Bitcoinmania

Bitcoins are on the headlines of many financial news articles, and it seems like everyone around me is reaping profits from the hype. Since Bitcoins can be bought in parts, many of my friends have invested in it and made a hefty profit. My first-year friend who goes to University of Toronto flamboyantly showed off on Facebook how he made his entire first year tuition by buying into bitcoin cash, which its values quadrupled in a week.

In the ocean of information that the internet offers today, I am wondering if this invisible money is qualified for long-term investment, and I am grateful to find a blog of a cryptocurrency trader that offers his take on bitcoins. The blogger has 5 years trading bitcoins, which a portion of it being full time. He posts his trades and give detailed explanations of the reasons for his trades, and how his portfolio is diversified. He dissects the bitcoin and other cryptocurrency markets into different tiers, and offers his strategies for each one of them. His years of experience are very valuable and pragmatic for any traders who are interested in this field.

I align with his beliefs with the huge profit potential of Bitcoins in the short-run. The profit can be made by buying or shorting based on the believe of Bitcoin’s huge upward and downward potential. However, I fundamentally disapprove the investment of bitcoin in the long-term, as there are too many risks to justify the stability of returns for bitcoins. Many illegal institutions use and drives up price of bitcoins because of its ability to be untraceable. Bitcoins also fluctuates erratically when policy changes, such as when China banned the trading of bitcoins. There is a large possibility sudden policy changes will appear in the future for regulation.

Based on the fundamental analysis of the soundness of investing in bitcoins, my conservative investing values still align with the value of the Sauder Portfolio Management Foundation. I admire the countless hours of research they are involved into knowing the inside and outside and talking to the company executives to know more about the company. The research mitigates the risk and fosters long-term growth.

I believe in the short-term opportunities of bitcoins. I applaud my friends for making back their living expenses for the year or their tuition. However, I do believe some of their winnings are driven simply by market forces, and they do not know why they won the money, or why they lost the money. In the long-term, to be an evergreen force of investment like Warren Buffet, one needs to know what they are doing inside out, and it is hard to achieve that with bitcoins.

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