Are Bitcoins a good alternative investment option? In this article, we will be evaluating whether Bitcoins are good alternative investment options or not. Bitcoins have been in bull run in mid-volatility since 2013, when it went main stream. This is what started making them popular as alternative assets. Today, Bitcoins value is around $4,100 per Bitcoin. Moreover, some financial market experts are predicting the Bitcoin prices to go even higher. Thus, Bitcoins are a good asset class for alternative investment. This raises a very pertinent question that whether ordinary investors should park some of their savings in buying Bitcoins. Following are three major reasons that make Bitcoins a lucrative investment option:
Major investors and the financial securities industry are taking Bitcoins seriously Computer geeks have been the biggest advocates of bitcoins since their creation. However, they have been joined recently by a growing number of mainstream investors and entrepreneurs. They see Bitcoins and digital currency as a legitimate asset class such as stocks, bonds, and other commodities. Therefore, Bitcoins are becoming an increasingly popular investment option in alternative funds. In 2017 alone, famous private equity firms are investing huge amounts of money into digital currency companies. Moreover, the financial infrastructure for supporting Bitcoins and other digital currencies is also maturing rapidly. Digital currency options and derivatives are getting the green signal from various exchanges globally. Today, more and more businesses are accepting Bitcoins. In India, Demonetization has provided the all-important boost to Bitcoins. This is justified by increase in Bitcoins exchange activity in India by around 250% post demonetization. Unocoin, a Bengaluru based Bitcoin exchange has around 4 lac users and has added around 50K users last month. Currently, it sees around 500 transactions a day with an average value of Rs. 30,000.
Bitcoins are rare and limited in number There are only limited amounts of Bitcoins in the market. Therefore, they are a rare commodity unlike other currencies. One of the major reasons to buy Bitcoins is that only around 21 million of them will ever come into the world, since they are a rare commodity. Moreover, most of them are already here. As those familiar with a Bitcoin know, the number of coins created by the mining process drops by half every few years. Currently, around 80% of all Bitcoins are already mined. With Bitcoins becoming more popular, there will be higher demand. Therefore, this scarcity would continue to drive the prices upwards.
Bitcoins are being seen as the new gold Some classes of investors are increasingly seeing Bitcoins as the new gold, which transcends borders and has no regulatory authority. One of the reasons people like to own precious metals is that their value is not controlled by governments. Therefore, even if a country is affected by war or its central bank prints too much money, the value of gold, unlike the national currency, will always remain unaffected.Bitcoins possess many qualities similar to that of gold. Bitcoins exist on a decentralized computer network that transcends national borders and there is no RBI like Central Bank authority that can devalue it.Moreover,
many analysts and investment experts believe that the rush to buy gold will fast turn into that to buy Bitcoins because of their increasing acceptance as a currency. This also means there is scope for lots of money flowing into the digital currency space.