Do you have $5,000? Buy this crypto now
Let’s face it: investing money in stocks can be daunting – and investing money in cryptocurrencies, especially now, can be even scarier. But that doesn’t mean people shouldn’t try to educate themselves about potential opportunities.
In fact, when asset prices are under pressure, as they have generally been in 2022, it might actually be the best time to invest. And there is one cryptocurrency which rises above the rest, possessing the least risk of other digital assets, while having a huge advantage.
If you have $5,000 you are ready to investlook no further than Bitcoin (BTC -1.02%). Now maybe the best time to buy it.
Bitcoin is the first cryptocurrency
Launched in 2009, Bitcoin is the oldest cryptocurrency, which is significant given that there are now over 20,000 digital assets. Bitcoin is a fully digital peer-to-peer cash system that does not need any central authority or intermediaries to operate. This contrasts sharply with the current financial system.
It is no coincidence that Bitcoin was created on the heels of the Great Recession, when major banks were bailed out with massive chunks of cash. The pseudonymous founder or founders, called Satoshi Nakamoto, were certainly motivated by what was happening in the economy at the time, particularly with regard to government intervention in financial markets. Bitcoin’s ultimate goal is to help build a fairer monetary system that is open to all and free from manipulation.
Despite its heartbreaking volatility, Bitcoin has produced a remarkable return of over 20,000% since May 2013. This not only crushes the total return of the S&P500but it must be the best performing traditional financial asset during this period.
Bitcoin benefits from a growing ecosystem
Unsurprisingly, this kind of monster return attracts financial speculation, which has characterized the entire crypto market so far. Therefore, the primary use case for Bitcoin today is as a store of value, or a “digital gold.”
As of this writing, Bitcoin’s market capitalization is just north of $400 billion, compared to the estimated value of gold in the world of $12 trillion. However, it should be emphasized that Bitcoin is divisible, transactional, portable, and more secure than gold. Moreover, the supply of Bitcoin is absolutely limited.
There still needs to be substantial investor participation for Bitcoin to approach the value of gold. Companies like Robinhood Markets and Coinbase make it easier for investors to buy Bitcoin. Digital payments giant PayPal has a feature called “pay with crypto” that allows users to make purchases with digital assets.
Moreover, a company like To block, led by Bitcoin enthusiast Jack Dorsey, has repositioned itself to focus more on developing the best cryptocurrency. For example, TBD is a segment of Block that attempts to build a decentralized exchange for Bitcoin. And Spiral, another organization within Block, funds developers who work on things like Bitcoin wallets and the Lightning Network.
Then there are the traditional financial institutions that open the floodgates for their customers to access Bitcoin. black rockthe world’s largest asset manager, said recently would partner with Coinbase to allow users of its Aladdin investment platform to buy Bitcoin directly.
The ever-expanding ecosystem of financial tools and infrastructure should help reduce friction and further adopt Bitcoin as a store of value over time.
Bitcoin is an alternative to the current monetary system
Bitcoin’s greatest potential lies in becoming an entirely new form of currency that is free from government control. Many people in emerging economies, facing hyperinflation and corrupt regimes, would much rather own a decentralized global digital currency that no one controls.
In the United States, the situation does not look good. High inflation for four decades and continued federal borrowing could cause the dollar to depreciate, making Bitcoin more attractive to hold.
Gary Gensler, Chairman of the Securities and Exchange Commission, as well as Federal Reserve Chairman Jerome Powell have both publicly stated that they have no intention of following in China’s footsteps and banning Bitcoin. The position of these two powerful personalities is a bullish sign for the top digital asset.
With $5,000 to invest, it’s a good idea to take a look at Bitcoin. This dollar sum could be worth several multiples in a decade.
Neil Patel holds positions at Bitcoin, Block, Inc., and Coinbase Global, Inc. The Motley Fool holds and endorses Bitcoin, Block, Inc., Coinbase Global, Inc., and PayPal Holdings. The Motley Fool has a disclosure policy.