Purchasing bitcoin, like any other risky investment, comes with some well-known risks. Bitcoin has seen rapid price rises accompanied by painful price drops. Moreover, a single online hacking or hard drive crash might wipe out your entire bitcoin holdings with just a little recourse.
With so much going around, it is very natural for you to ask — Is bitcoin a good investment?
The following article will give you all the information that you require. It will also help you get the answer to your question. However, it is crucial to know that the idea of investing in bitcoin depends on your risk tolerance.
Established by Satoshi Nakamoto, bitcoin debuted in 2008 and got launched in the succeeding year. It is finicky to describe bitcoin. It is a luxury to others. Some refer to it as virtual money.
The most abstract concept of bitcoin, on the other hand, is as below:
- It is software / a program.
- Allows people to exchange money directly with others.
Bitcoin is bizarre. It is a piece of software that gets distributed through a network of connected but separate computers. No single person has power over the system in this way. A central bank or a government cannot fix the value.
Every bitcoin transaction remains registered in a public ledger as “The Blockchain.” It is accessible to everyone. The potential of bitcoin’s technology to avoid counterfeiting and hacking has earned it widespread acceptance. After its launch in January 2009, the currency’s database has never breached.
Bitcoin has no economic value since it is nothing more than digits in a computer program. Just what another individual is willing to pay for decides its price.
Unocoin is India’s most trusted trading centre for cryptocurrencies. You can exchange a range of digital assets on this secure and intuitive trading platform. You can purchase, sell, store, use and accept bitcoin from anyone.
Is bitcoin a good investment?
Following the final stabilisation of cryptocurrencies in early 2020, analysts forecast that, by the end of 2021, it will potentially rise to break the record of 2017. Not only did bitcoin at the end of the year cross this mark, but it also passed it multi-fold. By the end of February 2021, the price for 1 bitcoin was over $50,000. This means it is as precious as gold.
The traditional currency value gets determined by a free market and the interests of the governments that issue such currencies. On the other hand, bitcoin’s worth is dictated purely by what investors are willing to pay. It’s a market dominated by emotion, and there’s no telling how high–or low–it can go.
Bitcoin seems to be almost exclusively a speculative investment. There are several considerations to consider when determining whether or not to invest. The most important of these is what your financial objectives are.
Its supporters have marketed it as an inflation hedge, similar to a modern form of gold, since its introduction in 2009. However, it has no history of doing so, and it’s unclear if it would be effective as part of a larger asset class like gold.
Bitcoin does, however, have a lot of uncertainty. That would be very appealing to a specific type of investor. Bitcoin has been proved to be a profitable investment solely based on its price history. It had no worth in January 2009. Twelve years later, in February 2021, it broke the $50,000 barrier for the first time.
According to Sathvik Vishwanath, CEO of Unocoin, India’s oldest cryptocurrency exchange, high-net-worth investors dipped their toes into cryptocurrency investing. The wealthy are getting more comfortable with cryptocurrencies as low-interest rates and global macroeconomic uncertainty weigh against their outperformance.
Reasons to invest in bitcoin
Let’s understand why is bitcoin a good investment.
- The opportunity to benefit — Trading platforms play a huge part in making profits. These sites are not just marketplaces, but they have state-of-the-art AI systems that can assist with the most cost-effective selling of your bitcoin.
- Huge Future Potential — Since the people receive it so well, many analysts agree how bitcoin will grow over time. In that era, governments will have a lot of public interest and no choice but to form an official payment method. Early investors will take the most advantage of these cases.
- A highly volatile property — It goes fast up and down, so you can always find an “entry point” to buy bitcoin. In comparison to other properties, you don’t have to wait long for it to pass. At the same time, bitcoin is still volatile, as legitimised and common, prices do not fluctuate as quickly enough, helping it gain wider acceptance.
- The trustworthy Cryptocurrency — Bitcoin also has the highest capital on the market, reflecting its trust in the market. Unlike Ethereum, the supply is small, the current and complete supply of which remains uncertain. Bitcoin was originally intended as a fully decentralised currency with a public directory.
- Usage growth — Out of 1 million bitcoin users active on any single day, the total number of users rose from 45 million in Jan 2020 to 65 million in Jan 2021. In a year, that’s a huge 44% increase in the number of users! Do you not want to be on the speeding train and to leave the station?
Advantages of bitcoin investments
Bitcoin’s outstanding performance as a currency and investment has attracted both traditional and institutional investors. So, is bitcoin a good investment? Let us see.
- Fluidity — Fluidity, or liquidity, is a term used to describe how liquid anything is. Thanks to the worldwide establishment of trading sites, exchanges, and online brokerages, bitcoin is currently one of the most liquid financial assets. With astonishingly low fees, you can easily exchange bitcoin for cash or commodities such as gold. Bitcoin’s financial leverage allows it an ideal investment opportunity if you’re searching for a fast profit. Thanks to their strong market demand, cryptocurrency transactions could be a great long-term investment.
- Diverse opportunity — There are new possibilities. Bitcoin and cryptocurrency transactions are still in their infancy, with new currencies regularly joining the marketplace. This novelty brings with it unexpectedly elevated market swings and volatility that could result in profits.
- Minimal Trading — Trading that is as simple as possible. The possession of a certificate or licence is required for stock trading. A broker is also needed when exchanging a company’s stock. On the other hand, bitcoin trading is simple. Simply buy or sell bitcoin on exchanges and store them in your wallet. Bitcoin transactions are instantaneous, unlike stock trading orders, which can take days or weeks to settle.
- Reduced Probability of Inflation — That is right. The inflation risk is reduced. Unlike many other currencies administered by authorities, bitcoin is resilient to inflation. Since the blockchain system is infinite, there’s no need to be worried about cryptos losing value.
Disadvantages of bitcoin investments
Bitcoin may be the future of money exchange, but you also should* know the concerns about cryptocurrency investment. It is equally essential. Some significant risks related to bitcoin investments are present.
- Longevity — Bitcoin’s prices are still up and down. If on December 17, 2017, you bought bitcoin, the price was $20,000. You couldn’t sell it for more than $7,051 a few weeks later. The market in bitcoin is changing all the time. You cannot get a good return on your investment in such a volatile marke
t. Keep a close eye on the business to prevent significant losses.
- Fear of getting hacked or scammed — The main threat a bitcoin investor is to get hammered or scammed. You can buy and sell your cryptos through a mobile app or a website via bitcoin exchange. It allows them to hack and steal all of your investment. And the FDIC is not insured by bitcoin owned on transfers.
- Limited or no security — At present, there are no big controls on the bitcoin industry. It is not taxed, and governments do not clearly understand it. It will allow you to be exposed to fraud and misconduct.
- Restricted application — Only a few online retailers are currently accepting bitcoin. Many businesses still don’t take bitcoin as a legal exchange that makes it an inventory.
- Possibility of losing wallets — You will lose your bitcoin if your hard disc crashes or a virus corrupts your wallet file. You may leave being a rich investor without a way to recover your funds.
Final Verdict — Is bitcoin a good investment?
In this hyped-up economy, price instability is not everything you need to be concerned about. Because bitcoin exists largely outside government control, it poses more danger to government monies and other asset classes than to deal with. However, it is not difficult to sell or buy, and you can only purchase a small quantity.
In the short term, you will make gains or lose heavily when the value fluctuates. Understand that bitcoin is a very modern technology, and future-oriented individuals do not know their destiny. When investing in bitcoin, use the principle of “buyer’s risk.”
It is reasonable to buy low and sell high while trading — but bitcoin is hard to value. The payment of dividends from many stocks and bonds is unpredictable and lacking. Offer and demand can be one of the most significant variables to assess.
There is no yes or no to it. Consider it as a risk-to-reward profile and do your homework before you buy when you think bitcoin is a successful investment.
Frequently Asked Questions (FAQs)
- What is the minimum investment in bitcoin?
Bitcoin can be purchased in India on Unocoin for as little as ₹100.
2. How much money can you make mining bitcoin per day?
The block reward for bitcoin miners will be 6.25 bitcoin in 2021 (since the halving in May 2020). You, as a miner, will earn a block reward of 6.25 bitcoin (plus transaction fees) if you are successful in mining a single block of bitcoin’s blockchain up until the next bitcoin halving in 2024. Since then the remuneration will be halved to 3.125 bitcoin per block.
3. Are bitcoin investments liquid?
The capacity of an asset to be transformed into cash on demand is one way to define liquidity. Since they are traded on most of the world’s exchanges, well-known and large-market-cap cryptocurrencies like bitcoin and ethereum enjoy strong liquidity.
In other words, yes, bitcoin investments are liquid.
Unocoin is India’s first and the most secure bitcoin trading app. This exchange app was founded in 2013. You can buy and sell bitcoin instantly using the Instant Buy and Sell feature. Not just this, you can also buy ETH and Sell ETH in no time. With more than eighty-seven coins listed on this best cryptocurrency exchange in India, you can also accept bitcoin from your friends from any location. You can also know which cryptocurrency works best for you with the price ticker and notifications. The most popular cryptocurrencies like Bitcoin (BTC), Ether (ETH), USDT (Tether), BNB, Ripple (XRP), Cardano (ADA), Solana (SOL), Binance USD (BUSD), Dogecoin (DOGE), Polkadot (DOT) and other popular altcoins can be traded on the go. The new Android and iOS applications make Unocoin the best cryptocurrency app. With the unique feature of the Systematic Buying Plan, you can buy and sell bitcoin and Ether periodically. What more? You can start your crypto journey using SBP for as little as INR 10. With another exciting feature called Crypto Basket, you can diversify your crypto portfolio based on market capitalisation (Market Cap) or Volume. These two excellent features make Unocoin the best cryptocurrency platform.
Love Crypto Coins. Love Unocoin.
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- YouTube Channel: https://www.youtube.com/c/Unocoin/videos
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- Playstore link: https://play.google.com/store/apps/details?id=com.unocoin.unocoinwallet
Crypto products are unregulated as of this date in India. They could be highly volatile. At Unocoin, we understand that there is a need to protect consumer interests as this form of trading and investment has risks that consumers may not be aware of. To ensure that consumers who deal in crypto products are not misled, they are advised to DYOR (Do Your Own Research).