At this point in history, most people have heard about Bitcoin. They vaguely understand that it is digital currency, and they may even be aware that there are other cryptocurrencies, tokens, and coins. Another bit of popular knowledge is that if one were to have invested in Bitcoin in late 2012 (when it was $12), that same coin would be worth almost $3,000 today.
Many people have already struck it rich on Bitcoin and other currencies, causing some people to think that they missed the boat. Fortunately, there is a good argument that this is not the case. I’ll lay out my perspective below.
Full disclosure, I have invested more money in cryptocurrencies within the past four weeks than in any point prior. This is partially because of resources and awareness, but I still maintain that there are unique opportunities available today that can create incredible returns for investors. Here’s why.
- The Cryptocurrency Market Capacity Will Grow. At the time of this writing, all of the money in Bitcoin and all of the other hundreds of coins amounts to just under $100 billion. Let’s contrast this with the trillions of dollars invested in Dot Com companies before the 1990’s bubble. Right now, it’s hard to buy Bitcoin, as pointed out by Brock Pierce of Blockchain Capital. Sources like Coinbase cannot keep up with demand for new accounts, and other options require some tech savvy. This will gradually change. When your grandpa can invest in crypto, expect the coins of today to gain enormous value.
- The SEC Determined That Cryptocurrencies Are Securities. Last month, the SEC finally decided to list cryptocoins as securities, just like stocks. Owners for Bitcoin and other coins will have to pay capital gains just as they would with stocks. Some crypto enthusiasts fear that this regulation will be a damper on the community, but I think the opposite is true. By regulating crypto, the SEC is further legitimizing it, helping to ensure its long term future. Also, this move means that buying cryptocurrencies is, technically, an investment and not a speculation (though it still has characteristics of both).
- Altcoin Technologies Are in Their Infancy. Bitcoin is constantly evolving (in complicated, technical ways). It will continue to do so in the future. Newer currencies like Ethereum are evolving more fundamentally and more quickly. Even newer coins like NEO and Golem barely have a technological basis for their value, but are being developed at an incredible pace. This makes their price low and their potential upside great (though risky). Not all of the hundreds of coins on the market are worth your money. Not all of them will succeed. But some will, and they’ll make smart investors rich in the process.
Bitcoin is the king of the cryptocurrencies. It is very expensive, but there is reason to believe it will continue to gain value. Many other coins are on the rise in its wake. Don’t listen to the people who say the bubble has popped. There are strong arguments that this is only the beginning.
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