Over the past ten years, the popularity of Bitcoin has skyrocketed. The value of Bitcoin has been rising over the last decade. Now it has become one of the most popular and most valuable cryptocurrencies that you can purchase. But we cannot say for sure whether this cryptocurrency will turn into the global reserve currency or whether it will become another currency such as Ethereum. This is the reason a lot of investors are still in a dilemma as they don’t want to lose their investment. After all, the goal of every investor is to make a great return on their investment dollars.
In this article, we are going to find out if Bitcoin is still a good investment. After you have gone through this simple guide, you will be in a much better position to make an informed decision. Read on to find out more.
Is Investing In Bitcoin Risky?
Just like any type of speculative investment, Bitcoin comes with quite a bit of risk. Around ten years back, Bitcoin was the very first digital currency that laid the foundation of the ecosystem of cryptocurrencies. For the first few years, a lot of investors kept on investing in this currency silently. According to these investors, Bitcoin has the potential to replace the conventional monetary system shortly.
Over time, Bitcoin continued to become more and more popular. Today, bitcoin is a term that almost everybody knows. In other words, it has become a household name. Since there is a huge demand for Bitcoin, governments and institutions have been looking for ways you satisfied the demands of the masses.
Around two decades back, the internet was also a speculative investment. It received a lot of criticism from across the globe. Today, Bitcoin seems to be in the same boat. In 2021, the Republic of El Salvador made Bitcoin a legal tender. The good news is that many other countries are following this trend.
You will be amazed to know that the adoption rate of Bitcoin is much higher than that of the internet. The user base of Bitcoin is almost equal to the user base of the Internet around 24 years back.
According to experts, as conventional finance realizes is that Bitcoin has a lot of potentials to disrupt the traditional monetary system, they will have two options to choose from: They can adopt cryptocurrencies or be ready to face irrelevance.
However, if you want to invest in Bitcoin, you need to find out how much risk you can take and what you think about the future of the human race that is interconnected. Generally, cryptocurrency features much more volatility than your regular currency. This is what increases the element of risk.
Is Investing In Bitcoin Risky?
Investing in cryptocurrencies such as Bitcoin can be quite risky. Unlike the traditional stock exchanges, cryptocurrency exchanges are more vulnerable to hackers and other criminals. This is the reason many investors have lost a lot of money due to these security breaches. So this is one aspect of the risk you are going to take if you are going to put your money in cryptocurrency.
Apart from this, the storage of bitcoin is more complicated than the storage of bonds or stocks. Although you can use popular cryptocurrency exchanges like Coinbase to purchase and sell Bitcoin, you may not be comfortable handing over your digital assets to these exchanges because of the risks mentioned above. After all, you don’t want your cryptocurrency to be stolen by hackers.
Another good option to store your Bitcoins is to go for “cold storage”, which is a form of offline storage. In this case, you can store your coins or tokens in paper wallets or hardware wallets. However, the downside is that this storage method has its own challenges.
For example, if you lose access to your private key, you will never be able to access your coins, which is a huge risk anyone can take when it comes to cryptocurrency. Besides, there is no guarantee that Bitcoin will continue to lead the world of cryptocurrencies.
Since there are a lot of blockchain projects out there, the competition among them is quite fierce. Apart from this, the crypto industry is teeming with scams or fake projects. In the end, you will find only a handful of successful projects in the industry. The rest of the projects will become part of history.
Apart from this, currency regulators and governments may crackdown on the cryptocurrency industry if they feel that digital currencies have become a threat instead of innovative technology. If this happens, the value of Bitcoin and other currencies will continue to drop.
Since the technology for cryptocurrencies is undergoing a lot of development, it also increases the degree of risk for investors. Since this technology is under development, we cannot say for sure whether it can work in real-world scenarios.
Where to Invest in Bitcoin
The good news is that you can purchase Bitcoin from several centralized exchanges. If you are looking for the safest exchanges, we suggest that you choose from one’s that are based in the United States.
In this case, you have to be familiar with the SEC and the KYC guidelines. Since you have to pay tax on your investment, you have to enter your personal information, such as your social security number and address while creating your account with an exchange. After you have completed this step, you are all set to get started.
Here are the steps to invest in Bitcoin:
Given below are the four simple steps that you need to follow if you want to put money in Bitcoin:
- First of all, you need to open your account with one of the cryptocurrency exchanges we mentioned above.
- Your next move is to connect your bank account with your account with the crypto exchange and deposit funds in the exchange wallet.
- Your third step is to purchase Bitcoin
- Finally, you can purchase a wallet, which is optional.
Let’s now talk about some popular cryptocurrency trading platforms that you can use to get started as an investor.
eToro allows you to trade several popular cryptocurrencies. Apart from this, it helps you to get in touch with traders and explore managed portfolios. Today, eToro offers support for the buying and selling of 15 popular coins that are listed below.
Bitcoin Cash (BCH)
Ethereum Classic (ETC)
Stellar Lumens (XLM)
TRON coin (TRX)
With Coinbase, you can purchase sell, and safely keep Bitcoin. Even if you have a $0 account minimum, you can still purchase a part of Bitcoin. You can connect your bank account or use your debit card to purchase Bitcoin. All you need to do is create an account, verify your identity, and purchase your cryptos.
Besides, Coinbase offers Coinbase Earn, which is a special program that allows you to know more about cryptocurrencies. In fact, this program is an ideal way to make crypto part of your portfolio, and you don’t need to invest your own money for this.
You can use the Coinbase mobile application to carry out Bitcoin transactions no matter where you go. With this brokerage service, you can keep your Bitcoin, exchange it for another currency, use it for purchases and transfer it to whoever you want in the world.
With the proprietary platform of BitcoinIRA, you can self-trade crypto whenever you want to. It allows you to quickly take your desired action in response to the market moves. Below is a description of how you can make it work:
- Create an account: First of all, you need to create your account before getting your digital wallet and a customized dashboard. Next, you need to deposit funds in your account to get access to live pricing.
- Transfer funds: You can follow 3 simple steps to transfer funds. You just need to tell them how much you want to put in and how you want to deposit funds in your account. Plus, you need to provide your profile information.
- Get started with trading: You can use this proprietary platform for trading digital assets using your self-directed retirement account. The dashboard allows you to use the self-trading area to purchase sell or exchange whenever you want.
Advantages of Bitcoin Investments
Today, Bitcoin is one of the most popular and valuable cryptocurrencies. Therefore, both institutional and traditional investors are attracted to this currency. Given below is the description of some major advantages of Bitcoin over the conventional types of investments:
Liquidity: Without any doubt, Bitcoin is on the list of the most liquid asset types. This is partly because of the availability of trading platforms, online brokerage, and exchanges across the globe.
Therefore, it is quite easy to trade Bitcoin without paying heavy fees. If you want to earn some profit on your investment for the short term, you can try Bitcoin because it offers high liquidity. Apart from this, since there is a huge demand for digital currencies these days, investment in cryptocurrencies for a long time can also be quite lucrative.
Low risk of inflation: Unlike traditional currencies, Bitcoin remains unaffected due to inflation. The primary reason is that the governments don’t regulate cryptocurrencies. Since the blockchain system is unregulated, you don’t need to worry about the value of your cryptos.
Fresh opportunities: Cryptocurrencies including Bitcoin are not more than 10 years old. Therefore, you can find new coins appearing in the market. This is the reason the price and volatility go up and down unpredictably, which allows you to tap into a lot of profitable opportunities.
Minimalist trading: You have to get a license or certificate for stock trading. Besides, you need to work with a broker for trading the shares of different companies. But Bitcoin has a different story to tell.
You don’t need to get any license or certificate to purchase Bitcoins and transfer them to your wallet. Another great advantage is that you can perform Bitcoin transactions almost instantly.
On the other hand, in the case of stock trading, the orders may take several days or weeks to settle.
Disadvantages of Bitcoin Investments
Although Bitcoin may revolutionize the monetary system in the world, it is important to know that there are some concerns about cryptocurrency investment. You need to understand these risks before you invest a considerable amount of money in cryptocurrency for the long term.
Volatility: Bitcoin is quite volatile when it comes to value. For example, the price of one bitcoin was $20,000 on December 17th, 2017. A few weeks later, the price of one coin dropped to $7,051. Although Bitcoin is doing great these days, we don’t think that investing in Bitcoin is a viable option for the long term.
Risk of hacking: Although you can reduce this risk by working with a trustworthy exchange such as Gemini or Coinbase, the only way to ensure total security is to have your own private key. You can do this using a crypto wallet, such as a Coinbase wallet.
Can you exchange Bitcoin for Real Money?
You can try different methods to convert Bitcoin into cash. For example, you can sell your coins on Coinbase or Gamma as both of these are quite reliable. After you have sold your Bitcoins, you can receive the cash in your bank account.
Although Bitcoin ATMs are quite expensive, you can use one to receive cash in exchange for your Bitcoin. Besides, some websites can provide you with a prepaid debit card if you choose to sell your Bitcoin.
Is Bitcoin the currency of the future?
Since Bitcoin is appearing on the balance sheets of more and more institutions, it looks like that the future of currency will be Bitcoin. Since this is a type of an extremely volatile cryptocurrency, this volatility is keeping a lot of risk-averse investors from investing in the currency.
Since Bitcoin is an unregulated cryptocurrency, it comes with a strong monetary policy. Since the governments of the world have been printing more and more money due to the ongoing pandemic, today’s investors are thinking of taking alternatives to the traditional currency to avoid the effects of inflation. This is the reason a lot of investors are putting their hard-earned money in Bitcoin.