Bitcoin was created in 2009, however, it is only recently that it has become well-known. At the start of 2017, bitcoin was trading at around $1,000. This past March, its value was at $10,000. Due to this ascension, there has been an increased interest in cryptocurrency. Because cryptocurrency is not regulated, investing in it can be very risky as opposed to the traditional stock market. However, one cannot ignore the rapid rise in the price of Bitcoin along with the attention it has brought cryptocurrency from the press. Now, there are products that are focused on the alternative currency, giving even novice investors access to this thriving market. Here are some additional facts about cryptocurrency that business owners should be aware of.
Legitimacy Has Raised The Price of Bitcoin
While there are many different theories to explain the surge of bitcoin in 2017 and its volatility in 2018, one of the overarching themes is its growing legitimacy. It has gotten to the point that even morning shows are discussing cryptocurrency when there was a time that only technology pundits knew about it. Bitcoin also received a huge boost when earlier this year, Japan recognized the cryptocurrency as a legal payment method. It isn’t just government validation that is driving up bitcoin’s price. Other factors include new investments, like cryptocurrency funds. You also see some startups raise funding by issuing initial coin offerings (ICO). So, rather than selling stocks, they are selling bitcoin which is bringing in hundreds of millions of dollars in investments.
The Risk Of Losing It All is Real
It would be an understatement to say that investing in bitcoin is very risky. This fact has already been established. The reason being that is is not regulated and anonymous which makes it very speculative and volatile. This was shown in its price plummeting this past fall and then setting new record highs just weeks later, only to come back down at the start of 2018. These price movements are looking to be the biggest risks to bitcoin’s future success along with other influencing factors like increased regulatory scrutiny. Investors have been able to adjust to the governments around the world seeking to crack down on cryptocurrency, however, there is no guarantee that they will be able to continue doing so. If government regulations become too stifling, the value of bitcoin and other cryptocurrencies could plummet.
Many big retailers have begun accepting cryptocurrency as a method of payment, but small businesses should still be careful. Due to the volatility of the price and the fact that the value can change so suddenly, it can be challenging for a business owner to accept it as payment. As discussed previously, bitcoin could be trading at $8,000 one day, and then drop the following week. However, it can still be a lucrative endeavor. CME and CBOE World Markets rolled out bitcoin futures and only a handful of online brokerages offered it to their clients. Those few that took the risk were rewarded with new customers along with increased trading volumes. So, when you put aside the increased risk, bitcoin can be a lucrative investment. In fact, some proponents anticipate that it will have a market value that one day rivals Apple.