No longer a bubble: This price increase is more stable than in 2013, and buying Bitcoin is a wise investment choice

Bitcoin, a currency backed by computer technology, has had a tough few years. At the end of 2013, the price of the currency reached a peak of $1,216, but in the following year or so, the price took a sharp turn and fell below $200. Now, the price of Bitcoin has returned to above $1,100 and may soon set a higher record.

The 2013 surge in prices turned out to be a tragic event. Is Bitcoin headed for another crash this time around? Or is this a good time to start taking a serious look at Bitcoin?

The story of the 2014 cryptocurrency crash

About four years ago, Bitcoin began to attract countless investors around the world. As a hobby project, this cryptocurrency has grown from "almost worthless" in 2009 to hundreds or even thousands of dollars per unit. Investors, speculators, and even outright gamblers are trying to find ways to profit from this new thing. Cryptography enthusiasts have done a lot of rigorous calculations behind the scenes, using special math processing chips to process these increasing Bitcoin blocks.

However, a lot of rumors followed. Critics called the growth of Bitcoin prices a "bubble" and undermined people's trust in the currency. In their view, what they feel is reality, or that the true value of a tradable asset without gold reserves or government backing is very questionable.

As a result, the price of Bitcoin fell. The decline accelerated when Mt. Gox, an exchange that managed nearly 70% of the world's Bitcoin transactions, declared bankruptcy. Mt. Gox's CEO was arrested shortly after declaring bankruptcy and charged with embezzling $390 million in customer funds. Since then, many exchanges have closed down or been attacked, usually due to insider embezzlement. Whenever such incidents occur, they trigger a rush to sell Bitcoin, and the price of Bitcoin has repeatedly plunged amid rising trading volume.

What's different this time?

I would say that the 2014 crash was necessary. It drove unreliable speculators out of the Bitcoin game, created a new exchange arrangement, and strengthened the community's response to risk. Although Bitcoin has been illegally misappropriated from time to time, I would like to reiterate that any currency can be misused and even involved in scandals.

More importantly, companies and government regulators are beginning to view Bitcoin as an important and valuable resource. Goldman Sachs has invested millions of dollars in a Bitcoin trading management platform in the hope of profiting from it. Other banks and financial institutions are also planning to launch Bitcoin exchange-traded funds (ETFs) and expect to be approved by the U.S. Securities and Exchange Commission (SEC).

Large credit card issuers may not integrate bitcoin into their services, but they are studying the underlying technology to improve transaction management, which could also help boost the bitcoin market.

In addition, you can use Bitcoin to purchase a range of real-world products and services. Microsoft's online store accepts Bitcoin payments, including the purchase of digital content and games: Windows, Xbox Games, Xbox Music, etc. Time magazine subscriptions can also be paid with Bitcoin. Newegg, an online retailer of IT digital products in the United States, not only accepts Bitcoin payments, but also offers a 10% discount to users who use this payment method. This list is still growing.

Most of the retailers mentioned above do not define Bitcoin as real currencies such as dollars or euros. In their view, Bitcoin is more like a new type of gift card, but the management is unknown. But even if they have such an attitude towards Bitcoin, it is a sign of confidence in this ecosystem. These companies also seem to be interested in promoting the daily use of Bitcoin.

Huge progress

Yes, things are different this time.

Although Bitcoin is still not as reliable as gold or the US dollar, and its practicality is not as good as cash or credit cards, it has made great progress compared to a few years ago and is gradually developing towards reliable and practical characteristics. Assuming that the scandals of shady operations are no longer there, the price of the currency will no longer fall frequently in the next few years, but will become more stable.

Of course, you shouldn’t bet your entire fortune on Bitcoin. Today, the risks associated with Bitcoin are lower, but they are still significant. In addition, currency trading is not a stable investment, even when trading real-world currencies such as the US dollar, RMB, and the euro.

However, it is very beneficial to buy some Bitcoin within your means. I personally bought about one-fifth of a Bitcoin two years ago when the price was not high. This small investment has a return rate of nearly 5 times. This investment will not make me rich, but it is enough to arouse my interest and encourage me to continue to learn about this aspect.