I’ve been debating with myself over whether or not I should invest in Bitcoins. The problem I have is that they remind me too much of tulip bulbs.

Bitcoins don’t exist, they’re entirely virtual. There’s a cap on how many there can be, which is 21 million, and people buy them for investment as well as to actually used them online, to purchase goods online. Because of their relative rarity, by that I mean the cap on them, a lot of people have decided to invest in them. The result is that the current value of a Bitcoin has gone from an original $100 to over $4000. In Feb. 2017 the price crashed to less than $1000, and the average price can easily fluctuate over $200 a day. If you look at the Bitcoin exchanges, prices range from $4500 to over $10,000, so YES, Bitcoins are very volatile.
When I see volatility like this, I see people in a greedy panic trying to get a ride on the cash cow while it lasts, and I can’t blame them considering the great increase in Bitcoin value. The fact that there’s thousands of merchants who now accept Bitcoins as payment only adds to the interest in them as an investment.

Back in the 16th Century, tulip bulbs were introduced to the Dutch from Turkey and became very popular. They were also very scarce, and to add interest to them was a plant disease that caused them to develop into a wide variety of colors and shapes, most of which were attractive.
A Tulip Bulb Stock Market arose, and investors, in their eagerness to get in on big profits, began paying huge prices for new, colorful flower bulbs, until it finally dawned on them that they were paying far more for the bulbs than the bulbs were actually worth, the entire market collapsed and many in Europe lost their fortunes.

Since Bitcoins are only virtual, an Internet collapse could wipe them out. Or a hacker could create millions more out of thin air or steal a massive number of them, or a sales scam could frighten investors away and crash the value to nearly nothing, or…. Plus the fact that because Bitcoin sales are anonymous, terrorists are using them, which may soon push governments to either regulate or outlaw them.

Yeah, I think the debate with myself is concluded. If I were rich and had lots of money to play with, I’d take a chance on it, but I’m not. The time to have invested in this was when they were $100 each.

Comments are closed.