Is bitcoin still a good buy?

Short answer - It sure is! We are still in an early and developing ecosystem.

Long answer - It is but bitcoin is still a volatile market. Invest for the long term ignore price spikes and falls that happen short term.

Obviously this article needs dating (October 2016) as week to week the landscape for bitcoin changes rapidly. Below are the main reasons why the price should go up with a contra list below for balance.

1. Lack of supply - Bitcoin halved in July meaning the supply discovered (mined) per day was slashed in half.  Miners will have stock piled supply of coin but eventually they will run out. It took about four months after the halving in 2012 for the price to respond to the drying up of supply.

2. Global economic gloom. Generally interest rates are low, some countries are even considering minus rates. Add to this record levels of debt, the central banks printing more and more money (devaluing the currency in your pocket) and you have the perfect storm driving people to bitcoin.

3. Getting institutional investors on the act. The bitcoin ETF (exchange-traded fund) is still awaiting approval for listing on the New York Stock Exchange. If this gets approval then it would mean that hedge funds, pension fund to easily buy into bitcoin.

4. Technology improvements to bitcoin. Bitcoin is more secure, open and robust than anything Paypal, Visa or the banks have to offer but it needs to scale up to the levels of through put they currently service. The up and coming Segregated Witness and Lightning network improvements should see competitive scaling in 2017!

5. Bitcoin is a battle hardened warrior. Bitcoin has a big target painted on its network. It says "if you think you can find the flaw in this open code then come on, we have a 10 billion dollar reward to find the exploit". Bitcoin has been unhacked for 8 years. Businesses, upstarts and now Central banks have plans or have made clones and alternative coins but still bitcoin moves onward still holding 80%+ of the cryptocoin market. This strong network effect might mean the ever developing bitcoin is just too far ahead to be caught by rivals.

6. The numbers. Only 21 million bitcoins will ever be brought into circulation. Now this figure confuses people when they think of a world population of 7.4 Billion. How can is be enough to be a global currency? Bitcoin is not the same as the dollar or the pound however. Each coin is divisible to eight decimal places 0.00000001, it is more than enough for a global currency. For me the the key figure to look at is global smart phone usage, these phones can hold bitcoin wallets. In 2016 we had 2 billion smart phone users. Even if that phone figure remained at 2 billion and never grew over time it would mean that with an even split of 21 million potential bitcoins it would give each person a net worth of 0.0105btc. So beat the average. Buy even a small amount of bitcoin and beat the average!

Reasons price could stutter or fall

1. Competition from other coins. Currently bitcoin enjoys 80% of the blockchain market. Ethereum is the nearest rival and that is a mere 10th of the market share. Businesses, banks and even countries are all looking to launch competing coins. Can they steal market share or will the new entrants merely expand the whole market for these digital currencies?

2. World wide ban. Bitcoin has been banned on and off in many countries. With everyone from the Bank of England to the IMF saying cryptocurrencies are the future an official world wide ban really does  not look likely. If it did happen the network would still operate but the price would certainly drop. When was the last time the whole world agreed on an issue though....

3. Scare stories. Threats of bans, media stories of ponzi schemes, drug/terrorist money laundering. Markets can be very human and humans tend not to look beyond a large headline!

4. Technology issues. Bitcoin has weathered all attacks on it's network up to press. Bugs have been addressed quickly but with the up and coming Segregated Witness will the added complexity mean that cracks appear in the technology?

All in all I see far more positives going forward than negatives. If you want to own a slice of the future it might be time for you to jump on board?