No yield, no matter!
In traditional finance, generating a yield on investments is often seen as a key aspect of investment strategy. However, when it comes to #bitcoin, the lack of a yield is not a disadvantage. Here are some reasons why:
Store of Value
Bitcoin is often viewed as a store of value, similar to gold. Just as gold does not generate a yield, Bitcoin's value is derived from its scarcity and demand, rather than any inherent yield or interest payment.
Bitcoin has a history of significant price appreciation, with annualised returns of over 200% since its inception. While this growth is not guaranteed and subject to volatility, it can still offer a significant return on investment without the need for a yield.
Bitcoin is a decentralised asset, meaning that it is not controlled by any government or institution. This provides an added layer of security and trust, as your investment is not subject to the whims of a centralised authority. The lack of a yield is simply a consequence of this decentralisation.
Lack of Counterparty Risk
Bitcoin does not require a trusted third party or intermediary to facilitate transactions, meaning that there is no counterparty risk associated with holding Bitcoin. This can be an advantage over traditional investments, where counterparty risk can be a significant concern.
Bitcoin can be a valuable addition to a diversified investment portfolio, as it is not directly correlated with traditional investments like stocks and bonds. This means that Bitcoin can provide diversification benefits without the need for a yield.
In summary, while generating a yield on investments is often seen as a key aspect of traditional finance, the lack of a yield for Bitcoin is not necessarily a disadvantage. Bitcoin's value is derived from its scarcity and demand, and its lack of a yield is a consequence of its decentralisation. Bitcoin can provide significant returns without the need for a yield, while also offering benefits like portfolio diversification and lack of counterparty risk.
Also not a Ponzi
It is also important to understand why Bitcoin is not a Ponzi scheme. A Ponzi scheme is a fraudulent investment scheme where returns are paid to earlier investors using the capital invested by newer investors, rather than from any legitimate investment activity or revenue generation.
Bitcoin, on the other hand, is a decentralised digital currency that operates on a peer-to-peer network, and its value is derived from its scarcity and demand. Bitcoin has a fixed supply of 21 million coins, with each coin being divisible into smaller units. It is not a scheme where investors are promised high returns or where returns are dependent on newer investors joining the network.
Understanding the fundamental differences between Bitcoin and a Ponzi scheme can help investors make informed decisions and avoid fraudulent schemes