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Created page with "This page discusses the case for owning bitcoin as an investment and store of value. ==The case for investing== # There is a fixed supply of bitcoins...."

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This page discusses the case for owning bitcoin as an investment and store of value.

==The case for investing==

# There is a [[Controlled supply|fixed supply]] of bitcoins. There will never be more than 21 million bitcoins.
# Because of bitcoin's [[Bitcoin as a medium of exchange|useful properties as a medium of exchange]], demand is growing or at least staying the same.
# Fixed supply and growing demand implies a growing price.

==Store of value==

Bitcoin has useful properties to make it a good store of value. It has been described as a "swiss bank account in your pocket".

* '''Cannot be debased.''' Limited to [[Controlled supply|21 million coins]] only.
* '''No storage cost.''' Bitcoins take up no physical space, [[Storing bitcoins|any amount can be stored]].
* '''Easy to hide.''' Can be stored encrypted on a paper, on disk, or even [[Brainwallet|memorized in your brain]].
* '''Can be made [[Anonymity|anonymous]]''', meaning nobody would even know you own bitcoins or how many.
* '''Easy to protect.''' Can be made impossible to steal or seize by any thief, government or bank.
* '''Censorship resistant.''' The coins can be [[Bitcoin as a medium of exchange|sent anywhere in the world through the internet without being blocked]].
* '''No counterparty risk.''' Coins are in your possession, if you keep the [[private key]] of a bitcoin secret and the transaction has enough [[Confirmation|confirmations]], then nobody can take them from you no matter for what reason, no matter how good the excuse, no matter what.

Even if these properties are not useful to you, they may be useful to others which would benefit you by increasing the value of your held bitcoins.

==Useful notes==

===Difficulty with storing and theft===

Because bitcoin is a digital asset, it can be un-intuitive to store safely. Users should definitely [[Ways to store Bitcoins|read the guides]] for correctly storing bitcoins. Historically many people have lost their coins but with proper understanding the risks can be eliminated. If your bitcoins do end up lost or stolen then there's almost certainly nothing that can be done to get them back.

===Preserving these properties===

Bitcoin is a software project. There's an obvious question of how it's useful properties can be maintained. Couldn't some programmer simply edit the source code to create more than 21 million bitcoins? The answer turns out to be no. Bitcoin is secured by strong cryptography and game theory, and it's properties are very hard or impossible to change.

See also:

* [[Myths#Miners, developers or some other entity could change Bitcoin's properties to benefit themselves]]
* [[Principles of Bitcoin]]
* [[Economic majority]]

===Volatility===

Bitcoin is much more volatile than some other assets. This can be good when the price is rising but bad when the price is falling. One way to deal with this is to only hold a certain percentage of your savings in bitcoin and the rest in more stable assets. You could also deal with it by studying bitcoin's fundamentals deeply so that temporary price drops do not scare you into selling low. Investing with a dollar-cost-averaging strategy can also reduce the effects of volatility.

===Uncorrelated asset===

Although bitcoin is volatile, it is mostly uncorrelated with any other asset classes. This means bitcoin can reduce the overall volatility as part of a well-diversified portfolio.

==See also==
* [[Bitcoin as a medium of exchange]]
* [[Principles of Bitcoin]]
* [[Irreversible Transactions]]
* [[Controlled supply]]

==Source==

[http://bitcoin.it/ http://bitcoin.it/]

Bitcoin as an investment - Revision history

Admin: Created page with "This page discusses the case for owning bitcoin as an investment and store of value. ==The case for investing== # There is a fixed supply of bitcoins...."