What you need to know
- Bitcoin has enjoyed something of a rally over the past year, reaching a new all-time high of $73,000 back in the spring, making it the best-performing asset of its type for 2024.
- Improved guidelines at a state level has driven increased confidence in the cryptocurrency, which has even Microsoft seemingly interested in jumping on the crypto train.
- On December 10, 2024, Microsoft plans to let shareholders vote on whether or not to invest in the currency.
As a tech enthusiast with a decade-long experience in the industry, I’ve always been intrigued by the rise of Bitcoin and other cryptocurrencies. I remember when it first emerged, I wished I could invest back then, but alas, I was still figuring out how to set up my first email account!
This year, Bitcoin has been performing exceptionally well, even drawing interest from tech giant Microsoft, who are currently contemplating an investment in the digital currency.
For those unaware, Bitcoin is a well-known digital currency characterized by its artificial scarcity due to intricate mathematical computations. Often referred to as “mining,” the process involves using high-performance graphics cards, such as those produced by NVIDIA, to carry out progressively complex calculations. The reward for this work is fractions of a Bitcoin token. These Bitcoins can be bought and sold much like traditional assets such as gold or other investable commodities, with the transactions verified through blockchain technology. Unlike traditional markets, the Bitcoin trading market operates continuously, around the clock, and has been a focus of numerous debates and controversies.
Cryptocurrencies are frequently used by wrongdoers to dodge the same level of oversight as conventional currencies, and they consume significant amounts of computational power, raising concerns about their impact on climate change and carbon emissions. However, Bitcoin is increasingly being mined with renewable energy, and advancements in regulation have made it simpler to trace criminals who abuse the currency for their own gains.
Over the past year, numerous regulatory enhancements have significantly increased trust in Bitcoin, causing its value to soar. It reached an all-time high of $73,000 per coin earlier this year and has consistently held that level since then. Compared to other similar investments, Bitcoin has thrived, often being considered a secure “off-grid” digital investment that may help investors avoid problems faced by conventional assets. However, it’s important to note that Bitcoin tends to behave similarly to traditional stocks when market volatility arises.
Regardless, it appears that Microsoft has positively received the confidence-building move, as they are considering allowing their shareholders to decide if the company should begin investing in cryptocurrency, according to a recent Securities and Exchange Commission document.
According to reports, Microsoft’s board of directors is encouraging shareholders to vote against the proposal due to concerns about Bitcoin’s volatility. This isn’t surprising given Tesla’s loss of over $100 million from its Bitcoin investments in 2022 and Elon Musk’s car company shifting $750 million worth of its cryptocurrency assets into private wallets, leading some to speculate about a potential large-scale sell-off. Despite this, the overall market appears optimistic, with Bitcoin approaching its spring highs again by October 2024.
Could Microsoft really invest in Bitcoin?
It’s not unpredictable that Microsoft might consider investing in Bitcoin, given its consistent growth despite its instability. As technology advances and regulatory oversight becomes more robust, it’s likely that Bitcoin will become even more powerful. Many people wish they had invested earlier when it initially emerged, but for Microsoft, it may not align well with their climate commitment.
Microsoft’s board is urging shareholders against approving the investment as it has the potential to block the proposal from passing. While Microsoft might not be the pioneer, other established companies such as Tesla, BlackRock, Square, and others have already ventured into bitcoin ownership. Not just corporations, even nations like the United States and Germany hold significant amounts of Bitcoin, partly due to seizures from law enforcement actions. Interestingly, Germany has sold billions in Bitcoin over the last year, much of which was confiscated from criminal activities.
Typically, it’s wise to remember that whenever you consider investing in Bitcoin or any other asset, you should never risk more than you can afford to part with. It’s also advisable to consult with a professional financial advisor before making your investment decisions.
Do you think Microsoft should invest in Bitcoin or any other cryptocurrency? Hit the comments.
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2024-10-25 06:09