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Bitcoin has um, how can I put this? Been on an absolute tear as of recently. People thought the highs that it reached in 2017 was extreme. Yea, you might want to think again, 2021, has put those previous highs to shame.
And what this has done is it’s left a lot of investors, as you can imagine, saying it’s a bubble. Stay away from bitcoin. It’s going to pop. Rookie investors are overinflating it. And there is some truth to that, but there’s also a whole different side of the, hmm let’s say coin that we need to discuss.
You see a lot of people like to jump on either the bull side of the argument very quickly or the crash side, but I want to give a bit of nuance in this video. Something we don’t really see much in this day and age. I’m going to do my best to try show you the full picture of things.
First of all if you’re investing in bitcoin, or even thinking about it, you need to know the basics of what it is. Ok, let’s think about it. More and more transactions are happening online right. Am I right or am I wrong. It’s the truth.
The problem is that each transaction goes through a bank or credit card company, who take a cut. Not only do they do this, but we put our trust that these big billion dollar finance companies will do everything right. Will they keep our details safe, will they insure the transaction is accurate, will they secure our transaction from hackers or employees in their own company. These are risks.
But what if we can just cut out these middlemen, with a safe and secure way. I bring to you bitcoin. Where instead of these big bank companies storing the transactions in a ledger, all of the users record all of the transactions at the same time. Thus there’s no way to fool the system.
Cut out transaction costs. Cut out the middlemen. Cut out relying on these big banks and credit card companies. This is the genius behind bitcoin!
And people aren’t dumb, people have been paying attention to this technology and they’ve been flooding the market with their dollars to buy bitcoin.
What this has done is its escalated the price of bitcoin to dizzying heights. Leaving the inevitable worry, and I’m sure you’ve seen this as much as I have, that bitcoin is in a bubble and it will pop.
So let’s address the arguments behind this idea of the bitcoin bubble popping.
First, the thing you need to realise about bitcoin is there’s no insurance policys, there’s no circuit breakers, there’s no backstops, bitcoins price could just collapse. And it’s not like oh we’ve hit $5,000 that’s the minimum it can go down and you’ll get a refund, no it could go to zero and you couldn’t say anything.
The other thing is that we’re in weird economic times right now. No one can deny this. People who aren’t used to free money are getting quite nice amounts of it, in the form of stimulus checks. Now some people do need this to pay for food, water, electricity, etc, but for a lot of people this is extra money. And they think, hmm let’s put this into the market. Let’s buy some bitcoin. And it pushes prices higher.
And it’s easy to do this. Easy to buy bitcoin these days. At least compared to 3,5, 10 years ago. You can just use PayPal, or square or sign up to Robinhood for free and you can start buying bitcoin.
These factors mean you get rookie, beginners, who are getting free money, don’t know much about the market and they can now easily put it in to bitcoin. A lot of investors are saying it’s because of these reasons why the price is too high and overinflated…
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DISCLAIMER: It’s important to note that I am not a financial adviser and you should do your own research when picking stocks to invest in. These are just some of my viewpoints, by no means would I recommend watching one YouTube video and then immediately buying that stock. This video was made for educational and entertainment purposes only. Consult your financial adviser.