There are rumblings that we could see bitcoin used for retirement accounts.
Bitcoin is the flavour of the month, and a rash of reports of the rise and rise of the stateless digital currency has turned it into one of the world’s largest commodities.
Now there are rumblings that we could see bitcoin in retirement accounts.
One of the reasons for the popularity of this type of currency is that it cuts out the need for banks and financial institutions to act as a middle man. No surprise, with trust in banks at a low point. It is little wonder it has attracted the focus of investors, making it (in theory) an appealing option for retirement investment.
However, there is speculation as to whether the incredible surge in bitcoin value will also lead to the biggest bubble since the 2000 dotcom crash.
Since bitcoin’s creation, there have been around 1000 other cryptocurrencies developed in its wake. While most will end up being worthless, many predict that bitcoin will at least survive.
But at what value, no one can predict.
Still, the loss of faith in financial institutions may make cryptocurrencies ‘the new black’, with the appeal of “a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution”.
There are currently 16.7 million bitcoins in circulation at a total value of US$277 billion (at the time of writing). The number of bitcoins to be circulated will be capped at 21 million, meaning their ‘exclusivity’ may further increase their value.
But is it a safe investment?
The code upon which bitcoin works has never been hacked, although individual online wallets that hold bitcoin cash have been robbed by hackers.
There have been a number of ‘heists’ that have yielded hackers almost US$90 million in total and such attacks are what make bitcoin such a high risk.
And the nature of a cryptocurrency is such that should you be hacked or lose the password to your digital wallet, your money is gone with no recourse.
In other words, once it’s gone, it’s gone for good. One bitcoin tracker estimates that around US$61 billion has been lost through mislaid passwords or corrupt hard drives.
But this risk is not enough to thwart potential bitcoin investors.
Venture capital company Blockchain Capital published statistics showing that two per cent of adults held bitcoin but 19 per cent planned to within five years.
This could push the value up to hundreds of thousands of dollars, or not, no one can safely say.
The underlying lesson is that if you’re willing to take a risk and have expendable funds, then bitcoin may be a good investment. But with the risk comes the chance that you lose it all. Such is the nature of cryptocurrencies.
Read more at The Australian
Would you be willing to bet your retirement on it? Or would you rather sit back and play it safe? Have you invested in bitcoin? How have you fared from your investment?
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