Bitcoin price is rising!
Bitcoin? Bitcoin! BITCOIN!!! The cryptocurrency is currently experiencing a high. For the first time in its history, bitcoin has even surpassed the 50,000 US dollar mark. Here you can find all BTC exchanges. Is an investment worthwhile?
The Bitcoin is currently causing heart palpitations for many. For weeks, the price of the cryptocurrency seems to know only one direction – upwards. This development was fueled by Tesla CEO Elon Musk, among others. He had announced that he would invest in Bitcoin with his company and accept the digital currency as a means of payment in the future.
Investors who bought Bitcoin at the beginning of the year can now look forward to tidy profits. But is bitcoin really a good investment? Can you get rich overnight with it? Or at least build up wealth in the long term? Experts do not really agree on these questions.
Asset class yes or no?
Opinions already differ on the question of whether Bitcoin and Co. are an asset class in their own right, like stocks, commodities or real estate. “We would not yet speak of a separate, established asset class for cryptocurrencies,” says Nicolas Pilz.
“Government acceptance and a certain degree of regulation are still lacking for this.” There are dedicated exchanges, trading and I can exchange it for real currencies. However, it lacks intrinsic value.” And Stephan Witt of Finum Private Finance AG says, “Cryptocurrencies are an asset class in their own right. “Even banks and commercial enterprises are now using and investing in this asset class.”
Broad masses are still skeptical
Private investors, however, are still quite skeptical. Just two percent of over-16s in Germany have invested in Bitcoin or other cryptocurrencies so far, a survey by IT association Bitkom shows. Around one in five (18 percent) can at least imagine doing so in the future.
The large remainder, however, would like to continue to steer clear of Bitcoin and Co. “Cryptocurrencies are an object of speculation,” says Prof. Hartmut Walz, a behavioral economist at the University of Applied Sciences Ludwigshafen am Rhein.
Walz does not want to speak of a currency here yet. “It’s more of a store of value.” Similar to gold, the supply is limited. High demand therefore determines the price. The amount of private investors and traders is increasing nevertheless, one reason for this might be automatic trading software mentioned at this site.
Are cryptocurrencies the new commodities?
So is bitcoin the new gold? No, thinks Markus Richert, because a Bitcoin has no intrinsic value. “Gold is also used, at least to a certain extent, as a raw material in industry.” Thus, at least a base value can be derived, he says. “A Bitcoin is a pure combination of numbers with no real use, replaceable at any time by another cryptocurrency.” Marcel Uhlmann, project manager for cryptocurrencies at V-Bank, sees it differently: “Gold has been used as a store of value for centuries because it is very rare and cannot be multiplied at will. These characteristics apply just as much to bitcoin.” Unlike the precious metal, Bitcoin can even be divided at will and sent easily, he said. “Bitcoin is therefore the better “new gold” for many. I personally can only agree here.”
Usage of Bitcoin
Despite the news of main stream media, that btc isn`t used at all at the moment, there are in fact many sectors where BTC is used quite often. For example in the sports betting industry, 2021 will be a great year for many bookmaker. You can read more about it here.
Bitcoin increases volatility in the portfolio
Prof. Monika Gehde-Trapp, an expert in risk management at the University of Hohenheim, has tried to approach this question scientifically. Her approach: is bitcoin something like a safe haven in a diversified portfolio – similar to gold? The sobering answer: no, it is not. On the contrary. In model calculations, Prof. Gehde-Trapp and her team showed that an investment in Bitcoin actually increases the volatility – i.e. the fluctuation in value – in the portfolio. With a Bitcoin share of ten percent in an otherwise pure Dax portfolio, the loss measure already increased by five percent. With a Bitcoin share of 20 percent, it increased by another 15 percent. “The recent rise in bitcoin has not made much difference to these results.”
Investment remains more speculation
For long-term wealth accumulation, bitcoin is currently still risky, many investment experts think. “The fluctuations are simply too great for that,” says Frank Wieser of PMP Vermögensmanagement. “In a few years, however, digital currencies can become a (small) part of wealth creation. It’s still too early for that.” In Prof. Hartmut Walz’s view, investors should remain cautious. “The “Lindy rule” (read more) is a valuable orientation for such market situations,” says Walz. The core message of the rule is that the longer systems and organizations have been in existence, the higher the probability of survival.
One trillion dollars in sight Bitcoin is close to the barrier
Compared to gold, this means that the precious metal has existed as a means of payment for thousands of years. Whether that will be the case with cryptocurrencies is uncertain. “For example, it can be at any time that regulation strikes here.” Prof. Walz reminds the current situation around cryptocurrencies of the stories of the gold rush in the 19th century. “Back then, it was mainly those who sold the gold diggers their rubber boots and shovels who got rich.”