The meteoric rise of bitcoin has made it one of the essential topics in the tech world today, but how can you make sure that your bitcoin investment is worthwhile?

One of the most common questions about Bitcoin is whether it’s a good investment. While there’s no definitive answer, it certainly can be—if you’re smart about it and buy when the price is low and sell when the price starts to skyrocket.

But what if you’re not interested in trading? In that case, it’s essential to understand how Bitcoin works and where it comes from to assess its value as an investment opportunity. If you are interested in investing in Bitcoin, it is essential to know the risks involved.

Governments do not regulate Bitcoin[1], and there is no guarantee that it will remain legal. Bitcoin is also subject to price volatility, which can quickly lose its value.

Diversifier, Hedge, and Safe Haven for Bitcoin Investment.

Bitcoin, the first and most well-known cryptocurrency, is a diversified hedge and haven for investors.

Diversifier: Bitcoin has a low correlation with other major asset classes. This means it’s not highly correlated to stocks or bonds, which are more closely linked to the global economy.

Hedge: Bitcoin can help protect an investor’s assets in market turbulence.

Safe Haven: Bitcoin can be seen as an alternative to gold as they both have intrinsic value and store value.

The Potential Reasons Why Bitcoin Might Be Worth Investing In.

Leon Louw, Nobel Peace Prize nominee, stated about bitcoin[2] that

Bitcoin has seen an increase in value over the last few years. It is not uncommon to see Bitcoin’s value soar by thousands of dollars in just one day. With this in mind, investing in Bitcoin might seem like a good idea.

Bitcoin has been a high-risk, high-reward investment until now. Starting at approximately $0.0008 (eight-hundredths of a cent) per coin, the price of Bitcoin rose to a peak of $19,783 per coin in December 2017[3], creating a market cap of over $300 billion.

From there, the price of Bitcoin fell to around $6000 per coin in February 2018. Despite this in popularity, Bitcoin remains a highly speculative investment, and there is no guarantee that it will continue to grow in value.

The Potential Risks and Rewards Associated with Investing in Bitcoin.

Some people consider Bitcoin to be more of an investment than just spending. Risks and rewards are associated with any investment, but it’s essential to know the possible consequences before deciding.

The best way to invest in bitcoin is by holding onto it to take advantage of the appreciation in price. You can also invest in bitcoin through trading or mining.

To do this, you need specific software and hardware that can handle all of the transactions required for mining bitcoins; both options will require significant startup capital and come with a risk factor. Before investing in anything, be sure to weigh out the pros and cons carefully.

The Advantages of Investing in Bitcoin.

Investing in Bitcoin is risky[4] because it’s so new. However, the rewards of investing in Bitcoin now could be enormous if Bitcoin becomes accepted as the global currency.

Investing in Bitcoin is also an opportunity to diversify your portfolio, as this cryptocurrency has a low correlation to traditional assets like stocks and bonds. For this article, I’ve decided to make a top list of benefits of investing in Bitcoin.

1. Accessible Worldwide

Bitcoin has made investing accessible to everyone. Anyone anywhere can buy Bitcoin as long as they have a computer and some spare money. It takes 5 minutes to set up an exchange account and purchase BTC with a debit card.

If you live in an area without modern banking systems, you can get BTC by meeting someone face-to-face or using peer-to-peer transactions over the counter. No minimum amount is needed to invest, nor does one need any financial training or certifications.

All it takes to own Bitcoin is a desire for ownership! The growing size of this marketplace makes it very liquid – giving investors complete control over how much they want to spend at any time, how often they would like to withdraw funds from their wallets, and when those withdrawals occur based on specific buying patterns and price signals.

 2. Decentralized

Decentralization is an essential characteristic of Bitcoin. However, what does decentralization entail? The Bitcoin network allows anyone to send money over it, whether investors, miners or users. By doing so, you don’t interact with a centralized entity that manages the network but with millions worldwide who use Bitcoin.

The decentralization of Bitcoin makes it almost impossible for anyone to steal or freeze your assets. Ten years ago, an anonymous individual invented Bitcoin and disappeared from the world. In Bitcoin, the code prevents any founder from manipulating the network or its subsequent wallets.

 3. Great long-term returns.

Until now, Bitcoin has delivered an annualized return of 230%, ten times better than the Nasdaq 100. Despite a much higher volatility than any other stock or asset, Bitcoin has a good history of long-term growth on high-scale periods.

4. Immediate Transaction.

Banks will take several days to process a transfer of more than you usually send, and in such cases, the transfer might be held and require a lot of documentation before the transaction can go through. Then when will we be able to spend our money as we please?

Bitcoin takes a fraction of your regular bank’s time to process the transaction. No matter how much money you send, you can designate it for any recipient. It’s even safe if you want to send money anonymously. Consequently, your information is entirely anonymous on the blockchain, and nobody, especially not banks or governments, can view what you’re doing.

5. Option of Financial Freedom

In addition to financial freedom[5], mental space comes from controlling your funds and technology. Using bitcoin as a form of payment for everyday goods and services would be as convenient as using cash if it were to become widely used throughout the world.

6. Security

From an entirely economic point of view, Bitcoin presents a more secure and robust system when compared with traditional financial institutions. Assuming sufficient liquidity and a substantial amount of trading within the Bitcoin system. The market should be able to establish the actual value of Bitcoin, and it should no longer be in the power of any institution or group of traders to significantly dictate these values.

Companies related to Bitcoin have always looked for ways to increase security, and future blockchain implementations will only provide a giant security net.

Risks Involved in Investing Bitcoin

Bitcoin has many advantages. However, there are also some disadvantages to Bitcoin as an investment. The following is a list of drawbacks to consider when deciding whether or not to invest in Bitcoin:

1.     Not Controlled by any Govt.

Any government or bank does not regulate Bitcoin, so if something goes wrong with your investment, there is no one to turn to. Its value does not have any inherent stability.

2.    Stealing Probability.

Hackers can steal Bitcoins from you through malware or ransomware on your computer, even if you don’t store them online.

3.    Conversion Fee

You can’t cash out Bitcoin investments without converting them back into regular currency, which means you’ll pay more fees than if you just converted it at the start.

4.    Consumption of Energy

To make sure transactions go smoothly, bitcoin relies on miners. These miners need lots of electricity and use a lot of computing power[6]-which means they use tons of energy while mining bitcoin.

5.    Different Asset Types

Currency based on different asset types cannot be issued with Bitcoin[7]. Some banks are also adopting different strategies. The Bank of America allows its customers to buy Bitcoin but blocks them from using it for issuing credit.

6.    Risk and Volatility

Bitcoin can be volatile compared to more stable investments like bonds or stocks. One day, it might cost $68,000 for one bitcoin, but in the next few days, it could be worth $35,000. You must know that this type of volatility will occur before you invest in anything – including bitcoin. The key is figuring out how much risk you’re willing to take and what potential rewards are available if everything goes right.

Conclusion

The answer to the question is bitcoin a good investment is not as simple as yes or no. It depends on who you are, what you’re trying to achieve, and how much risk you’re willing to take.

Investing in bitcoin can be risky, but it may also be worth the risk. It’s hard to say whether or not bitcoin is good for investment, but it has the potential to make you money. If you invest in bitcoin, keep an eye on the market, so you don’t lose everything. Remember only to put what you can afford to lose into bitcoin.

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