Is Bitcoin the next economic bubble? That seems like a valid question, as the price of the cryptocurrency has soared to unprecedented levels over the past few months.
Just this spring, Bitcoin traded around $5,000, and it has now gone past $15,000. Who wouldn’t like to triple their money in less than a year? But like any investment, the risks are correlated to potential rewards. And crypto is extremely risky. Many people have lost thousands just because they didn’t understand the concept of blockchain, how crypto works, or simply because they forgot to securely store their coins!
That is pretty frustrating, and you should really understand the basics of Bitcoin before you decide if this is an investment you should get into. Otherwise, you may lose money. As governments are trying to work on ways to regulate crypto currencies, right now, there are not guarantees for your money. No central bank to back it up, no recovery for your lost credentials. Still curious? Crypto has a lot of advantages, and can be a great way to diversify your portfolio.
As it is too early to tell whether we are experiencing a Bitcoin bubble or not, lets remember the previous bubbles of economic history. The Dotcom and US property bubbles are just a few years away. They hit pretty hard and many investors saw their savings reduced to nothing in a matter of months.
Want more information? Enjoy this infographic on economic bubbles, courtesy of ETX Capital