Being trapped in debt is the sort of situation that can cause you to consider unusual and even risky approaches to getting back on an even keel. With 73% of Americans now leaving debt behind when they die, it is clear that more people than ever before are looking for a way of paying off what they owe. Bitcoin started 2017 at well under $1,000 and shot up to over $19,000 at one point, so it is no wonder that some people see this digital currency as offering a way out of the debt trap. It may be the world’s fastest growing asset in recent times but is it the type of investment that could get you back on your feet again financially?
The People Who Have Made Money on Bitcoin
It is clear that there are plenty of people out there who have made lots of money on this cryptocurrency. Best placed of all are the early adopters who got in when Bitcoin was valued at a dollar or less. The incredible surge in price that it has enjoyed has no doubt changed some lives, but it is worth remembering that many of the people who have made a fortune from Bitcoin were already extremely wealthy individuals in their own right. Well-known investors who have made money from this currency’s rise in value include billionaire venture capitalist Tim Draper, who bought 30,000 bitcoins in 2014. WikiLeaks founder Julian Assange claimed in October 2017 to have made a 50,000% profit on his coins. By looking online at blogs and forums we can see a few stories of ordinary people who say that they have managed to clear their debts thanks to their Bitcoin profits. However, we need to bear in mind that these are investors who typically bought in early and at a very low price. What you should be more interested in now is what the price is likely to be in the future.
The Future Prospects
The truth is that opinion is sharply divided over what the future holds for Bitcoin. Some optimists believe that it will carry on climbing ever higher, while the pessimists think that it is an economic bubble that will burst very messily at some point, just like similar boom periods with other investments in the past. Among those who think that the best is still to come is former hedge fund manager Mike Novogratz. He has proven to be accurate with many of his cryptocurrency predictions to date and recently stated that Bitcoin could reach as high as $40,000 by the end of 2018. Another cryptocurrency expert, Julian Hosp, was recently quoted as saying that it could go all the way up to $60,000, although he also believes that it could drop as low as $5,000 at one point too. It is worth bearing in mind that as more merchants accept Bitcoin as payment it should become more useful and therefore more sought-after. Analysis of this matter by Betway Casino article, suggested that Bitcoin could be used widely for gambling in the future too, although the viability of this may depend upon how high the price rises. Those who take a less positive view of the future of Bitcoin include Credit Suisse Group AG CEO Tidjane Thiam. He commented recently that it was the definition of a bubble as people are only buying the currency with the aim of making money. Also in the news for his negative views on Bitcoin has been JP Morgan CEO James Dimon, who called people who buy it “stupid” and threatened to fire anyone in the company who invested in the currency. More recently, a team of Morgan Stanley analysts led by James Faucette suggested that the value of Bitcoin should be zero.
The Dangers of Borrowing to Buy Bitcoin
Perhaps the riskiest thing that anyone in debt could do to try and get back into the black is borrow money to invest with. This is particularly true in the case of highly volatile investments such as Bitcoin, which can gain or lose thousands of dollars in a matter of hours. Yet, US securities regulator Joseph Borg said that there are Americans who are running a big risk taking out mortgages or running up credit card debts in order to buy into the cryptocurrency. For any investment of this type to make sense, the investor would need to feel sure that the return is going to be greater than the interest to be paid. While there have been periods at the end of 2017 in which this currency has risen in value by 25% in just 48 hours, there is no guarantee that spectacular increases like this will continue to be the case. If your home is at risk on this investment then you are going to be in for some very hairy moments as the price goes up and down.
Could it Suit Some People?
As we can see, there are a number of factors to take into account when deciding whether to invest in Bitcoin. This is an even bigger decision when you are in debt and looking for a way out. It is certainly a very different approach to living a more frugal lifestyle by making changes such as cutting down on your electricity use or lowering foods costs by planning your weekly shopping very carefully. It is the kind of investment that has a degree of risk attached to it, so you will want to carefully consider whether it suits your personality and current financial situation before deciding whether to go ahead.
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