The cryptocurrency space has been abuzz in recent months, with prices spiking to begin the year and then dropping sharply, new coins consistently coming to market, and heightened speculation about digital currencies potentially replacing traditional banking services and card networks.
While cryptocurrencies present interesting opportunities and potentially huge upside, there are also big risks. Cryptocurrencies could become a new kind of financial platform and an alternative to fiat currencies, but unlike stocks of businesses, cryptos don’t produce anything. So while a stock’s intrinsic value can be thought of as the present value of all future cash flows, any sort of intrinsic value for cryptocurrency is more nebulous; it will basically be worth what the supply and demand in the market dictates that it’s worth – which could be a lot, or nothing.
For all those reasons, if you are willing to take the plunge into cryptocurrencies, don’t bet any more than you can afford to lose. But if you’re going to speculate, one coin should definitely be at the top of your buy list.
Bitcoin: the OG cryptocurrency is still the safest bet
Since cryptocurrencies are relatively new, a basket approach may be best, but I definitely think the first and largest holding in any crypto basket should be Bitcoin (CRYPTO: BTC).
Why bitcoin? For the same reason Amazon.com became a dominant internet company, while many other potential competitors fell by the wayside: Bitcoin is a first-mover.
Beware:How…
