Question: Can I just buy/sell/trade to BTC and hold it and still be profitable? I mean with money you'd need to invest it in stocks, bonds, and etc to make more cash and simply holding on to cash over the long term means the same as losing money. Is this also true with BTC? Will I be losing money if lets say I buy 2 BTC coins and just leave it alone without investing it?
2 Answers
Yes, for most people it is an easier option to obtain bitcoins through an exchange (or a private trade perhaps) than through mining.
The current market price of Bitcoin is essentially based on a balance between 2 outcomes:
- the anticipated probability of Bitcoin becoming completely worthless in future (eg if the encryption failed, or maybe if multiple countries outlawed it)
- the anticipated probability of Bitcoin becoming far more popular (and more highly valued) than it is now
The first outcome would probably lead to a price of around zero, and the second outcome could lead to a very high price.
No matter what you believe, Bitcoin is dependent on many factors beyond the control of an individual.
If you hold on to bitcoins, you're essentially hoping for outcome number two.
answered Apr 3, 2013 at 7:35
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Some countries declaring it illegal would not necessarily cause a price drop, it could actually make it more popular. Or not. But that's not obvious.– o0'.Apr 3, 2013 at 8:26
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@Lohoris, I agree; it's unknown what the effect would be. However, the potential is there. To cover either possibility, I intentionally added a "maybe" to the way I worded it! Apr 3, 2013 at 19:23
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True, but it is still in the negative effect side, while we don't know if it would be negative or positive.– o0'.Apr 4, 2013 at 10:24
Yes, mining is optional.
You will profit from selling and trading. Holding only means, unrealized profit / loss.
Bitcoin is deflationary, as opposed to inflationary fiat currencies. Bitcoin's worth is supposed to go up as there are less and less coins, and more people starts using it.
Anyways, exchange rate varies with investor / speculator / general public's current interest.
