Bitcoins are set to become more valuable in the future, regardless of people’s scepticism towards it in the current trend. But people who are always keen on investing in traditional plans like mutual funds, equities, and others will try to steer away people who want to invest in bitcoins. Determining how good a particular kind of investment will be a guessing game, but there are tried and tested ways to understand an asset’s worth.
One of the ways to consider bitcoin investment is to observe its rise against the U.S. dollar. Bitcoin prices recently eclipsed $1000 and have surpassed $1500. If you had invested in bitcoins when it was around $150 a few years ago or during the time of its inception in 2009, you would be a millionaire by now. It’s sufficient proof to thing that bitcoin is great to invest in.
Moreover, one of the reasons many people are dubious about bitcoin investment is the concept that there will only be 21,000,000 tokens. Meaning, it may stay stay consistently valuable or increase in its value as per the other types of currency that can be printed anytime and endlessly. Bitcoin is a great investment because of some other factors, such as its growing popularity, network effects, immutability, its status as the first-ever kind of such a currency, and security.
There is one considerable argument for limiting bitcoins as a small part of your portfolio: it’s known to jumps in prices abruptly and deep valleys that can make it very hard to have belief in the asset as a long-term investment to depend upon. It could be impractical to put all your eggs in one basket. So practice investing in more than what you are willing to lose.
Some basics of investing in bitcoin
- You can invest in both Bitcoin Core (BTC) and Bitcoin Cash (BCH). They are two different digital currencies that can be purchased and sold online.
- There isn’t a single definition for Bitcoin investment. It all depends upon what you decide. For example, you might be purchasing coins to trade or store, or you might be trying to earn coins through bitcoin mining.
- As with any kind of investment, make sure you research well before spending your money on bitcoins and ensure you never spend more than you think you might lose
Is it safe to invest in Bitcoin?
- A quick search online regarding bitcoin price charts will tell you that both Bitcoin Core (BTC) and Bitcoin Cash (BCH) can have high volatility
- Both are relatively new kinds of investment opportunities and their prices can fluctuate with respect to market sentiment
- Predicting the prices is quite hard, even for experienced investors. But by doing a sufficient amount of research you can learn about different kinds of Bitcoin investment opportunities, you can make educated decisions regarding your investments.
Investing through storing and buying Bitcoin
- Most of the new investors prefer to buy Bitcoins and once they have them, they store it away securely for the foreseeable future, a.k.a. HODLing
- The goal is that the Bitcoin will appreciate in value and if this happens, the investor can sell their Bitcoin for a better price
- There is absolutely no way to predict whether the price of bitcoin will increase in value. One of the biggest things impacting its price is usability. So it is important to keep yourself updated with the industry news and learn more about the potential of different kinds of cryptocurrencies.
- In order to buy bitcoin,you exchange fiat currency, e.g. INR or USD for either Bitcoin Cash (BCH) or Bitcoin Core (BTC)
Investing in Bitcoin through trading
- Trading Bitcoin involves purchasing either Bitcoin Core (BTC) or Bitcoin Cash (BCH) and instead of holding it for the foreseeable future, you trade it quite often
- The goal is to buy when the price of bitcoin is low and sell it when the price increases. Make profit by selling.
- Bitcoin traders do this quite often over short periods of time, by timing the market
- As there is no way to predict the market, it’s important you trade it with caution. Understand that there is never any guarantees of booking a profit.
Investing in Bitcoin through mining
- Bitcoin mining involves earning Bitcoin Cash (BCH) and Bitcoin Core (BTC) through lending computational power to the networks
- When a computer processes bitcoin transactions, you get newly-created coins. Meaning, the owner of the hardware earns bitcoin.
- In order to start mining bitcoin, you can either purchase your own mining hardware or you can rent it through cloud mining contract. Either way, you can join a mining pool.
- The profits earned through bitcoin mining depends on several factors. Above everything else, the value of the mined bitcoin needs to be bigger than the cost of running the mining hardware for miners to book a profit.
How to avoid bitcoin investment scams?
- The crypto space is filled with scammers looking to take advantage of relatively new traders and investors. But this is true in any financial investment landscape.
- If any bitcoin investment opportunity seems to be too good to be true, it probably is. For example, if a website or a company says it can double or triple your bitcoin or offers high interest rates if you “lend” them your bitcoins, you can be sure that it’s a scam.
- Similarly, if someone unexpectedly approaches you and promises to send more bitcoins your way if you first send them some, ignore them
- Several people fall victim to scams, especially when scammers pose as well-known personalities in the crypto community through fake email and social media accounts
- Before committing to any investment, let alone bitcoin investment, research the company or website involved and establish their trustworthiness
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