As an owner of that business, you are entitled to a slice of that profit. That’s because conventional investments offer the chance to generate cash.Īs an example, stocks are a slice of business ownership. What this means is, bitcoin is different from more conventional investments like stocks, bonds and real estate. Or rather, you’re betting that the price of bitcoin will go up compared with the U.S. When you invest in bitcoin (or gold, or oil, or other commodities, or any other currency, or fine art), you are betting the farm on price appreciation alone. As sexy as investing in bitcoin sounds - and despite the recent run-up in price - there are at least two fundamental problems with investing in bitcoin right now: PROBLEM #1: YOU LOSE MONEY AFTER INFLATION (NEGATIVE REAL RETURNS) While this isn’t a problem in itself, investing in bitcoin does pose some specific challenges.

In other words, at any given time, bitcoin is worth whatever the market says it's worth. This means, when it comes to your investment return (opens in new tab), bitcoin faces the same uphill battle as investing in: For the purposes of investing, bitcoin is similar to any other currency (or commodity) investment.

Bitcoin stock price 2017