Points to Know Before Investing in Bitcoin

Introduction

The unconventional features of Bitcoin as an asset have raised a significant amount of interest in its investment potential. Since its inception in 2009, Bitcoin has become the cynosure of Wall Street. The highly secure encryption and instant transaction speeds are some of its most attractive features as a cryptocurrency. Despite that, it is imperative to learn about the pros and cons of the currency before investing sizable funds in it.

Points to Know Before Investing In Bitcoin

• It is not owned by any central third party- Unlike traditional currencies such as the Dollar or the Euro, Bitcoin is not owned by any specific institution, be it legal or financial. Hence, this decentralized currency does not come under the stringent legal purview that one experiences while using traditional currencies for casinos or betting sites.

• It was invented by a group of anonymous individuals- As long back as 2008, a group of people who call themselves “Satoshi Nakamoto” formulated the Bitcoin concept. They provided a white paper in which they detailed the process of using a cryptocurrency for peer-to-peer money exchanges with the lowest fees charged. No identity of the announcer has been traced so far.

• Its value can soar and fall: Although Bitcoin has generally increased in price so far, the rate might drop at any point. In the first week of 2021, its price soared by a high rate of 20%. However, it is entirely speculative, as it depends upon the sentiment of the ones who invest. Furthermore, no circuit breaker can prevent its rise or fall after a certain point, unlike standard markets.

• It is deflationary- The limited availability of Bitcoins makes them highly valuable over time. As opposed to traditional currency, the buying power of a single coin becomes increasingly greater in a year or more.

• It is a legitimate form of asset- Bitcoin has been accepted across the world as a completely legal form of currency. Recently, Tesla has purchased 1.5 billion dollars worth of Bitcoin. Microstrategy too bought an additional amount of 253 bitcoins costing 15 billion US dollars.

How do Beginners Invest in Bitcoin?

The methods of investing in Bitcoin depend upon the region in which the user resides. If they reside in a developed country, they will have a wider range of options to initiate their first investment. One has to purchase Bitcoins in exchange for the fiat currency that is available in their region. To buy Bitcoins, they have to sign up on any cryptocurrency exchange platform like Coinbase or eToro to convert their cash into Bitcoin. Once they sign up on that platform, they will have to provide their identification documents and then transfer the fiat currency through an online payment mode. One will be then provided with a wallet linked to the platform where they can store their Bitcoins.

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Is It Worth Investing in Bitcoin?

Since Bitcoin is not regulated by the open market and any government or financial institutions, its price is not fixed. Depending on the collective demand of the investors, it can either rise or fall in value. Furthermore, the security of Bitcoin depends entirely upon the third-party organization which provides the storage options. They will provide one public and one private key for storage. If the user loses the private key, they probably will not be able to retrieve the funds. In the worst case, if the third-party storage provider gets hacked, or compromised, then chances of replacement are equally low due to the limited availability of the coins. Some organizations like Binance may offer replacements; however, one cannot sue them in a legal court to breach funds since such exchanges do not come under the purview of legal jurisdiction. However, many large-scale organizations have already made provisions for payment using Bitcoins, even offering credit cards for this special cryptocurrency.

Conclusion

The bottom line concerning investment in Bitcoin is that its speculative rate has not detracted investors and attracted more of them, especially reputed institutions like JP Morgan and Morgan Stanley. It offers the least amount of transaction charges and the highest transfer speed. No other cryptocurrency has been able to ascend the peak of market capacity like Bitcoin, so it can be a profitable investment provided one invests wisely.