3 Must-Learn Lessons From Bitcoin's Surge

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Bitcoin has become a global financial phenomenon, soaring from under $1 less than three years ago to nearly $850 recently. But even if you've missed out on the Bitcoin craze, it's not too late to get valuable insight about the digital currency.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about three lessons everyone needs to take from Bitcoin. First, Dan notes that prices of any investment can climb much further than you'd think possible, especially when demand becomes extremely high. Next, Dan points out that investments that rise in value almost always include big declines along the way. Just as Bitcoin has suffered many plunges of 50% or more in its short history, so too have stocks like Netflix and Chipotle Mexican Grill  experienced substantial declines that interrupted their long upward moves. Even the Dow Jones Industrials have suffered through major bear markets in their inexorable rise over the decades.

Dan concludes by noting that any successful investment inevitably gets Wall Street interested, with a Bitcoin ETF in the works. In the end, Dan advises that investors be careful about Bitcoin and its prospects, but to learn the lessons it has to teach you about investing more generally.

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Bitcoin's popularity rose in part because of doubts about the world's financial system, and those doubts have kept millions of Americans from buying stocks for years. But staying out of stocks is not a smart move. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

The article 3 Must-Learn Lessons From Bitcoin's Surge originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Chipotle Mexican Grill and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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