Bitcoin
An Investment in the Future?
Since Bitcoin began use in 2009, it is estimated there are now 100 million Bitcoin owners or about 1.3% of the world’s population. As the world’s first and largest cryptocurrency, it has become as synonymous with crypto as Kleenex has with tissue paper.
What is it?
To a layman like me, it’s a recently created digital-era money, one that shows potential to act as a financial haven (like gold has for millennia) as it continues to mature.
It has a limited supply, 21 million eventually with over 19.9 million already in existence. It is decentralized, meaning no one central authority, administrator or bank controls it. It is more expensive to create or ‘mine’ as time advances, because increasing amounts of computing power (energy) are needed.
It has a detailed technical description of how it works readily available to all on the internet. No secrets or surprises.
It is unique from all other crypto currencies. Many are just schemes to make their creator rich at your expense.
How does it work?
Anyone can buy and sell Bitcoin (BTC) with dollars. All you need are some basic computer skills and an account at one of many reputable online exchanges (like banks for crypto). Once you own BTC, you can store it on the exchange or take it offline and store it on a fancy thumb drive.
You can use BTC to buy and sell, although the transactions can take minutes (vs seconds with credit & debit cards). Technologies are being developed to take BTC-based transaction times down to seconds.
Finally, CRA has been taxing BTC since the early 2010’s. They treat it as a commodity, subject to capital gains tax.
What about its price volatility?
It is highly volatile, relative to dollars. Keep in mind it’s only 16 years old and it is on a steady trend of gaining value over time against all countries’ dollars and gold.
Will it eventually go to $1 million or to $0?
Good question. No one can be certain. A couple thoughts:
· With each passing year it doesn’t get hacked or otherwise compromised, the $0 scenario becomes less likely
· The steady trend of gaining value relative to dollars and gold, reaching a value higher than the current USD $110,000 becomes more likely
Should You Own Some?
If you’re interested in new tech, and you have the time, it’s something you can learn for a very small investment in time and money.
If you like speculative (high risk, high return) trades, then learn BTC’s ~4-year cycle of highs and lows. It has been repeated 4 times thus far.
If you look to the future and see the end of Fiat (1) currency, with return to real assets, then consider holding BTC as a small element of your real asset holdings.
We own a little bit, with all three of these reasons playing a factor in the decision. So far, so good.
Be Prepared. Invest in the future, not just the present.
1. Fiat, A reset is coming, October 25, 2024, Be Prepared blog