Should I invest in Bitcoin?
Anything I say is not to be used as financial advice.
That being said, bitcoin is definitely worth considering.
And with bitcoin crossing the $10k threshold earlier this week, it’s no wonder people think it’s a bubble. It dropped below $1,000 in June of this year, and has absolutely skyrocketed ever since.
Investors tend to poopoo cryptocurrency for its incredibly volatile markets. With volatility, though, comes drastically increased profit margins. In less-than-6-months, bitcoin has increase in value by more than 1,000%.
To many it’s a sure sign of a bubble. To others, it’s a unique chance to make a fortune in a short period of times.
But let’s step back for a second. Think about it in terms of economics. When you look at a supply and demand graph, you see that as supply increases, demand decreases. And as supply decreases, demand increases.
This is known as an inverse relationship.
Demand is created through something called “scarcity”. Scarcity means to be in short supply. Think about it like water in a draught. There’s little water available, and thus demand drastically increases.
On the flip side, rain during a monsoon is in extreme excess. And people want nothing to do with more water.
These are examples you see in real life, but let’s look at scarcity, in terms of crypto.
There will only ever be 21 million bitcoins mined. In the world, there are roughly 33 million millionaires.
Even if every one of those millionaires wants a whole bitcoin, it’s impossible. There are simply not enough bitcoins to go around.
Scarcity builds demand.