Do you suffer from FOMO? FOMO stands for Fear Of Missing Out. Just about everyone suffers from this in one way or another. Bitcoin is becoming more of a household word and it’s popularity is exploding. So what is bitcoin, and is it something you should invest in?
What is Bitcoin?
Bitcoin is a form of cryptocurrency that only exists in numbers on a computer screen, rather than an actual coin or physical dollar bill. It is a form of international currency and it is the first decentralized digital currency in the world. You can buy bitcoin from any online bitcoin seller, by trading your dollars for bitcoin. There are many other types of cryptocurrency now trying to surpass bitcoin in popularity.
Why is Bitcoin so popular right now?
The price of 1 Bitcoin started out close to $1 back in 2011, and now the price of 1 bitcoin is about $17,000. Even just a month ago it was well under $10,000! That is some pretty extreme price fluctuation and growth. Also, just recently, trading futures of Bitcoin became available, and ETF’s with Bitcoin are coming soon.
Should you invest in (buy) Bitcoin?
Investing in Bitcoin is much more similar to gambling, than it is to prudent stock market investing. Yes, if you buy Bitcoin now, you could be filthy rich in a year, but you could also be completely broke too. There is so many regulatory issues that Bitcoin has not made it through yet, and there have been several instances of bitcoin price manipulation and fraud.
My main suggestion when it comes to Bitcoin is to only use money that you absolutely do not need and could live without to invest in Bitcoin. If you have the desire and want to try it out, go right ahead, but not with grocery or retirement money.
I have personally been watching the price of Bitcoin over the last few weeks, and the price swings have been pretty extreme on a daily basis. The price volatility seems to be about 10 times more extreme than the price volatility of the stock market. For now, most of the price swings have been up.
Over the coming weeks and months, you will hear many “investing gurus” or maybe even radio commercials hyping the potential to get rich investing in Bitcoin.
Buying Bitcoin without actually Buying Bitcoin
The prudent way to invest in Bitcoin, is by investing in a globally diversified stock portfolio. In this way, you are in turn investing in some companies that buy, sell, and accept Bitcoin. In this way you take a lot of the risk out of it, and get more steady returns. Your Fear Of Missing Out senses might not be quenched, but you will be able to sleep better at night.
(Update: From the time I wrote this 2 days ago to now, the price of Bitcoin went up to over $18,000, and is now down below $17,000.)
By Jimmy Hancock
References
Solin, Dan. “Bitcoin in Perspective.” The Huffington Post, TheHuffingtonPost.com, 14 Dec. 2017, www.huffingtonpost.com/entry/bitcoin-in-perspective_us_5a2fd4e4e4b0bad787127002?utm_content=buffer00ef8&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer.