Why would someone want to purchase bitcoin currency at $17000?
Why would someone want to purchase bitcoin currency at $17000?
This question originally appeared on Quora, the knowledge sharing network where compelling questions are answered by people with unique insights.
Answers below are by Tim Ventura, Mike Timmons, Kenneth John McPherson and Bent Larsen.
Tim Ventura, Digital Marketing Executive
Updated January 2nd, 2017
I just bought digital currency, let me explain: First a warning: buying Bitcoin, Ethereum, or Litecoin is a high-risk speculative investment, nothing more. Unlike Gold, these currencies have no industrial or even traditional social value, so their selling price is entirely based on what people will pay for them right now – and that changes on a momentary basis, making them highly volatile. What do we call a highly-volatile investment? A gamble. Just like Vegas, you need to know your limits. How much can you afford to lose? How much will investing that amount in Bitcoin likely gain for you? You need to set limits for yourself BEFORE you spend money, and don’t spend more than you can afford to literally walk away from. If you’re married, this is something you agree on with your partner ahead of time, understand?
Why Buy Bitcoin At $17,000+? You can buy increments of Bitcoin, and it’s easy to create an account on Coinbase and invest $100, $500, $1,000 in Bitcoin at time you want. You don’t have to spend $17k (and personally I’d recommend against that much anyways). What’s most important isn’t the overall price-per-Bitcoin, but the rate of change. So if you invest $1,000 in Bitcoin at $17k, and the price per coin goes to $34k, then you’ve made a thousand bucks. The overall price of Bitcoin IS important, though, because at $17k per coin, it’s going to take a LOT of additional increase in value to double your investment. So the question is whether you think it’ll reach $34k, or will it crash before then? James Altucher predicts bitcoin will reach $1 million by 2020. If that turns out to be true, then the thousand bucks you put in will increase in value 58 times. Now the Bitcoin craziness makes more sense, doesn’t it? Scary big numbers – both in terms of risk & return. What’s even more scary is that the whole thing may collapse tomorrow, which is why you shouldn’t invest even a penny more than you can afford to walk away from. Why Buy Bitcoin At All? Once you’ve decided to buy digital currency, the next question is “which one”? I’m registered with Coinbase, which makes it easy to sign up & buy Bitcoin, Ethereum, and Litecoin – and the values are increasingly rapidly for all three of those. My father believes in Bitcoin because of the name value, but I got in late, so I actually purchased Ethereum because it’s way behind Bitcoin in terms of price, which means it has more room for easy growth. Right now Ethereum is about $740 per unit – which means it’s a lot easier for it to double than Bitcoin, which is over $17k. That was my reasoning, at least. Ethereum’s had a couple of recent security issues, but overall it’s also a bit newer technology – I’ve read posts both for and against it.
I’m looking at buying Ripple (XRP). This isn’t sold on Coinbase, but it’s an up & coming digital currency with applications for international banking, which I feel will protect it from some of the volatility of the Bitcoin market (hopefully). Also Ripple transactions process many times faster than Bitcoin, which should make it actually more useful for online transactions.
My standard disclaimer: cryptocurrencies are highly volatile. Never invest more than you can afford to lose. This post contains personal opinions only, and not financial advice. I take no responsibility for any financial decisions that you make.
Mike Timmons, Happy traveler…
Answered December 14th, 2017
Why would someone want to purchase bitcoin at $17000?
They are displaying irrational behavior that can also be seen in what is described as the “Dollar Auction” game.
A $20 bill is auctioned off to the highest bidder. Bidding begins at $1. All subsequent bids must be in single dollar increments. The “twist” to this auction is that while the highest bidder wins the twenty dollar bill, the second highest bidder must pay to the auctioneer what he or she bid as well. In this auction, there will usually be not only be one loser, one who pays money for nothing, and but two.
Again and again this game play has the same result with each new group. The players continue to bid up the price until ‘somebody breaks’ and refuses to bid higher. A good video at:
Today, instead of an auction in a beer-garden, the major players are Japanese. Since China began to shut down cryptocurrency exchanges over 40% of cryptocurrency trading in October and November was yen-denominated.
Good data at: Deutsche Bank Says Japan’s Retail Investors Are Behind Bitcoin’s Surge
The behavior in the Bitcoin market is the same seen in the Tulip bubble or the selling of mortgage backed securities. A key point to remember that a bubble can only exist when the participants all swear that ‘it’s not a bubble’. When the price gets ‘too high’ the bidding will stop and there will be a stampede for the exit. Unfortunately at that point there will be no buyers to support the price.
Buy hey, I could be very wrong. I know there is no way to predict when that day will come. Great drama… This answer, by the way, has more thought behind it than any other response I have seen so far to this question…
Kenneth John McPherson, Engaged in Bitcoin mining.
Answered December 20th, 2017
I would guess many of those entering the Bitcoin buying frenzy in the last year have seen profit but a % will also have lost due to strategic misunderstanding of what they were embarking on terms of the volatility and thus the entry point if un-planned was high and the reversal of a trend occurred resulting in a reduction of value.
Lack of trading experience will undoubtedly result in losses due to the market behaviour as seen above because the fluctuations in the market have seen intraday swings of 5–30% which is less common in other trading areas e.g. Forex, Stocks and Bonds.
When people compare Bitcoin with a less well known Alt coin and “think” or “believe” it will replicate it’s growth one has to really understand how the market works and on what basis such a scenario can become reality. We are dealing with different dynamics by comparison with the Forex market in fiat currencies that are governed by the economies of a whole country versus that of another and the strength which governs their values.
The complexity of buying any investment is where it’s highs and lows are and understanding the exit points to base your observation of performance and potential to reach a higher high or drop to a lower low and this is part of all investors mindset. Price perception and Asset Value call for analysis of those features to know whether you are buying into future growth or a projected “Bubble” and again one has to keep this in mind since few investments grow at the rate which Bitcoin has in the last year.
Never invest funds you cannot afford to lose.
Bent Larsen, Cryptocurrency enthusiast
Answered Decemeber 28th, 2017
People want to believe that they too will buy at 17k and it will continue to increase to 30k or 40k and they will end up making a lot of money. They will do this with money they can not afford to loose but will believe all the hype in the news and internet that cryptocurrency is the best thing since sliced bread.
They do this without educating themselves beforehand on the specified coin they would like to buy. I strongly advise to educate yourself on the coin you want to buy before buying it. Also never invest money you can’t risk losing.
A good and trusted place to store cryptocurrency is Binance. Unlike other sites you will automatically get new cryptocurrencies within a few days after a coin you own has forked. Binance is very quickly becoming the best exchange site out there. Unfortunatly though, it is not possible to buy cryptocurrency directly from Binance, it only offers the ability to store and exchange with other coins. You can buy the coins from Changelly and then send them to your wallet in Binance.
Happy trading and investing in the money of the future.
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