Is there a right or wrong move when it comes to buying or selling Bitcoin? It seems like there is. Yes, the market can be unpredictable, but there has been almost a 1,500% increase in Bitcoin price in the last 12 months. So why would anyone want to sell their crypto now when it is still moving up in price?
How does bitcoin work?
For those of us, who are not particularly savvy in trading, there’s the nagging question: “How does Bitcoin work?”. Is it safe to invest now? What are the risks? As Bitcoin is a decentralized currency, it is not controlled by central banks or any other institution for that matter. Its price is actually determined by demand and the free market. So it can fluctuate between 1 to 20 weekly—this is a substantial volatility rate.
And one more important detail: the overall quantity of Bitcoin is LIMITED to 21 million coins. This includes every single BTC ever in existence. Let’s put a pin in that, as it will be important as we go along.
Bitcoins can be mined (acquired through solving math problems on a powerful computer), as well as bought and sold, by exchanging for other currencies. This begs the question of what to do with cryptocurrency coins if you already have some? In the past couple of weeks, there have been a few significant events in the financial world that might help answer that question better.
What’s happening in the market?
Tesla dives in
As recently as March 25, Tesla announced accepting Bitcoin as payment for their electric cars. Furthermore, they won’t be converting those coins to fiat money. Elon Musk might be an excentric fellow, but he is a legit genius, and not only in engineering and physics. Any company or corporation, including Tesla, is there to make a profit. And it seems like acquiring bitcoin before they run out is clearly a winning strategy.
There’s a name that rings a loud bell here: Laszlo Hanyecz. This is the person who truly knows the meaning of the word “regret.” He was the one to execute the first publicly known transaction in bitcoin in 2010 and buy two pizzas for 10,000 BTC, which today would be worth around $600 million, as the price for a single bitcoin is nearly $59,000. He made a blunder, but why would anyone want to follow suit?
PayPal and Visa follow suit
Back to financial market news. PayPal launched a crypto-checkout option. As a global payment giant, PayPal is associated with millions of merchants worldwide, people can now shop online and pay with their cryptocurrencies. The coins will be converted to fiat currency right at the checkout, saving people time and energy to do that separately. How considerate of them to save us all that trouble. But again, no company does anything ‘to be nice.’ This is a calculated move aimed at obtaining crypto.
There’s a video online of Dan Schulman, the CEO of PayPal buying ostrich cowboy boots with bitcoin, to demonstrate how the checkout works. I’m not sure I need ostrich cowboy boots for my precious bitcoin or those gorgeous Manolo Blahniks, for that matter.
Visa also followed suit and announced we can now handle transactions in stablecoins. Stablecoin is a safe move, in this case, that screams, “We want to play too, but let’s not get crazy here.” Stablecoin is like cryptocurrency in a bubble wrap. All the fun of digital currencies without the risks of losing big, as the USD stablecoin is pegged to the US dollar.
Is it wise to cash out?
As prices for cryptocurrencies keep going up, there’s an element of distrust regarding how far the prices can rise. But financial analysts like Cathie Wood have commented on this matter by saying that the price for a single bitcoin is likely to ascent to over $400,000 if the current trend of crypto-investments from large companies continues.
But what does all that mean for individual investors, who are not protected from the ups and downs of the trading market? It might seem like all those companies are actually trying to bring cryptocurrencies closer to us and closer to the mainstream market. But it’s becoming increasingly obvious that to protect our assets and our own well being we should stick to holding our bitcoin for a while longer and not give it up for ostrich boots, however stylish.
Photo by André François McKenzie on Unsplash
