Everyone’s talking about Bitcoin these days. From tales about the digital currency’s mysterious founder to strike-it-rich stories about early investors, Bitcoin has captured the world’s imagination — as well as its dollars. The investment market for bitcoins is so hot that some investors are concerned about a possible bitcoin bubble. If you’re thinking of investing right now, it could make a lot of sense to forego bitcoins and return to one of the world’s most popular investments — gold.
Here’s why:
1. Bitcoins are not legal tender.
2. The bitcoin market is incredibly volatile.
3. The bitcoin market may be a bubble.
Throughout history, greed and the desire for quick profits have led to various bubbles that sent prices skyrocketing — and then plummeting. Perhaps you've heard of the Dutch tulip bubble in the early 17th century? At the height of the frenzy, a single tulip bulb sold for more than 10 times the annual income of a skilled craftsman. Now, you can pick up a high-quality tulip bulb for less than the price of a candy bar. With the popularity of bitcoins and the rush to acquire them, it's entirely possible that we could be in the speculative bubble phase of the market.
4. Bitcoin has had setbacks.
A widely traded virtual currency is completely new terrain — and Bitcoin has had a few bumps in the road on the way to its current popularity. Back in 2010, hackers exploited a vulnerability in the programming code and created 184 billion bitcoins in a single transaction. While this has been the only major security flaw found in the code, it’s reasonable to believe that as the popularity of Bitcoin increases, more and more people will attempt to hack the system. Another recent problem involved the rollout of a new version of Bitcoin, which caused mass confusion and resulted in some people’s balances being incorrect.
5. People trust gold.
Ever since the world’s most popular precious metal was first discovered, it’s been a steady medium of exchange. People understand gold. They know where it comes from and how expensive it is to mine (something called its intrinsic value). And people trust gold to be a solid hedge against inflation. Gold has been a good investment for thousands of years. Bitcoins? Too early to tell.
If you'd like to learn more about investing in gold, come see the experts at Bellevue Rare Coins in Bellevue and Lynnwood.
Bellevue Rare Coins specializes in gold buying and dealing in rare coins. We are a family-owned business located in Bellevue and Lynnwood. We also buy and sell gold, silver, diamonds, currency and jewelry. Visit us first for a free evaluation.
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