Providing for retirement with Bitcoin: useful or nonsense?
If you think of cryptocurrencies, you almost inevitably have to say Bitcoin. But is a long-term investment suitable for retirement and retirement provision?
Since its introduction in 2008, the value of the Bitcoins grown continuously. Meanwhile the Cryptocurrency Has long since arrived in the mainstream. More and more people are investing. Your private retirement provision does not necessarily have to consist of cash, stocks, real estate or ETFs. Yet it actually makes sense in terms of that pension investing in bitcoins? We clarify.
What are Bitcoin and cryptocurrencies actually?
Cryptocurrencies are digital means of payment that are intended to create a decentralized and secure payment system. The transmission is encrypted. However, cryptocurrencies have not yet been recognized socially and economically as a comprehensive means of payment.
Bitcoin is a payment system. All transactions are stored on the blockchain. The chain cannot be manipulated or changed. So-called mining creates new coins.
Why there is a pension problem in Germany
Dr. Norbert Blüm, then Federal Minister for Labor and Social Affairs, announced a now legendary sentence during the 1986 election campaign. “The pension is safe,” said the politician at the time. However, old-age provision is by no means that secure. According to the Federal Agency for Political Education, there is a big problem. On average, people are getting older and society is shrinking. Relatively few young people have to finance the pensions for the elderly.
Currently women receive an average of 640 euros per month, men around 1,000 euros per month, reports Die Zeit. It should be clear that in times of rising rents this is less and less enough to live on. Again and again there are reports, most recently at Tagesschau, among others, that the pension system in Germany is even about to collapse. So it could be risky if you don’t take additional private provisions.
Bitcoin for retirement: useful or nonsense?
This is where Bitcoin comes in. But does it make sense to use it to provide for retirement? It would suggest that the cryptocurrency is relatively inflation-proof. The reason: The amount of Bitcoins or the offer is limited to 21 million due to the so-called halving. So there is an artificial supply shortage, which, according to the principle of supply and demand, could increase the price.
In addition, the value of Bitcoin has always increased over the long term. In general, you should stick to retirement planning like the economist Benjamin Graham and pursue a defensive strategy. So you shouldn’t be aiming for short-term profits or speculating. Nevertheless, you should keep in mind that cryptocurrencies are currently subject to extreme fluctuations in the short term.
Bitcoin for retirement? Cryptocurrencies are still fluctuating a lot
So your investment can be worth much less the next day. Influencers like Elon Musk also have a certain influence on the courses. In May, for example, the Tesla founder sent the Bitcoin price down with a tweet. Since cryptocurrencies are not yet fully established in society like fiat money, it is a matter of speculation. In addition, states can theoretically prohibit Bitcoin.
Pension conclusion: don’t just make provisions with Bitcoin
If you want to provide for your pension privately, you should therefore invest a maximum of a portion whose potential loss does not leave you falling into a financial hole. You should never only make provisions with cryptocurrencies. Opt for a diversified portfolio of stocks, ETFs, real estate, gold and cryptos to spread your risk. Therefore, Bitcoin is currently only partially suitable for your retirement. That can change, however, if cryptocurrencies are socially accepted and recognized as a fundamental means of payment.
Sources: Federal Agency for Political Education, Zeit Online, Tagesschau, Aktien Mag
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