If you’re tempted to invest Bitcoin?

My first time in early 2017 due to happen in the past few months cryptocurrency wrote an article on Bitcoin, we expiration date.

For some perspective, let’s look at the original first paragraph

“If you have been concerned about the price of Bitcoin lately, you already know that they have made record run as of this writing, I: I from March 2017 list of Bitcoin worth nearly $ 1300, more than one ounce of gold to put things in perspective, a bit currency at $ 300. – $ 400 range of large part-time 2015 “

as of this writing, the Bitcoin price exceeded $ 11,500 – which is nearly 10 times higher than earlier this year. Those who (even in March 2017) Investment Bitcoin years ago may Rejoicing. However, you should join them? Read on to learn more about Bitcoin, how it works, and why this investment may be worth skipping, despite its high returns.

What is Bitcoin?

In general, Bitcoin uses cryptocurrency by global online companies and large enterprises. The biggest advantage is that a bitcoin currency can be easily across borders – to promote international trade.

For the purpose of investment, credit bits is similar to any other currency (or product) of the investment. This means that when it comes to your return on investment, Bitcoin face the same uphill battle as an investment:

Gold

Agricultural

Art

Oil

In other words, at any given time, Bitcoin is whether the market is worth watt Ortega said. While this in itself is not a problem, investment Bitcoin does bring some special challenges. Sexy investment in sound Bitcoin – despite the recent run-up price – there are at least two fundamental problems with the investment now Bitcoin:

Question 1: you lose money inflated (negative real statements)

When you’re in a bitCurrency (or gold, or oil, or other goods, or any other currency or art) investment, you are betting on the price appreciation of individual farms. Or, you bet Bitcoin prices will rise compared with the dollar. This means that Bitcoin is different, like stocks, bonds and real estate more traditional investments. This is because the traditional investment provides the opportunity to generate cash Ë day.

As an example, a slice stock business ownership. Companies exist to make a profit. As the owner of the enterprise, you are entitled to the profits of a slice.

That profits may be reinvested in the business (to increase the value of the business) or paid to investors as dividends. Either way, the cash generated by the stock – final wealthy and those who have a stake.

The same applies to the real key. Bonds spit out cash (usually twice a year). With bonds, you (usually) get back your original investment, plus interest.

The same applies to real estate. Rent price appreciation (or depreciate). But, either way, the goal of rental property investors to generate cash and presence – over the cash, and icy cost to maintain the property.

Unfortunately, this is not a bit of money, gold, “foreign exchange,” the case of goods or art. These types of investments will not generate cash. Instead, investors can only hope that the price of their appreciation and inflation. Comparing

Stocks, bonds and commodities performance and expanded.

Not only to the inflation rate appreciation of your investment, but it must also go beyond the inflation and to compensate for transaction costs. Believe me when I say this is difficult to achieve. Most commodities rise in inflation. In addition, there is no money to speak of and increase in value – because that’s what inflation – decrease the value of money!

On average, economie trumpet growth. Growing economy can increase demand for goods and services. This may lead to the above-mentioned goods and services, in order to raise prices. In addition, the entity issuing currency usually can “print” more money. This devaluation of the currency, the need for more of the same currency is required for the same goods or services

These two factors – a growing economy and print more money – can cause swelling. Thus, inCurrency investments, by their nature, should not be able to grow with inflation. Therefore, not only you, because inflationary monetary investments lose money, but you also lose the investment / spreads from the bid – purchase price into a different currency

Is almost equal to the rate of return of goods the inflation rate in the past year, but before expenses.

Bits where bits credits PRO credits will indeed make the growth of the inflator. Bitcoin proponents claim, it is a “deflationary currency.” So far, this will be the case. Of course, only a very short timetable, since Bitcoin has occurred, it can be difficult to make a clear under such circumstances. This is unlike shares, which have existed for centuries.

In short, Bitcoin and similar investments is at a big disadvantage when it comes to investment returns generated. Bitcoin does not generate cash like stocks, bonds and real estate leasing do – they have never been able to keep pace with inflation even greater challenge!

Question 2: mean reversion

Regression to the mean is a fancy way of saying: What rises must come d own – and vice versa.

All investments by the mean response, and no exception bit credits. Regression to the mean in itself not a bad thing, but it is still worth mentioning when it comes to investment in Bitcoin, in particular, yes.

As mentioned above and, as shown in the figure commodities provided almost inflation return on investment – before costs. In addition, the return on investment in commodity-dependent price appreciation provided separately. This is because the product does not generate cash.

So, if you get the return on investment from Bitcoin, you do not want to buy at the top of the market. However, the recent price run-ups suggest that it may be our top Bitcoin market – or, at least in the way

Expert Tip: The vest is only so much money, you can stand to lose

Try thinking in Bitcoin investment, you’ll buy a ticket. Only spend a dollar, but you can win big. However, as shown in the history of the commodity, the odds are good that you want to lose money, compared with the low-cost, diversified investment. When

OfHou In most cases, you will be much better, if you choose a long-term investment strategy, it is not so evaporate. You should also diversify, as you can; so that if a particular investment falls apart you will not lose your shirt.

If you choose to put your money into Bitcoin, although this proposal, just know that you do so at your peril. The best thing you can do is limit the amount of your investment, you can afford to lose, day grace courage to face a long and bumpy journey. Cryptocurrency

On a final warning: Beware of security vulnerabilities

Yes, Bitcoin is a volatile investment, it could quite possibly be a bubble. For this reason, you can maximize the return on investment (all?) Is missing. However, in addition to all the reasons Bitcoin is, the investment is a risk (ie volatility) risky investment, Bitcoin and other cryptocurrencies additional security challenges from traditional investments (such as plain vanilla stocks and bonds) do not suffer.

In contrast, the value of your principal is usually lower investment risk, cryptocurrencies, you can completely lose your password assets. In addition to price volatility, investors in the asset encryption has lost money because: