Maybe you have already decided for yourself that you want to invest in Bitcoin or other cryptocurrencies. But it is also quite possible that you are still unsure. We are not here to convince you to invest in bitcoin, but can obviously think of some reasons.
Bitcoin as Store of Value
Bitcoin, like gold, is increasingly seen as a store of value (purchasing power reserve). This term refers to the function of money or other assets that can maintain their purchasing power in the future. To be useful as a store of value, it must be easy to store and retrieve at a later date. Gold is favored as a store of value because of its rarity, which reduces the risk of devaluation due to a (large) increase in supply, for example.
Bitcoin may seem like an even better (digital)
store of value than gold currently. Because bitcoin is digital, you can “move” it a lot easier. Moreover, the maximum number of bitcoins is fixed. It is a given that only 21 million bitcoins will be available and that this maximum number will be reached approximately in year 2140. Bicoin is therefore increasingly referred to as digital gold.
Bitcoin as Means of Payment
With more and more professional parties turning to bitcoin, the currency may yet begin to serve as a means of payment. Paypal has offered the possibility to buy bitcoin through its platform since the end of 2020. According to rumors, consumers will also be able to pay for products and services in bitcoin in the future. Those bitcoins can then be converted into “real” currency. Besides Paypal, many other large corporations, such as Tesla and Apple, are also looking to adopt and incorporate cryptocurrency into their companies.
Bitcoin as a Hedge Against Inflation
Gold historically performs well in uncertain times and provides some form of protection against inflation. Recently, governments and central banks have decided to print huge amounts of additional money to combat the corona crisis. The large stimulus purchases also bring a lot of new money into the system and, as a result, many investors now think that inflation is lurking.
Although the official figures show hardly any inflation, people rather speak of asset inflation. This term indicates that assets are rising sharply in value. However, this price inflation is not reflected in the traditional indices, which only reflect the price development of consumer goods. However, we do see these developments on the financial markets. To protect yourself against this asset inflation, you could invest in bitcoin, but also in shares, real estate or gold.
The 2008 financial crisis left a deep impact on many people. After that period, the price of gold rose hard and still some think that the monetary system may not survive another crisis. We also see this when we look at the recent popularity of gold and bitcoin. Investing in bitcoin is therefore increasingly seen as a hedge against the collapse of the “system.
Bitcoin as a Revolution of Money
You could argue that bitcoin is bringing about a new monetary separation of powers. The power over money and money creation is being decoupled from centralized entities such as banks and governments. Bitcoin, by the way, is more than just a monetary asset. It is an asset, but also an innovative and promising financial technology.
The underlying blockchain technology has not been cracked since its inception (which is over 10 years ago) and has never suffered downtime. Bitcoin can therefore be seen as a revolutionary, extremely secure, unhackable and transparent payment network. By investing in bitcoin, you can be part of this still fairly new asset class and potentially a digital revolution of the way we perceive money in general.