Many in the bitcoin community have a “to the moon” mentality regarding the prospects of future price appreciation for the digital currency. After all, the history of bitcoin is one of explosive growth & volatility. While BTC may be down from it’s all time highs, its still sitting around $350…a huge jump from its humble beginnings of a near $0 valuation. And while bitcoin adoption will surely increase given its killer applications for every industry, the price has nowhere to go but up, right?
Maybe
The important thing to remember about bitcoin is that there have been similar revolutionary concepts in history that have boomed, busted, and transformed the world yet didn’t guarantee investors huge profits. One such example was the airlines in the 60s & the 70s. Air travel was well on it’s way to changing the world for businesses and individuals by making once remote destinations accessible to everyone. Imagine the world before you could easily hop on a flight to Paris and how easy it is to do so now…the globe is at our fingertips. As a result of this foundational development in globalization, investors piled into airline stocks as fantastic returns were a foregone conclusion.
Air Travel Boomed
It changed the world. But, the stocks didn’t boom along with it. Many investors lost their shirts and it has been argued that the airline industry still hasn’t hit break even since it’s inception. Disruptive development successfully implemented on a global scale? Check. Incredible rewards for investors? Far from it.
Another prime example is the internet, which was the next big thing back in the late 90s. Arguably a more far reaching development than air travel, the internet was poised to alter the social landscape by making accessible the knowledge of the world. America Online, Pets.com, and WorldCom were some of the sure bets set to capitalize on the excitement.
What Could go Wrong?
The stock market crashed and a swell of internet stocks lost 90%+ of their value. The internet, on the other hand, boomed and streamlined communication and business for the globe. Again, sometimes a sure thing is anything but when it comes to money.
We have a similar situation developing in bitcoin. It’s the currency of the internet with the potential to disrupt the likes of credit card companies and western union for good. And that’s just the currency & payment network aspect of things…bitcoin 2.0 developments could bring decentralized autonomous corporations and smart contracts built upon the technology of the blockchain. Again, bitcoin has the legs to turn the world on it’s head, but this does not mean the price of the underlying currency nor that of bitcoin companies will follow suit.
Just like the airlines and the internet before it, realize there are risks involved before putting all your eggs in one basket with bitcoin (think regulatory & political headwinds). The market is a beautiful thing and it will adopt the core adjustments this cryptocurrency will bring, nonetheless the market will annihilate you if you’re unprepared.
We Believe in Bitcoin
Simply by being a more efficient and cost effective means of transacting value, bitcoin has assured itself a pivotal role in the future of money. Nonetheless, be wary.We’ve seen this movie before – revolutionary developments can and do make the world a better place, but this is far from a guarantee to investors looking to profit from the coming boom.