Bitcoin continues to make history. It passed $ 20,000 in December. He did the same with the 30,000 and 40,000 in January; and last week it achieved $ 50,000 for each bitcoin. This weekend it also achieved a rise of more than 3.75 points in its price and reached 1 trillion dollars in market capitalization. It is the first cryptocurrency to achieve this level, according to available data from Investing.
But, What is the reason for the revaluation of the cryptocurrency, which already reaches 50,000 dollars?
“This phenomenon has occurred because there are large buyers and financial companies that are regulated and important, who have decided to participate in the bitcoin ecosystem.” So says Eduardo Gavotti, economist and financial expert.
Gavotti explains that bitcoin has served to protect citizens’ money from the global economic crisis, generated due to the covid-19 pandemic. He argues that people have decided to invest in this asset, as at some point they did with gold, to prevent their resources from losing value. He describes the currency as “digital gold.”
“Bitcoin has had a trajectory in which it has been perceived as a currency and today, the market has given it more of a role as a store of value. In fact, there are people who call it digital gold because it fulfills the traditional functions of gold which is to protect the value over time and has characteristics of scarcity by design. The mathematical design establishes that there is a finite number of how many bitcoins will exist in history: 21,000,000, “he says.
Despite the fact that financial experts do not trust this cryptocurrency, most trust that it is a safe system and they have long expected it to achieve the performance it is having. The pandemic and the response of banks around the world contributed to making the leap.
“There is a part of the financial market of the institutional part that expected assets such as bitcoin to perform like the one it is registering, motivated by the relative loss of the value of the dollar in global markets and this is due to the actions of central banks in the face of the pandemic ”, he affirms.
In addition to the financial markets that decided to enter the bitcoin business, large companies joined in, which, Gavotti explains, gave the currency greater support and credibility.
MicroStrategy, Tesla and Paypal are some of the companies that began to carry out and allow bitcoin transactions within their platforms. “When you have such strong demand, the price is motivated and that gives validity to those who follow the financial market,” he says.
Will bitcoin keep rising?
Like any other business in the financial world, there is no certainty about how the value of the currency will behave. However, Gavotti predicts that it could have good results in the long term.
“Prices never go up or down in a straight line. In fact, one of the characteristics of bitcoin, being a still young currency, is that it is excessively volatile. I would not advise that those who go into business do so seeking profit in the short term. This is because volatility can play with emotions if you are not prepared for these types of waves. For this reason, the investment horizon must be longer term ”, he clarifies.
On that long-term horizon, Gavotti argues, bitcoin still has great growth potential. For example, in 2017 bitcoin had its highest growth and reached 20,000. Then it had a big drop to 3,000 and now you have this new growth.
“Investors who did not invest in the house at that time, today are winning because the price soared. Along the way there will be significant price drops ”, he highlights.
Why is the identity of its creator doubted?
Satoshi Nakamoto is the person or group of people who created the Bitcoin protocol and its reference software. However, it has been alerted about the little knowledge that is had about this person. In fact, major media outlets have done extensive research to reveal his identity. They have not been successful.
For Gavotti, this would be an irrelevant fact in the operation and success of the currency. It ensures that the corresponding financial publications have been made to demonstrate the safety of bitcoin. It acknowledges that the standards established in 2008 have been met.
“It was made under a pseudonym because it doesn’t matter who is doing it. That person is unwilling to win a Nobel Prize or be threatened by world powers. It’s as if we wonder who created the dollar, it doesn’t really change anything. I understand that there are people who believe that by having the name of the creator, they can point to a person and have a culprit if the thing is a scam. But the original role posed by the business has been respected, “he says.
“Bitcoin is not new. He is 12 years old and despite his ups and downs, his code has not been violated. The incentives have been so well designed that everyone who has decided to enter the system has chosen to play by the rules of the system. Other cryptocurrencies have been created, but for now bitcoin is the one that I venture to defend, ”Gavotti highlights.
What is it like to invest in bitcoin?
Investing in bitcoin is like investing in gold. The reason someone buys gold is because over time it will hold its value or actually increase. It is the phenomenon of appreciation of that asset that tells you that your assets will be protected, ”explains the financial expert.
“There are many ways to buy it. There are companies that in most serious countries are already regulated and that allow you to make purchases through your bank accounts. You can buy the amounts that the company allows you and then that bitcoin is registered in what is known as a digital wallet ”, he adds.
And although the greatest concern of citizens is the security of not being scammed, there are security protocols that prevent users’ digital wallets from being hacked or compromised.
“Many are concerned about the security of their data because we are talking about something totally digital and it is like the password to your email. But that security depends on who our digital wallet provider is and there are very good providers that guarantee reliable security protocols ”, he highlights.
Regarding the certainty that the business will generate profits or be profitable, Gavotti recommends those who decide to enter the business to do so considering all the risks that must be taken into account when investing in the financial world.
“The second concern is the investment security of how to ensure that this does not go to zero. Nobody has that answer. You can have expectations, but like other investments, you must be aware of how much our risk capital is. It’s the same as when you start any other business, “he warns.
Can it be done from Venezuela?
Yes it can be done from Venezuela. A currency account is likely to be required, but can also be done directly between people and without converting to other currencies.
“There are companies in serious countries that have no problem allowing Venezuelans to have their wallets. The problem is that to do so, you will probably need a currency account. But a person who does not have an account abroad can opt for negotiations that are person-to-person. For example, in Local Bitcoins you can carry out the transaction ”, explains the also economist.
Recommendations to be safe: how to avoid a scam?
The specialist’s recommendation is that people look for a good financial advisor. Indicates that there are recognized companies around the world.
“If you are entering a scheme in which they ask you to bring more people and they tell you that the objective is not to take advantage of your investment, but to generate a community, that is a warning flag. Also if they talk to you about recovering the investment. In the financial world, everything depends on how the market develops and when we invest ”, he emphasizes.