay for high price to gain it.
4, Is bitcoin create value? For example, if you buy share, you are not investing in digital value and you invest in business. It is business which created product and service. For example, Apple company and it create apple watch, iPad and different kinds of products each year. Because Apple users has great attachment with Apple products. It is one of reason why Apple can keep going to have great value.
Apple also great moat and it will hard for another company to copy it.
5, From my point of view, Crypto has perceived value. It is not tangible. It largely depends on what next people will pay for the coin.
This made me to think about the Californian Gold Rush.
“The output of gold rose from $5 million in 1848 to $40 million in 1849 and $55 million in 1851. However, only a minority of miners made much money from the Californian Gold Rush. It was much more common for people to become wealthy by providing the miners with over-priced food, supplies and services. Sam Brannan was the great beneficiary of this new found wealth. Prices increased rapidly and during this period his store had a turnover of $150,000 a month (almost $4 million in today’s money).”
After some consideration, I invested small amount money in ETF BetaShares Crypto Innovators ETF. It is not my core ETF holding and quite specified. But I regarded it as long term investment as supplement of Crypto. I will introduce this in my next blog post in ETF. This ETF never invest in Crypto. But it invested in all service and chainblock and trading App about Bitcoin. It sorts like service in Golden Rush. Only time can prove this interesting period.
Reference: https://spartacus-educational.com/
https://www.fool.com/the-ascent/cryptocurrency/articles/why-warren-buffett-is-so-against-bitcoin/
https://www.investopedia.com/ask/answers/100314/why-do-bitcoins-have-value.asp
https://www.vanguard.com.au/personal/education-centre/en/insights-article/cryptocurrencies-and-vanguard?cmpgn=ET1121AUBANME0002ENEMENE
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