Bitcoin is the most widely used digital currency in the world.
There are over 500 different digital currencies. Many exist merely
for entertainment value whilst others present a strong economic use
case and present an investment opportunity for early participants.
Investing in digital / crypto currencies however is fundamentally
different from investing in forex or investing in securities. For
the unsuspecting investor these differences can carry significant
risk. Before you invest in Bitcoin, here are three things you need
Bitcoin - an investment that hedges against inflation
Countries these days operate fiat currencies where a central bank
can issue more currency as when deemed required. If quantity issued
is not kept in check (which is often the case) the currency of a
country deflates in value. Printing money leads to inflation which
robs an individual of purchasing power. Bitcoin is fundamentally
different. The number of Bitcoins produced is fixed by a computer
algorithm which emulates the rate a precious metal like gold is mined.
There is a limited supply and as more are mined it gets harder and
harder to find and hence each Bitcoin becomes more valuable.
Bitcoin adoption is growing as it replaces traditional financial services
The core use case of bitcoin is centred around being more costs
effective than traditional financial services. Bitcoin utilises
"block chain technology" which utilises decentralised computers
all over the world to ensure security and trust. This automates
certain functions which then allow users to transfer money directly
to anyone without a middleman like a bank. This is a strong economic
motivator for world wide adoption. For example, when you travel to
different countries paying by Bitcoin you avoid traditional currency
conversion fees which is quite often exorbitant.
Bitcoin will provide financial access to the developing world
A large portion of the developing world does not have access to
financial services. Such services is key to driving growth and
helping people out of poverty. Bitcoin has the ability to connect
capital from the developed world with the need for investment in
the developing world. It can enter new markets where banking
infrastructure do not exist. The demand for bitcoin in these parts
of the world will grow.