A case against #Bitcoin

Being inquisitive by nature means you hoard all types of information. This actually happened last year- partly what led me to write on why I am against penny stocks. Around the same time there was a bit of a buzz around Bitcoin which I found annoying and chose to ignore. Let me start from the beginning.

I was away for most of the last quarter of 2015- in the rurals as well as in the city of KwaZulu (Natal). At the time there was a great amount of people joining MMM, sidebar: MMM is this Ponzi-like scheme founded by some Ukrainian that promised ridiculously high returns on your investment; this one woman managed to buy a fridge and a stainless steel Smeg cooker which is what the home chef’s dreams (mine) are made of; all from an initial investment of ZAR 3000. Anyway, a good lot of these schemes popped up; many running on WhatsApp, all requiring members to purchase Bitcoins. MMM & many of these WhatsApp groups have since collapsed. Bitcoin is still around.

I share the same views as JP Morgan CEO, Jamie Dimon when it comes to virtual currency; it is to remain small thus, it’s going nowhere.

Dimon separates currency from Blockchain. I’ll do the same.

"What’s the first thing a government does when it forms itself? It creates currency.

Why do governments create currency? To control it."

Governments like to control currency; where it goes and to whom. “There is nothing behind a Bitcoin, and I think if it was big, governments would stop it”. Dimon places ‘big’ into perspective by comparing Bitcoin’s control over a few billion Dollars against the six trillion JP Morgan moves per day.

See, in wanting to control the comings and goings of their own currency, governments may say they support technological developments but, trust that they would not support major currencies to go beyond borders that don’t have the same control over them.

And yes, this still isn’t enough to convince one why they should not buy Bitcoins…

1 Bitcoin (BTC) = 8342.3230 ZAR as at 15:22pm, 30 Aug. 16

2016 for the cryptocurrency has been especially interesting, from $70 million thefts to price spikes. You know, the price of one Bitcoin has doubled from this time last year, I’m not kidding, look:

Having bounced between $2 and $1137 over the past 5 years, the cryptocurrency isn’t known on the streets for being stable, but, it did become an unlikely haven during the aftermath of Brexit…

But only for a short while because soon after, the currency slid 25% in six days lol. See what I’m getting at; it’s the volatility that I myself have an issue with, like, the madnesses this currency has gone through in its short existence. Also, the $70 million Ocean’s Eleven type theft I mentioned earlier resulted in all customers on the exchange being cut 36 percent. Like… (If I was any less professional I’d have added an appropriate meme).

Given the concerns over volatility and security, many industry experts have a positive outlook for the digital currency.

“We always advise our investors to consider the fundamentals, but regardless of temporary shocks … the reasons to buy BTC have remained the same.” Co-founder of investment company Exante, Anatolly Knyazev went on say “if you were bullish last year, and we were and enjoyed the rally from $200 to $7000, then you should be bullish today.” in his email conversation with CNBC.

Keywords you should catch there are ‘fundamentals’ and ‘temporary shocks’ if you are an individual investor with a smaller account. The larger the investment portfolio you deal with, the more your strategy moves from being based on technical analysis to one with a focus on fundamentals. So if you have a small account, no hey, you are not the target market; these ‘temporary shocks’ would have tanked your account even though the trend may have been bullish.

But that’s just me.