Collective anarchy has bloomed around bitcoin over the last decade. It’s hard to say if this cryptocurrency would ultimately prove to be a big investment or just a passing storm. The thrill of prosperity or disaster makes some investors wary, while others want to chase the chance to make a bitcoin investment profit.
Is bitcoin a safe investment, huh? Start with our framework to learn more and make a decision of your own.
Simply put, is investing in bitcoin risky?
Similar to any risky investment, the purchase of bitcoin carries certain well-known risk factors: The price might drop substantially and a single online hacking or crashing hard drive incident could wipe out your bitcoin cache with no recourse.
Bitcoin has seen drastic price run-ups accompanied by some painful crashes but has reliably held a large portion of its previous gains every time it deteriorates. Since its conception, Bitcoin has been the first digital asset to create the modern crypto ecosystem. It has been growing underground for a long time, following investors who saw its potential as a possible substitute for the conventional monetary system.
The decision to invest in bitcoin ultimately boils down to your risk appetite.
When to Invest in Bitcoin?
You can use your online broker to invest in bitcoin. Investing in bitcoin is similar to investing in bonds, but is much more unpredictable due to the frequent fluctuations in bitcoin. If you want to know how to buy bitcoin, here are the steps that you need to follow to invest in bitcoin:
- Open a brokerage account with a company that produces crypto investment.
- Deposit the funds in your investment account.
- Order your BTC.
- Later, sell the crypt for benefit or loss.
These steps, however, rely heavily on the exchange or financial instrument you use.
There are well-established online brokerage trading in Cryptocurrencies like E-toro. Here you can explore centralized portfolios and link to traders. EToro is actively promoting the purchase and selling of 15 specific coins, including Bitcoins, Ethereal, Ripple, Dash & Litecoin, etc. The Ripple price live data page provides information on the market value of Ripple, or how much one XRP is worth in US dollars, in real time.
In addition, there are numerous online Apps that make it simple and convenient for you to buy, exchange and keep bitcoin. You can buy a bitcoin part for a minimum of $25.
You can pay for transactions by using your debit card or by linking your bank account. Owning Bitcoin on this brokerage is as easy as making an account, confirming your identity, and buying your crypto.
You can take care of your bitcoin portfolio anywhere you go through the mobile app. Brokerage helps you to hold onto your bitcoin, transfer it to another crypt, spend it on expenses, and pass it to everyone, anywhere in the world.
Another good broker is BitcoinIRA’s which is a proprietary platform that allows you to trade crypto at any time so that you can take action when the market shifts. Here you can open your account, get a personalized dashboard and mobile currency after you create the account. You can deposit a fund under your account, observe the live pricing and improve your crypto trading skills using a comprehensive knowledge base.
Advantages of Bitcoin Investment
Bitcoin’s overwhelming success – as currency and investment – has attracted both conventional and institutional investors respectively. Bitcoin provides you with the following advantages compared to conventional investing as an investment tool.
It’s liquidity. Bitcoin is potentially one of the most liquid financial assets due to the worldwide institution of trading sites, exchanges and online brokerages. You can easily exchange bitcoin for cash or gold assets instantly with extremely low fees. The high liquidity correlated with bitcoin allows it a major investment vessel if you’re looking for short-term gains. Digital currencies can also be a long-term asset due to their elevated market demand.
Lower probability of inflation. Unlike major currencies that are governed by their governments—Bitcoin is immune from inflation. The bitcoin network is infinite so there’s no need to worry about your crypts losing their value.
The novelty value : Bitcoin and cryptocurrency exchange are fairly young coins that are becoming popular every day. This novelty brings unforeseeable price and volatility swings, which could create opportunities for huge profits.
Minimal trading: It is easier to trade than traditional stocks. Stock trading requires that you possess a certification or license. You must always go through a broker to exchange the shares of a company. But bitcoin trading is minimal. Just buy or sell bitcoin from markets and put it in your pocket. Bitcoin transfers are also instant—unlike the confirmation of stock exchange orders that may take days or weeks. Consider visiting Cointools to know about the various tools you can use to make your bitcoin purchase a breeze.
Bitcoin Investments Drawbacks
Bitcoin may be the horizon of money exchange, but you must be aware of the cryptocurrency investment concerns. Here are some serious costs involved with bitcoin investment.
Volatility : The price of bitcoin is still going back and forth. If you were buying bitcoin on December 17, 2017, the price was $20,000. You couldn’t sell your investment for more than $7,051 weeks later. The bitcoin market is rapidly evolving. In such a volatile market, you can hardly make a decent return on your investment. To prevent big losses, keep a close eye on the market.
The danger of hacking online : Hacking is a huge challenge facing a bitcoin investor. Digital currencies let you trade your cryptos using your digital online platform. This makes them more vulnerable to hacking and theft of all your investment. And the bitcoin owned on the exchanges is not backed by the FDIC.
Few or no oversight at all : The bitcoin market operates without any big regulations. It’s not taxed, and authorities have no strong position on it. As a consequence, you could be susceptible to theft and malfeasance.
Restricted use : Bitcoin is only approved by a few online traders. Many businesses still don’t accept Bitcoin as a legal exchange, rendering it an implausible investment asset. Besides, there is only a fixed supply of bitcoin—21 million.
The wallets could be lost. If your hard drive crashes or your wallet file gets infected by malware, you lose your bitcoins. Within seconds, you can switch from a rich to a bankrupt investor with no way to recover.
Can Bitcoin be Exchanged for Real Money?
Bitcoin can be liquidated in a myriad number of ways. You can sell bitcoin to buy another digital currency like Coinbase or Kraken. The cash will be transferred directly to your bank account.
Bitcoin ATMs are rare, but if there’s one near you, you can swap your bitcoin for cash. And some websites allow people to buy bitcoin for your prepaid debit card.
Well, Bitcoin has matured enough and is here to stay. Owing to blockchain technology, it is considered the safest investment which is almost impossible to break into. In the big world of the Internet, the whole world has turned into a small village where information travels at the speed of light. Slowly, as the world economy converges and millions of international transactions are happening on a daily basis, the need to find a strong competitor to the dollar which is as reliable and safe has become strong. Though there has been hesitation among many countries to adopt Bitcoin as an authorized means of transaction (mainly due to control issues), slowly the cryptocurrencies are coming mainstream with Bitcoin in the leadership role. Therefore, investing in Bitcoin is going to be a safe bet in 2021 and for the coming years.