Digital assets took the world by their fancy in the recent past. Digital assets are the prime consideration of modern investors. Some descriptions justify a bullish move for digital assets. They are excellent for long-term investors. Two primary justifications support this statement.
- Digital assets justify as a potential store-of-value, and
- Digital assets justify as a currency.
One more justification for digital assets is a little more imperceptive, and that is volatility offered to speculators. They expect price discovery and liquidity, as well.
Bitcoin is “digital gold” but far better than real gold
The short-term volatile nature of bitcoin and other digital assets attracted criticism many times. Bitcoin is considered “digital gold” due to its weak relationship with all other assets, particularly stocks in particular. it has the same attributes as gold, with the apparent exception of tangibility. It checks off the first significant attribute – a rarity. However, both gold and Bitcoin have limited supply. Still, Bitcoin is far more valuable than gold due to its more excellent utility. Bitcoin has the additional advantage of being easier to acquire, transfer, and store than gold. It is more practical for someone to carry his digital assets to a new geographical location while carrying gold has many problems. Transportation of gold faces border restrictions, theft risk, risk of loss in transit, etc. People would be far better off using bitcoin than if they were to convert their wealth to gold.
Bitcoin – an excellent alternative to fiat currency and traditional banking
A digital asset like Bitcoin can be easily traded against fiat currencies when someone is looking to verge potential inflation risk with a supply-constrained asset. Bitcoin.
It is difficult to think of digital assets as currency, but its harder for everyone to access the traditional banking system. Bitcoin is the solution to this problem as a currency. Bitcoin can be used as a means of payment for purchases, though people have argued on this statement and criticized digital assets like currencies and a medium of exchange in the short run. The higher potential of Bitcoin and other cryptocurrencies to offer even more utility as a form of money than traditional central bank currencies make this statement more confusing.
Why is Bitcoin an excellent alternative to fiat currency and the traditional banking system? There are valid reasons.
- It is becoming far more difficult for people and institutions to do business with the correspondent banking system with the Bank Secrecy Act, the Patriot Act, and many other banking regulations.
- The most reputable people and institutions face the consequences of Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.
- Digital currency is an easy-to-use alternate form of payment for products and services. It works exceptionally well for cross-border payments.
- Bitcoin offers an un-censorable, immutable monetary system which can process transactions on a peer to peer system without any intermediary deciding who may or may not participate.
Bitcoin for speculation
Investors used to do trading with Bitcoin. See how they do it? Find more about importance of blockchain. It is a new form of speculative investment, but more valuable than other traditional types of risky investments. Modern investors have realized Bitcoin’s power of speculation. Like all markets, speculators bring liquidity, adding even more utility to the “users” of a digital asset. Bitcoin trading is more volatile compared to other assets. The beneficial side effect of this was significantly more liquidity, tighter spreads, and more price discovery. Bitcoin speculations are usually made for long-term investment. Bitcoin trading has paved the way for the next wave of investors who would be more influential.
Wrap up
Digital assets like Bitcoin are excellent for speculating a substantial increase in their future value, though their liquidity is not as good as other trading assets. Time is now to make a decision and to allocate funds for investment in Bitcoin. Something genuine is happening here, and those who ignore it are likely to face some significant regrets in the future. Do not invest more than your potential, but something is better than nothing. It is the time to reorganize your investment portfolio by adding Bitcoin to the current assets.
