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BITCOIN, BIASES, And ESG MONEY
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Bitcoin is a cryptocurrency that has been generating a lot of buzz in the financial sector. To better understand how it works and if it could be a good investment for you, let's examine what Bitcoin is, why it exists, how to buy Bitcoin, and whether or not Bitcoin makes sense as an ESG money.
Bitcoin was created in 2008 by someone using the alias Satoshi Nakamoto. At first, people assumed he was Japanese because of his pseudonym but this assumption has since been disproven when Australian Craig Wright publicly asserted himself as the creator of bitcoin.
With no central bank or government backing its value to speak of, bitcoins are essentially worth what other people will trade them for on various exchanges around the world at any given time which means they can fluctuate wildly. In December 2017, the price of a single bitcoin was over $18 000 CAD but by January 2018, it dropped to below $13000 CAD.
Bitcoin is a very different phenomenon from anything that has come before it and as with all things pioneering, there are unique advantages and disadvantages that must be examined before you can determine if Bitcoin is a good investment for you.
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Bitcoin Advantages:
It can't be manipulated by any government or bank because no one controls the network It cannot be counterfeited There are a limited number of bitcoins being mined so inflation won't dilute its value Unlike other currencies, bitcoin's value is not subject to interest rates which means investment gains are not taxed
Bitcoin Disadvantages:
Bitcoin is extremely volatile If you lose your private key to access your bitcoins, there's no way to get the lost coins back It's very difficult for most people to understand how it works and know if they're using it correctly or not As there is no insurance for bitcoin theft, that money is gone forever
Since there's no way to stop the creation of bitcoins, there are a limited number in circulation. This means that inflation won't ever reduce the value of your bitcoins— only increase it! In fact, over time bitcoin prices might actually rise compared to currencies with more inflation because people will be less likely to exchange them for goods when they know their value is expected to go up over time.
On the other hand, buying bitcoins can be very difficult with banks and people usually requiring identification in order to open an account on most exchanges. This means that some people may not have access to this new form of wealth or cannot buy more bitcoins even if they wanted to.
Anonymity is another advantage of bitcoin. Since there is no way for anyone to see what you do with your bitcoins, there are few limits on how it can be used. You could buy illegal drugs or other illicit items online and then use bitcoins to make the purchase without ever exposing your identity! This makes it very popular in certain circles but also makes it a huge target for hackers, scammers and spies.
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There are still plenty of risks that come with buying bitcoins as an ESG money even though there are some benefits to doing so. First of all, it's impossible to tell if your bitcoin is actually worth what you paid for it because the price changes every day.
For instance, if you bought one bitcoin in December 2017 when its price was $18000 CAD and then sold it at the end of January 2018 when the price was down to $13000 CAD, you would have lost over 40% of your money! Even though this is partly due to how volatile bitcoins are, most people still think that it's a good idea to only invest what you can afford to lose.
While there are some explanations for why bitcoin prices are so erratic, they're difficult for most people to understand which makes it hard to sell Bitcoins with confidence if something goes wrong or the price starts to fall unexpectedly. You also have no way of getting your money back if you lose access to the bitcoins in your account so there is no insurance if anything happens.
Since Bitcoin has no central bank or infrastructure, it's also very difficult to change how much you're spending when making a purchase with bitcoins and most people can't risk giving away their private keys for this reason.
Finally, it's also extremely easy to steal or scam bitcoins from other people. You can send a fake bitcoin wallet to a friend and then drain all their bitcoins into your own wallet without them ever knowing! Since there is no way to identify the account owner, there's nothing they can do to get it back.
In fact, hackers actually use this technique as a way to get people to install various types of malware onto their friends' or coworkers' computers so that they can steal all their bitcoins whenever they want.
So is investing in Bitcoins an effective ESG method? Well, not really.... However, there are many other ways you can go about it!
You could always try buying shares of companies like Coinbase or Bitcoin Investment Trust that you feel are committed to ESG and would benefit from Bitcoin use. However, unlike Bitcoin itself, they do not actually control their own supply so the price is still subject to traditional market forces. This means you could potentially lose or gain money even if Bitcoin does well!
Another option is to create your own index fund of various cryptocurrencies. This way you can invest in various coins that are committed to ESG principles without worrying about how they'll affect the price of your investment!
Though it's possible for Bitcoin prices to go up, there are always risks involved when investing in cryptocurrencies as ESG money. As with any type of investment, you should never risk more than you can afford to lose and always do your own research before committing any of your savings or retirement accounts.
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@zeebhutta
Amazing post! This will be quite helpful and useful for those who don't much about Bitcoin and cryptocurrencies and how they work. You explained it well!
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Thanks 🌹
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Wow, you have given a wonderful analysis on Bitcoin. Very helpful information.
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Thank You ❤️
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Congratulations your post has been selected in the best picks, keep following the #club5050
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Thank you ❤️
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#club5050 😀
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