New thoughts on investing in Bitcoins and cryptocurrencies

Invest in bitcoin

Without a doubt, investing in Bitcoins and cryptocurrencies is in fashion. It is difficult for a day to go by without family, friends or blog readers asking my opinion on whether it is worth putting your savings in them, either in Bitcoins or in some other type of cryptocurrency such as Ethereum, Iota or Litecoin ... The truth I am not surprised, since the profitability of these assets during the last year has been extraordinary.

In this article I leave you my last interview along with a selection of reflections on investing in Bitcoins and other cryptocurrencies that I wanted to highlight.

Tabla de contenido

  • FOMO (Fear of Missing Out)

The risks of investing in Bitcoin and cryptocurrencies

There are several risks to take into account if we want to invest in cryptocurrencies:

  • Lack of actual backing (beyond use value as a medium of exchange)
    • Fiduciary money, that is, its value depends on the trust of those who use it
    • The money we use is too, but they are backed by the state
  • Regulatory risk
    • Ban by governments
    • However, difficult to control
  • Technological risk
    • Absence of entry barriers
    • Emergence of new cryptocurrencies with superior technology
  • Risk of the reverse network effect
    • A currency is useful as a medium of exchange if its use is accepted as such
    • Network effect Reverse: If it stops being used, it loses usefulness
  • Risk of falling due to speculation
    • Many people buy expecting great benefits in a short time
    • Few know what they really buy

Parallels with the dotcom bubble

I have already talked on the blog about my experience with the dotcom bubble. The program commented on several similarities between this and the current situation of Bitcoin and cryptocurrencies:

  • They are based on innovative technology
  • They have a lot of potential
  • Very high profitability in a short time

Are cryptocurrencies living a bubble?

The important thing is not to generalize, since I do not doubt that your technology is useful and that it has a lot of potential. The difficult thing is to know now which or which of the current cryptocurrencies will end up triumphing in the future. In fact, it is possible that some will end up being imposed that do not exist today.

For example, during the dot-com bubble, the main search engines were Lycos and Altavista. To this day, these companies have been erased from the map by Google, a totally unknown and minority search engine during that time.

Alternatives to investing in Bitcoins and cryptocurrencies

Long-term stock investment through value investing is the most profitable, safe and sensible. Of course, it requires adequate training to avoid losing money, which is what happens to most investors.

If you are interested in training, you can start with mefree introductory course on investing in the stock market,in which you will learn the fundamental aspects to learn to invest from scratch.

What is your opinion on investing in cryptocurrencies?

Now is your turn.

  • Do you think we are living a bubble?
  • Do you think Bitcoin and cryptocurrencies will continue to rise?
  • What do you think will be the cryptocurrency that will end up imposing on the others?

I encourage you to leave your opinion in the comments. 🙂