Bitcoin is the world’s most popular and valued digital currency in terms of market capitalization, which appeals to a wide range of investors. Since it has gained more acceptability as an alternative asset in the financial world today, companies and institutions see it as a venture capital-backed asset.
These days, there are numerous ways to buy bitcoins. The most common ones are through crypto exchanges and platforms, some of which are reviewed in detail at Bitcoin-trading.io. But before signing up to any of these platforms and before making your first crypto purchase, you need to weigh all the pros and cons.
With every news channel hyping about Bitcoin and its tremendous growth, is it worth investing in 2021? Or is it too late to enter into the market to see any decent returns? Let’s take a look at a few points that can be considered before making the decision whether to invest in BTC or not.
Advantages of Investing in Bitcoin
In many ways, investment in Bitcoin is identical to stock market investing. However, when compared to traditional investments, Bitcoin has numerous advantages:
- Liquidity – Due to the worldwide development of trading platforms, exchanges, and online brokerages, Bitcoin is undoubtedly one of the most liquid financial assets. With very affordable rates, you can quickly exchange Bitcoin for fiat or commodities like gold. If you’re searching for a quick profit, Bitcoin’s high liquidity can turn it into an excellent investment vehicle. And for long-term investment, Bitcoin can be a viable option due to its strong market demand.
- Minimalistic trading – Investing in stocks demands the ownership of a certificate or license. To trade a company’s shares, you must also go via a broker. Bitcoin, on the other hand, is simple. You can easily purchase or sell Bitcoin on exchanges and deposit them in your wallet. Bitcoin transactions are also immediate, unlike stock trading orders, which can take days or weeks to settle.
- Digital storage – Cryptocurrencies like Bitcoin are less subject to seizing or regional hazards like fires or hardware failures due to their decentralized structure of cryptocurrency ledgers. The data is not only kept off-site but also duplicated to all full nodes across the world. The money isn’t in just one or even a few banks like the traditional form of investment
- New opportunities – Bitcoin is still very new, and new currencies are gaining popularity on a regular basis. This newness carries with it very high price fluctuations and volatility, which might lead to enormous gains.
- Limited accessibility – Many speculators consider Bitcoin to be “digital gold” because of its limited quantity. Bitcoin’s supply is limited to slightly under 21 million coins, with 17 million currently in circulation, whereas central bank-controlled currencies can be produced at the whim of politicians or governments. Bitcoin has features that are comparable to commodities like gold, silver, or other precious metals that have historically been utilized as investments due to their fixed supply.
- Diversification – Bitcoin can assist in diversifying an investment portfolio because of its minimal connection to stock market results. In a conventional portfolio, a small investment in Bitcoin may enhance returns and risk-adjusted returns while reducing volatility and maximum drawdowns.
Risks Associated With Bitcoin
Even if you’re investing in generally secure areas, there will always be some risk involved. However, being a successful investor necessitates taking measured and knowledgeable risks, which is also true in the case of Bitcoin.
Bitcoin prices, like any other investment, can vary. Because the notion of a virtual currency is still fresh compared to traditional investments, the currency’s value has witnessed huge swings in price during its brief life. It is feasible to lessen the risks connected with Bitcoin investment by being smart and cautious about how you invest in Bitcoin and conducting comprehensive research.
Future of Bitcoin
With international leaders and celebrities like Elon Musk, Jack Dorsey, and Richard Branson investing in and promoting Bitcoin, as well as numerous other corporations and institutions adding Bitcoin to their balance sheets, the cryptocurrency is gaining traction. Bitcoin promises to be the digital currency of the future.
Bitcoin’s monetary policy is very different from that of any government since it is not controlled by any central authority. Many investors are searching for alternative assets to protect against inflation as governments are now creating more money than ever before in the wake of the pandemic. Therefore many people are using Bitcoin to invest as a long-term asset, which might help in gaining its acceptance in the long run.
If you want to obtain direct exposure to the demand for digital currency, Bitcoin is a smart investment. The speed with which it is being adopted indicates that it is a booming industry. Bitcoins might help diversify your portfolio because their use is expected to grow in popularity over time. It also has the potential to become the first truly international currency in the long run.
If you’ve decided to invest in Bitcoin, the best thing you can do is explore your choices, build your portfolio appropriately, and hold your investment for the long term to minimize risk.