Dreaming Of Becoming A Bitcoin Billionaire? Ask These 5 Simple Questions First

[Nathrixxx]

In a bid to a successful Bitcoin investment, many have thrown diverse stones in words to castigate against btc with some of the futures in it but I've decided to bring up those stone and make a brick mansion in my own journey towards attainment of good height, they writes about the Bitcoin possible controversial fact which can easily get one discouraged before starting Bitcoin investment but I always said how do you be a perfect teacher without having a studentship experience first.

They have come along with some five controversial questions whom a beginner may find so interesting not to make an investment but I believe we are all into this and get answers to their ideologies and which are the more reasons why a beginner should invest, Bitcoin has not come in deceptive manner, but rather as an eye opener and brain teasers for potentials businessmen, organizations and institutions. Hear their respective views and let's make our own contributions.

The only thing more contentious than politics today is Bitcoin.

Ask the Twitterverse whether Bitcoin is a good investment and you’ll get too very different answers. First, the early adopters love to tell everybody when they first bought (or mined) Bitcoin. If they bought it any time earlier than a few minutes ago, they’ve probably made a fortune.

Then there are the value investors who see Bitcoin as nothing more than “artificial gold,” as Charlie Munger describes the cryptocurrency. In his view, Bitcoin is nothing more than “total insanity.”

Rather than try to convince anybody of one view or the other (although I’d never bet against Charlie Munger), here are some questions to consider before you starting buying Bitcoin.

1. Bitcoin is capped at 21 million, but does that justify its price?
Bitcoin is famously capped at 21 million. Unlike U.S. dollars, which the Treasury can print at will, there is a fixed limit on the number of Bitcoins that can be mined. Many argue that this hard limit justifies the price, particularly as the government prints more money in response to Covid.

Bitcoin isn’t the only asset with limits. In 2007 the same argument was made about land as real estate prices soared. That didn’t keep prices from crashing. It also didn’t keep Bitcoin from crashing in 2017.

2. Institutional investors have joined the Bitcoin party, but does that make it a good buy?
Many point to institutional investors buying bitcoin as a justification for its current price. As an example, Michael Saylor, founder and CEO of MicroStrategy (NASDAQ: MSTR) has bet the future of the company on Bitcoin. His company even borrowed $650 million on a 5-year bond to sink more into the cryptocurrency.

The question a potential buyer of Bitcoin should ask is, “so what?” Institutional investors make bad investment decisions all the time. The point here isn’t that companies like MicroStrategy have made a mistake investing in Bitcoin (although I think they have). The point is that one shouldn’t look starry eyed as some institutional investors move into Bitcoin. If anything, all it has done is rise the price (bad for would-be investors). What it won’t do is sustain unreasonable Pin the long-run.

3. Will Bitcoin save us from the government’s monetary policy?
The government is borrowing a ton of money to respond to COVID. While the Treasury’s printing press hasn’t resulted in significant inflation of goods and services (yet), it has sent asset prices soaring. It also calls into question the future value of fiat money, as many like to describe it.

4. Does the “network effect” support Bitcoin’s price?
Some argue that the network effect propels Bitcoin’s price upward. Bitcoin was the first cryptocurrency, it enjoyed early adoption, and as more people buy bitcoin, it becomes more valuable. It’s one explanation for why other cryptos, like Litecoin, haven’t seen their prices soar.

A potential buyer of Bitcoin should question this argument. The network effect is where the utility of something goes up as more people adopt and use it. It can apply to messaging apps or social media platforms. But does it really apply to Bitcoin?

5. Can you handle the volatility?
Finally, those considering buying Bitcoin should ask if they can handle the volatility. There are really two questions to consider here.

The first obvious question is whether you can handle the volatility. Can you hold on to Bitcoin even if it drops by 50%? That’s an important question to ask with any investment. It’s particularly important with Bitcoin.

The second question is more fundamental—what does the volatility tell us about Bitcoin as an asset? While some volatility is to be expected with any liquid asset, Bitcoin takes volatility to the extreme. Two days ago it fell 17% below $30,000. Today it’s above $35,000. That suggests that the price may be divorced from reality, even for those who think Bitcoin is a sound investment.
https://www.google.com/amp/s/www.forbes.com/sites/robertberger/2021/01/06/dreaming-of-becoming-a-bitcoin-billionaire-ask-these-5-simple-questions-first/amp/

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[amishmanish]

I think the article does present a pretty unbiased view of the pitfalls in allotting part of your investment portfolio to Bitcoin. There is nothing wrong in writing down the cons as this is a bearish article. For anyone who believes in bitcoin, there are pros that outweigh these.

For example, when it talks about volatility, i will mention the long term  upward trend as well as considerable stability compared to old times.

When the article tries to compare the supply cap benefit with real estate, it is pretty easy to distinguish that while real estate is just many of the existing assets, bitcoin is clearly the first and purest asset class of its kind. Mathematically sound, open source and based on permissionless, peer reviewed software.

It mentions that institutional investors make the wrong bets all the time, I point to Musk saying at "The B Word" talk with Cathie Wood and Jack that "its ridiculous that Teslas cash earns negative interest rates" and

Government is really just a corporation with a monopoly on violence

See the difference. These bearish articles and their pragmatic analysts view the world of bitcoin with a conservative viewpoint. They fail to see the potential of bitcoin and are justified, but incorrect IMO, in their analysis

[paxmao]

All these are valid objections, except perhaps the volatility (I think bitcoin is stable, the rest are volatile respect to bitcoin) and questioning the network effect which, for me, is crystal clear in its effects. However it is very difficult to set arguments against the facts and the facts show bitcoin becoming more widely accepted, and I am not talking about paying a coffee or buying a beer (not use cases in my view) but the fact that you can convert and pay anything in many countries seamslessly.

[Coyster]

3. Will Bitcoin save us from the government’s monetary policy?

It somewhat can, I mean Bitcoin is proving to be a good hedge against inflation and devaluation, and many individuals and corporations are employing it for that purpose, which means Indeed it can actually retain the value of ones funds. I mean, with all the money printing and measures/policies the government takes that affects it's citizens in numerous ways, the Bitcoin users amongst them can put a large amount of their funds in Bitcoin and thus to an extent evade some of the bad monetary policies of the government, since with Bitcoin they are their own bank and solely in control.

5. Can you handle the volatility?

The thing is some investors are get rich quick ones who forget that Bitcoin is more or less a long term project and along the way, there must be price shifts, corrections and bearish markets, for the long term investors, they hardly worry about volatility cause that is what it is in the network, if you're in the network for only the short term you might be more concerned about Bitcoins volatility when the price is depreciating, but on the grand scheme of things, volatility is one aspect of the network I don't consider as being negative and anyone who understands the network would handle it without too much of a problem.

2. Institutional investors have joined the Bitcoin party, but does that make it a good buy?

It was of course a good buy before the influx of institutional investors, it'll still be a good one even if many of them decide to leave the network, Bitcoin is a "good buy" cause it's users have control of their funds and can be their own bank, it is a great investment that can serve as a hedge to inflation, etc, that's some of the things that makes it a perfect buy as well as what allured the said institutional investors.

[palle11]

3. Will Bitcoin save us from the government’s monetary policy?

This question is valid for me and really bitcoin does handle this, taking hodlers away from government challenges on monetary policies and reviews cum unnecessary charges. I'm sure many active hodlers and operators of bitcoin have long gone to the banks for whatever transactions but to send and receive transactions from which ever location and moreover with the mobile application. Further, inflation isn't a challenge for individual hodler but the real question is how long will the government keep fighting bitcoin...

[ninkdwi]

This is a pretty good article because it's basically not only in bitcoin but we also have to really learn the ins and outs of the project we want to invest in before starting to invest. and indeed this (a project) will definitely reap pros and cons because everyone including experts and ordinary people have their own views on this matter.
and from the article, actually if you look at it, it refers to the cons, but it is not wrong because it is back here, there must be a lot of people who think about it.
but it will be very disproportionate if for example there are cons but there are no pro opinions.
and here many people have argued in pros such as in terms of volatility because in terms of volatility btc is indeed very good and quite stable when compared to the past (before btc was famous).
besides that bitcoin is a long-term project and most investors are not aware of it so they panic a little when a correction occurs and will immediately sell even though it will be detrimental, in contrast to investors who do it in the long term they are not worried about increases and decreases because they believe in the future bitcoin will be green and profitable.