I’m generally down on Bitcoin as an investment, but there’s no denying that people who have been able to time their buys and sells right have made some nice profits. Over the past month, for example, Bitcoin is up 7.3%, and if you’d managed to time the October spike just right, you could have made a quick 30%.
So am I being too hard on cryptocurrencies and are there reasons I’d buy Bitcoin? I might do, if…
I liked a gamble
There’s no doubt that people the world over like gambling, but commercial gambling products are heavily stacked against the punter. Fancy a flutter on the horses? The odds are arranged so that, whoever wins, over the long term it’s the bookies who make the big money.
What about the turn of a card or the roll of the dice? Again, it’s all stacked in the house’s favour, and that’s where the big profit margins go.
Bitcoin isn’t like that, and it’s close to offering a zero-sum deal. By that I mean the gains and losses go mostly to the gamblers themselves, apart from a small brokerage charge and a low spread. So you can probably expect the punters to keep more of their cash overall than with most other commercial forms of gambling.
I lived in Venezuela
It might be hard to believe, but even compared to the volatile nature of cryptocurrencies, we do sometimes see conventional currencies devaluing at horrendous rates when they’re managed by financially incompetent governments.
Venezuela is the most recent example, and a good few people were putting their savings into Bitcoin to protect them from hyper-inflation. Even if Bitcoin lost, say, 50% over 12 months, you’d still be better off than sticking to the 130,000% inflation rate that Venezuelans suffered in 2018.
And compared to Zimbabweans during that country’s worst hyper-inflation spell, Venezuelans had it easy – in Zimbabwe, annual inflation peaked at an estimated 89.7 sextillion percent in 2008. Sadly for Zimbabweans, there was no Bitcoin to help them back then.
However, with inflation running at under 2% here in the UK, I really don’t need cryptocurrencies for this reason.
I had too much money
So yes, if you literally have money to throw away, I reckon buying Bitcoin and holding it for the next 10 years (if it survives that long) should to the trick – though if I were ever in that position, I’d find more deserving causes.
us better investors.” data-reactid=”45″>Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019