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Why Everyone Should Own Bitcoin

Short answer:

because of the insane Risk/Reward ratio

Long answer:

Every investment or trade should involve weighing out the potential reward against the risk. Of course, the higher the reward, the more you can be prepared to risk. But there's another component: the probability that it will turn out in your favor vs the probability of it failing.

For example, most national lotteries (probably all) have a terrible RR ratio. Sure the jackpot sounds enticing but the odds of winning it are so low, that, if you had infinite attempts, you'd need to spend more money on buying tickets than even the jackpot would cover in the rare occasion that you win.

So at first glance, a lottery seems like it has a great RR ratio where you risk $1 to get millions, but the odds are what drive it down again.

What about a savings account?

This is the other extreme. Savings accounts currently have an appalling RR ratio. Sure, your risk is virtually zero. And the reward is all but guaranteed. So one might say "how can that not be a good investment then?" Here's why: Because your "certain" reward is less than the inflation - which means it isn't a reward at all but a loss. In short:

Savings accounts are a CERTAIN LOSS

And Bitcoin?

The Risk/Reward ratio of buying bitcoins is off the charts. First let's talk about the risk. The worst case scenario is that it goes to zero. And the reward? This is the key. Because the best case scenario is that bitcoin becomes a global currency. And given that there will never be more than about 21 million bitcoin, this means that a single bitcoin can potentially reach values of millions or even a lot more. There is no limit. And at the time of writing this, one bitcoin is around $400.

What does that mean?

It means that if you put in just $50 dollars, you could either lose it all, or you'll become rich as hell. Or something in between.

This is an absolutely incredible situation. At such insane numbers, the odds of one happening vs the other, start to take a secondary role. Knowing this, you would be crazy not to buy at least a small portion right now. And what's more, the odds aren't even bad. Bitcoin is clearly not just a fad. Its usage is steadily growing and has been for years. Businesses are adopting it and an entire industry is forming around it. I'd say the odds are significantly better than buying 50 lottery tickets. And the jackpot is nothing compared with what bitcoin could potentially do.

I feel we have a duty to inform our friends and acquaintances about this. Tell them the truth: you don't know what will happen and chances are they might lose it all so they should not invest more than they don't mind losing. But that's the beauty of it, you don't need to invest a lot in order to potentially win a huge amount. Not yet anyway.

Comments  

 
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