What are Bitcoin's main competitors
Are Bitcoin, Ethereum, Ripple and Co. good for retirement provision?
Retirement planning in times of the lowest interest rates is not easy. Classics such as life insurance or savings books hardly bring any return and therefore lose their appeal. So why not make provisions with cryptocurrencies?
Cryptocurrencies for Retirement Provision? For Viktur Buterin, founder of Bitcoin's main competitor Ethereum, this is mutually exclusive. For him, digital currencies are "still a new and extremely volatile form of investment that could fall to zero at any time," as the 24-year-old multimillionaire wrote on Twitter. The so-called cryptos were by no means suitable for retirement provision.
Benjamin Feingold, founder of Feingold Research and co-founder and operator of the portal bitcoin-krypto.de, sees it a little differently: "Of course, at first glance nobody associates crypto currencies with retirement provision," admits the financial expert. "At second glance, cryptos are definitely an interesting building block for old-age provision too - but only to a lesser extent," he emphasizes, referring to the "high volatility" of Bitcoin, Ethereum, Ripple and Co.
Rapid climbs and crashes
And this is really not bad: If you usually have to pay less than 10 US dollars for a Bitcoin in the early years 2010 and 2011, an upward trend will set in in 2012, which will intensify in 2013 as the spread of the digital currency grows. The result: In April 2013, Bitcoin broke the 100 dollar mark. About six months later, a Bitcoin costs $ 1,000.
This is followed by a crash to around $ 250 in 2015. The trigger is the bankruptcy of the Mt.Gox trading platform. But already at the beginning of 2016, a Bitcoin costs around 450 dollars again. And then an even more dynamic upward trend sets in, driven by a rapidly growing inflow of capital that temporarily catapulted the leading digital currency over the 20,000 dollar mark in 2017. This price explosion is also helping other crypto currencies on the jumps. In December 2017 there was the first opportunity to trade Bitcoin futures.
However, the digital currencies have reached their peak for the time being. At the end of 2017, a Bitcoin still costs around 14,000 dollars, in February 2018 it was just under 7,000 dollars. Right now it's back to nearly $ 10,000.
Bitcoin: After massive performance, the cryptocurrency has mainly gone downhill in recent months. (Source: t-online)
Diversification and only for admixture
"At the current level, something like normality has returned," says expert Feingold after the extreme price fluctuations of the past few months. According to Feingold, anyone considering crypto currencies as a component of their retirement provision should therefore pay attention to two essential points: In addition to classic diversification, it is important to keep the share of the AV portfolio at a maximum of one to two percent. "Cryptos should only be used for admixture," emphasizes Feingold.
"Today you simply do not know which crypto currency will still be around in five, ten, twenty years, which will prevail or which will be firmly established," Feingold explains. He himself therefore favors the larger cryptos: "They have already achieved a certain status, a certain acceptance - above all the reference digital currency Bitcoin. It is, so to speak, the basis for all other cryptos that are currently on the market."
According to Feingold, anyone who packs crypto in their retirement provision mix should also think about buying gold: "Gold is the classic hedging instrument par excellence, especially in physical form," he explains. "And currently comparatively cheap."
Polarize digital currencies
In addition to the enormous volatility, Marco Herrmann, Managing Director of Fiduka Depotverwaltung, warns of further uncertainty factors in digital currencies. "I fully understand the logic of investors. After the last financial crisis, they wanted more secure currencies and money that governments, central banks and central banks should no longer have any influence on," explains Herrmann. "But if you look at the volatility, cryptos are very far from being a safe investment."
For the Fiduka managing director, various cases of fraud also have a negative impact - and in the end also the "sword of Damocles that states could ban digital currencies".
"What amazes me is that the states tolerate parallel currencies to their own," says Herrmann. "They are giving the scepter of monetary sovereignty from their hands and thus also an important control mechanism for their economy."
Because of all this, Herrmann doesn't believe in crypto currencies. "You are nonsense. I would stay away from it." He advises against adding it to old-age provision. "The risks associated with digital currencies are simply too high."
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