Bitcoin continues to boggle the minds of old-school investors and is likely forging a path ahead through the great outback known as fiat currency. You’d imagine some elitist bankers are not too thrilled. You’d be right. But nothing seems capable of slowing down Bitcoin, no matter how often it is called a “bubble,” something that’s now become a routine adjective used to describe Bitcoin following any successes.
Well, now we can add “Bitcoin is larger than a whole country” into our gnarliest and most impressive of Bitcoin headlines to date. According to Time Magazine, Bitcoin is now larger than New Zealand’s GDP. Such an impressive stat, of course, doesn’t fail in frightening our inner-Bitcoin mania. A Bitcoin collapse must be inevitable now that Bitcoin is larger than entire countries, we tell ourselves. It’s OK to feel unsettled over Cryptocurrency investing, there is no doubt an associated risk.
The semi-absurdity of the nature of this big surly headline is that Bitcoin is relatively unusable. Don’t get me wrong, you can buy Subway sandwiches with it. You can shop on Overstock.com with Bitcoin. If you are savvy enough to use Gyft.com, you can even get some mighty fine overpriced asparagus water at Whole Foods with Bitcoin. But it isn’t being used throughout an entire country’s mercantile system and malls. The headline is purely fun but somewhat tragic to helping legitimize an otherwise groundbreaking digital currency undertaking. Part of the reason that Bitcoin is less used in actual purchases has much to do with the Bitcoin’s value. One day might a subway sandwich have cost you $500? That’s the possibility. That’s the consumer fear. That limits Bitcoin, often, to a hyper-investment opportunity. And in many cases, its a speculative gamble for people who have never invested in speculative investments before. It’s forging new ground in more ways than just one.
With every ebb and flow, Bitcoin security becomes more and more a scary premise. Exchanges such as Coinbase, where most Bitcoin investors keep their digital currency, are not insured for consumer hacks. If you get hacked on Coinbase, whatever is pillaged is forever lost. For more information regarding securing your Bitcoin, read my how to move Bitcoin from Coinbase to Trezor guide. That should help enlighten you to how you can secure Bitcoin, Litecoin, and Ethereum.
Are you watching for Bitcoin Bubble signs?
While we do feel that Bitcoin and blockchain technology are here to stay, that doesn’t mean that a crash isn’t on the horizon. A stock market crash could prompt a large cryptocurrency sell-off. The Republican tax reform plan likely helps to pacify this fear (for now), however, a stock market correction is most likely to come. And when it does, it would be difficult to imagine that Coinbank accounts wouldn’t be emptied on a massive scale. This would be due to a loss of investor confidence combined with people trying to liquidate realized stock market losses.
A major Coinbase hack could prompt a Bitcoin bubble to burst. The moment a major Coinbase hacking story runs, you can be sure a great many people will attempt to unload their funds. Being that many people don’t understand how to use a Trezor, that might mean simply converting Bitcoin to cash and cutting their risks.
Lastly, if the Trump administration begins using rhetoric targeting cryptocurrency exchanges, for example, questioning their legality, that would be a rather major red flag. In similar fashion, the government could ban the use of exchanges or the implementation of cryptocurrency as a payment method for merchants. In both cases, Bitcoin value, and other cryptocurrency values could be ripe to burst.
For now, all’s good in cryptocurrency land. We shall see what tomorrow will bring when tomorrow arrives.
Author: Jim Satney
PrepForThat’s Editor and lead writer for political, survival, and weather categories.
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