Is it Smart to Invest in Bitcoin?
Do you want to invest in Bitcoin but don’t know where to begin? If so, you are not alone. Bitcoin is a popular cryptocurrency that has made headlines for its rapid growth to start 2021. However, is it worth your investment? Let’s take a closer look at this popular digital asset below.
Should You Invest in Bitcoin?
Bitcoin is a decentralized digital currency that you can send peer-to-peer through different networks. And this is done without the need for any mediator.
In fact, each transaction takes place through a public ledger. This is known as the blockchain. It is somewhat similar to making a purchase with the U.S. dollar.
Anytime a consumer makes a purchase, a bank or credit card company must verify the accuracy of the transaction. The exact same thing happens when you invest in Bitcoin. Yet, it’s done at a lower cost.
The blockchain checks each transaction for accuracy through a system known as hashing. Once the computer solves the hash, it will permanently store the transaction as a block on the blockchain.
Bitcoin miners check each transaction and receive new Bitcoin in the process. That’s one way to get Bitcoin and the other is by buying it from existing owners… But should you invest in Bitcoin?
This is the question that all investors are asking; both new and old. And, in most cases, investors are leaning towards buying Bitcoin for their portfolio.
There are many ways to buy Bitcoin or other cryptocurrencies, such as Dogecoin. For example, the most popular options include:
- Traditional stockbrokers (TradeStation)
- Crypto exchanges (Coinbase)
- Mobile investment applications (Robinhood)
- Bitcoin ATM’s, which you can find across the United States
As you can see, Bitcoin is expanding in terms of your purchasing options. Everything is easier and more accessible. And this is another reason why investors are beginning to invest in Bitcoin.
Bitcoin Investing Trends
This growing trend in crypto investing comes as no surprise. In general, cryptocurrency has been a major talking point within the industry for quite some time.
It didn’t take long before it hit mainstream media. But now its potential is finally being realized. For instance, Tesla has recently acquired $1.5 billion in Bitcoin. This alone has pushed bitcoin’s price even further.
To begin 2020, one Bitcoin was worth just over $7,000. That same Bitcoin is now worth over $43,500 and rising.
Bitcoin Price Volatility
Bitcoin is susceptible to higher market volatility than most stocks and bonds. As an example, it hit the $40,000 mark in early January. But it fell below $30,000 by the middle of the month.
Bitcoin grew once more and ended January over $33,000. It’s now on a meteoric rise once again. Only time will tell how this cryptocurrency will fair over the coming months.
It’s heading in the right direction. But it’s important to consider market volatility when you invest in Bitcoin.
How to Store Bitcoin
By this point, you may be ready to decide if you want to buy Bitcoin or not. And if the answer is yes, you will need to store it somewhere.
You can do this through digital wallets. There are two types of digital wallets to consider: a hot wallet or a cold wallet.
A hot wallet is faster than a cold wallet. However, a cold wallet provides extra security measures to protect your Bitcoin.
Most investors access their wallet through a mobile app or computer. These hot wallets are available through your preferred broker. Some brokers, such as Coinbase, offer free hot wallets and will also insure any losses due to security breaches.
A cold wallet is a portable device that lowers the risk of a breach. You can download your Bitcoin directly to the device and carry it around with you. Although, these can be expensive and cost over $200.
When you invest in Bitcoin, make sure you keep track of your password. Lost passwords have locked many people out of their own accounts which now hold millions of dollars worth of Bitcoin.
Investing in Cryptocurrency
Cryptocurrency may be new to you, but it’s been an investment opportunity for some time now. And you can stay ahead of the trend with expert analysis and insights.
Sign up for the Profit Trends e-letter below. This daily newsletter provides valuable crypto updates and stock tips from investors with decades of stock market experience.
Digital currency has become a major player with real investment potential. And Bitcoin isn’t going anywhere. You may want to invest in Bitcoin as it continues to grow in the right direction.