The world is slowly transitioning towards digital currency, and you might be asking yourself: Should I be investing in bitcoin? Before you proceed any further, hear us out first.
Cryptocurrency is gaining better stability now than when it first took off, and it might be tempting to invest in such. Today, we will try to illuminate whether investing in bitcoin is a splendid idea or not.
What is Bitcoin?
Bitcoin is the first cryptocurrency to arise, an independent currency unregulated by central governing bodies. It operates through blockchain technology that makes transactions transparent for everyone. Which means they are impossible to change.
That said, we must correct the notion that bitcoins are forms of investment that grow. Investing in Bitcoin, or any other cryptocurrency in general, is done to secure a digital asset independent of fiat currencies.
Investing in Bitcoin means that you buy bitcoins and sell them at the proper time to make a profit. If the bitcoin exchange rate happened to be higher than your investment, trading would result in profits. Otherwise, you would incur losses if you decide to sell on a dip.
Investing in Bitcoin: The Good and The Bad
The usual primary driver that pushes people towards investing in Bitcoin is the fear of missing out. However, there are many aspects one must consider before committing. Every expert in the field reminds people to invest only the money they can afford to lose so that if everything falls apart, you will not get zeroed out.
But then again, investing in Bitcoin is a personal decision to make. And that decision lies within a person’s hands and their capacity. Below are points that you must consider when investing in bitcoins to help you decide whether you invest in it or not.
Pros
- Monetary policies will plunge the value of fiat currencies as time goes by. It will lead to inflation. Bitcoin has a more predictable and lower inflation rate than fiat currencies, making it seem like a better hedge against this economic phenomenon.
- Bitcoin was born in 2010, but the nada price at birth has been upward and costs more or less $40,000 today. Provided the market is volatile, but looking at it from an 11-year perspective shows promise.
- It is decentralized, so no government has any hold on cryptocurrency values.
- Bitcoin is secure, and transactions are cheaper since middle agencies are taken out.
Cons
- Highly volatile market, and dips and uptrends can be observed now and then.
- There is a potential crackdown of the US government in all Bitcoin transactions. IRS has taken notice of it now!
- Although it is secure, it remains online, and cyber-hacking can transpire.
- The risk of losses is just a constant, crippling fear of Bitcoin traders.
Takeaway
Investing in Bitcoin is a legitimate venture, proven by its 11-year development and growth throughout. However, investing or trading Bitcoins instead is not as cost-effective as we want it to be, given the high volatility.
So is investing in Bitcoin a good idea? It depends on the person reading:
- If you are young and have extra money stashed that you don’t need for the time being, then invest away. You can earn money back anyway, and losses might not be felt as much.
- If you are making ends meet and see Bitcoin as a way out of poverty, we recommend that you steer away from this. Focus on being stable first, rather than being rich. Especially since Bitcoin does not assure you of the latter as well.
If you are a beginner in investing, do not jump right into the fray first. You may want to know some of the investment risks you need to consider first as a beginner in investing.