Bitcoin made some incredible progress in the first decade of its existence. Since it started working back in 2010, the digital currency has defined the way all other crypto monetary projects can operate and successfully stand the test of time. What was only the first such venture ten years ago is now a single element of an ever-growing domain of both technology and finance. Because of that, it is no wonder that bitcoin is still captivating the imagination of not just the general public, but also some heavy-hitters from the domain of traditional finance and economics.
The latest such name is Paul Tudor Jones, who is an investor and Wall Street legend. With a portfolio worth billions of USD, Jones has been a voice that everyone in the investment and finance circles pays close attention to. Now, he offered his support to none other than the crypto field, more precisely bitcoin. In his view, this digital token is very much like an early investment into cutting-edge tech stock over 30 years ago.
Back then, these companies also offered products or services that many individuals and businesses simply did not get either in terms of potential or present functionalities. But, we all presently know just how smart any such investment in the 1980s or 1990s was. Jones’s statement also comes after he himself decided to invest money into the cryptocurrency network and attain a form of hedge against the upcoming ties of inflation and other financial difficulties. The direct impact of such an investment is limited in terms of market cap or token price, but also once again showcases the way mindsets are turning and making a complete reversal on previous ideas about cryptocurrencies and the BTC token.
BTC on Rails
Bitcoin is currently looking very strong, especially in terms of its price and the prospect of the future growth of market cap. That is aided by the investors who are more and more turning towards it, especially in the light of the general state of the global economy in 2020. This week, the price of a BTC token reached its highest level in over a year. Now, Paul Tudor Jones, who revealed earlier in the year that he bought bitcoin as a means of hedging against inflation came out with another interesting take on the cryptocurrency.
According to him, BTC tokens are like stocks of tech giants in their infancy. That is why he sees holding bitcoin today as very similar to having Apple actions in the era of Steve Jobs return to the company or having an investment in Google very early on. What is also interesting is the fact that Jones has some insight into the entire tech setup that bridges these two otherwise very different investments.
Value of Technology
Johns explained that the characteristics of bitcoin are essentially that of a tech stock. This is a concept that has been echoed before, but now it is apparently slowly seeping into the thought processes of regular market investors. This allows BTC to evolve and change because the same thing occurs on the actual blockchain network that is running the same software. As a changing and improving entity, it too represents something like a tech stock – a piece of a growing technology that is becoming more and more useful to an ever-bigger group of people.
In that circumstance, the pandemic is just a side element that is only propagating faster than the same thing that has been going on for some time – the rising value not only because of trader prospecting but because it actually offers more to its users. The same thing happened to Apple and Google as they expanded their products, services, and features. This is also taking place today in other cutting-edge tech industries like esports or social media. Johns simply believes that the bitcoin network is no different than any of these business entities.
High Risk, High Reward
Even when it gets the limelight from names like Jones, investing in bitcoin or any other cryptocurrency is still, in many ways, a hellish proposal. The process of crypto investment of any kind is one of wild price movement and an equal possibility for huge gains and equal losses. Any money placed in crypto can easily drop by something like 10 or 20 percent in a space of only a few days. The drops that occur in these moments are not any kind of transient process that returns to original numbers in just as short a time frame. Instead, like with the drops in 2018, when the gains of the massive bull run of 2017 were wiped clean, the price never returned – as of yet. That means that for anyone looking to make a profit in a short time period, including small profits, the process of crypto investment is a total gamble.
Even a relatively well-informed trader cannot be sure what tomorrow will bring, but unlike with the traditional markets, the same trader cannot count that even the worst-case scenario will be in single-digit percentages. Instead, the right circumstances, often totally unclear beforehand, can knock down thousands of USD from the crypto price for that individual token. On the other hand, long-term investment where individuals are comfortable with waiting months or even years until they get the price they have been waiting for. In those cases, the high risk, high reward principle applies completely. In the short-term, however, using that concept is nothing more than gambling in an online casino.
No matter the trading and investing side effects and difficulties, the fact remains that institutions are doing the same thing as billionaire investors and starting to take bitcoin and other cryptocurrencies seriously. PayPal recently revealed that it is doing what the rumors suggested for months and is introducing crypto trading and holding for its users. This shows a level of technological validation that these fintech companies are giving to bitcoin and crypto in general.
While they never had an issue with the basic understanding of the blockchain tech, many were unsure whether or not this is scalable and can be pushed further with new users. A decade after its launch, bitcoin is as stable and robust as it ever was. Today, with the pressures of a global recession and the threat of inflation, no major mover of money, regardless if they are an individual, group, or business entity, this verification of technology is an unmistakable green light for an investment.