A Guide to Bitcoin Investment

By  //  May 16, 2021

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Investing in Bitcoin surely does sound like a tedious job that requires a lot of patience and technical knowledge about cryptocurrency but recently this has become a new asset for a lot of traders and investors to invest in.

Bitcoin is the most widely known digital currency in the world which can be used as a mode of payment (a new form of money) and as an investment. There is no single entity that owns Bitcoin and hence it cannot be altered or controlled by any individual, thus giving some security to the users or investors.

How to Invest in Bitcoin?

Cryptocurrencies do not require to be regulated, which is otherwise the scenario for stock exchanges. They are self-regulated and operated all the time. 

Crypto exchange- Fractional shares of Bitcoins can be bought and sold via an exchange that needs you to have a minimum capital. Sometimes you may be charged to enable these transactions.

Person to person- When you are not sure about your knowledge or not interested to pay any transaction amount, you can go for a person to person (P2P) mode of purchase. Here, you can do the purchase by finding a seller who will further facilitate the process and help you close the transaction. P2P mode has its pros and cons and hence a person should be very careful while opting for this method.

Mining- This process requires a person to know the blockchain network. In Bitcoin mining, new Bitcoins are added to the circulation by digitally adding transaction records to the blockchain. It requires powerful computers to solve various Bitcoin algorithms, and upon solving a complex mathematical problem, Bitcoin gets rewarded.

Buying through an exchange is the easiest method of all. There are various software to facilitate these trades like any crypto superstar

Why invest in Bitcoin?

Bitcoin is entirely a new class of assets that has established itself and gained popularity within a decade. This is an extremely rare/unavailable digital currency that holds a huge value and that itself is a reason, big enough for investors to eye Bitcoins.

Bitcoins can be considered as a top-performing asset in terms of high return values being the fastest growing class of asset that holds about 70 percent of its market value. Although the price of a Bitcoin is highly volatile which can cause the prices to go extremely up as well as down from the average value but it can be advantageous if you are willing to take the risk for an instant and good return from your investments.

The term inflation is well known in the trading circle and among people who discuss and practice economics. It stands for the global rise in prices of services as well as goods over time. Deflation is the polar opposite of inflation and Bitcoin was initially a deflationary asset. Bitcoin has now proved to be a better alternative than gold, among a huge population, to invest in for protection against inflation. Investors convert their cash into Bitcoins to improve their finances.

Is investing in Bitcoin safe?

The most common query among all peer investors and traders is, whether Bitcoin or cryptocurrency investment is safe or not. There are several risks associated with Bitcoin investment which everybody should keep in mind before making any purchase or transaction.

There are many complications in regulating Bitcoin as an asset in many countries. There are issues regarding the information imparted by the users and various other controversies are involved, making Bitcoin investment risky to some extent. Most of the activities related to the use of cryptocurrencies remain hidden due to their untraceable nature and hence any regulation implemented on the exchange of Bitcoins can be proved problematic for the investors involved.

There can be various technical issues related to Bitcoin trading. The software used for Bitcoin trade has extremely high functionality but the risk of a bug is never zero.

Although very unlikely, but there remains a possibility of the emergence of a new and more competitive asset that can take up the market and bring down the graph of Bitcoin value. The competitor will need to take away the Bitcoin miners and also compete with the size of the Bitcoin network to bring it down.

Conclusion

Bitcoin trading has become a trend that is spreading fast among traders and more and more investments occur in Bitcoins making it an important asset class. There might be some risk factors associated with Bitcoin trading but with good and keen knowledge, Bitcoin investors are bound to get rewarded.