Cryptocurrency has been a hot topic from time to time since December 2017 when Bitcoin value reached close to USD 17 000 in value. Currently Bitcoin is valued at USD 29 000 and its value has been very very volatile with latest peak of over USD 33 000 in January 2020. So the question is, should you invest in Bitcoin or any other crypto currency?
Lets summarize what known investors and wealthy men have said about Bitcoin and cryptocurrencies.
Warren Buffett has stated he does not support cryptocurrencies, CNBC interviewed him back in February 2020 where Mr. Buffett said "has no value" , link to interview. Financial Times wrote in their article about Winner of Warren Buffetts annual lunch about the views Buffett had in 2019 and clearly it has not changed, as well has Charlie Munger called Bitcoin "poison" and "and apparently calling people who buy Bitcoins "idiots", link to the FT.com article back in 2018.
What can we make of cryptocurrency? Two known investors who have been successful in their practice and have seen a lot of turmoil in markets say cryptocurrency is nothing of value. This might be true yet as long as there are people buying the coin and you can use it to buy goods and products it will have a value. As does current currencies, Bitcoin diffres from our FIAT currencies as it does not have a central bank that decides how many coin there are. Normal Central Banks pump in and out money in hope of reducing large economic swings (this is actually their purpose). This is one reason why Bitcoin sees huge swings in its value, it is demand based with no pump in or pump out option.
There are other crypto currencies besides BitCoin, to name a few
Etherum
Litecoin
Dash
Monero
Dogecoin
Tether
OneCoin, the one coin where I hope you did not lose money. OneCoin is an example of cases where you should be careful, if something sounds to good to be true it most certainly is. Shortly summarized OneCoin was pronounced a ponzi scheme and a lot of people lost their money. It begun in 2014 and was launched by Bulgarian Ruja Ignatova and quickly became the new potential BitCoin. It did not take long for the scenery to collapse, in 2017 Ms Ignatova dissapered after failing to appear at a meeting in Lissbon, Portugal. In US, if she is found, face securities fraud, wire fraud and conspiracy to commit money-laundering charges. For more information on OneCoin you can read Financial Times article and listen to BBCs podcats. OneCoin was not a success for buyers however, very profitable for those who set up the company and sold OneCoin.
Why am I writing about cryptocurrencies?
I just stumbled upon some investment companies publicly saying they are considering cryptocurrency funds, was surprised about it yet it makes sense when people get excited they demand more of it. I did hear back when Bitcoin peaked for the first time that some large investment banks were thinking about launching cryptocurrency funds, yet did not believe they would actually do it. On that part I was completely wrong.
Is there an investment opportunity in cryptocurrency?
There
might be especially in currencies that can be used to purchase goods
and services, if businesses accept the cryptocurrency then it can be seen
as a currency. Even though it is not supported or accepted as a
official payment method by governments and banks, they see it as highly speculative investments.
FT.com has an article from October 2020 about SEC (US regulator) reviewing the possibility of a cryptocurrency ETF. It seems like Franklin Templeton and WisdomTree are at least going to launch this kind of ETFs or funds.
Where can you pay with bitcoin?
Apparently Expedia.com, Microsoft (payment in Windows and Xbox stores), Virgin Galactic, Overstock.com, Newegg.com, eGifter, Zynga, Subway, Overstock and more. According to 99Bitcoin around 36% of small- medium sized businesses in US accept Bitcoins.
Cryptocurrency fund, found one!
Bitwise Asset Management has at least launched a cryptocurrency fund named Bitwise 10 Crypto Index Fund (BITW), it launched in December 2020 with assets of approximately 120million USD at $25 per share and ended the day at $31. January 16th 2021 it had a price of $60,25 and NAV (Net Asset Value) of $31,71. The funds biggest holdings are Bitcoin, Etherum, Litecoin, Bitcoin Cash, Chainlink, Stellar, Eos, Tezos and Cosmos. Bitcoin with the biggest weight of 79,77% of total fund. More about the fund as well as fact sheet and disclosure at Bitwiseinvestments.com. Below is a snapshot of the fund performance and biggest holdings.
There are also different platforms where you can trade cryptocurrencies which I have not dig into.
Short Summary
Cryptocurrencies might have a future given that they can be used in daily purchases, I do not see it as sustainable if it is only accepted in some purchases.
I have not personally invested in any cryptocurrency and unsure if I will until it is accepted as a payment method in more stores, one requirement is that I could pay for my groceries with Bitcoin at a large chain. That will most likely get me to buy cryptocurrency. I have to admit, I was surprised at how many places you can use Bitcoin, even Global companies accept Bitcoin. It was an interesting lesson to first google and then actually check at the company website that they accept Bitcoin as payment method.
As we know, humans are full of surprises. Have a good start to 2021 and save well.
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