Is Bitcoin a good investment? Discover what experts say about investing in Bitcoin

Obviously, in this bear market, the answer to any query involving investing will almost always be a resounding ‘NO’. However, amidst all the gloom and doom, there have been some stocks that have performed well.

We are talking about investing in bitcoin. While it may not look like a very attractive proposition now, with the cryptocurrency market being extremely volatile and prices having fallen by more than 65% since their peak in January, we cannot rule out investing in Bitcoin as an alternative investment. Whether it is a good investment or not - let's take a closer look at why you should or shouldn't invest in Bitcoin.

What is Bitcoin?

Bitcoin is a cryptocurrency, which means it is a digital or virtual currency that uses cryptography for security. It was the first decentralized digital currency and it was invented by an unknown programmer or a group of programmers by the name of Satoshi Nakamoto.

The most common way to buy Bitcoin is through a Bitcoin Exchange where you can buy and sell it with other “crypto” currencies like Ethereum or Litecoin, or through a broker. But keep in mind that you will incur a transaction fee when you buy or sell Bitcoin through an online broker.

How much a Bitcoin will cost you at any given point of time depends on how much someone is willing to pay for it. This is determined by the demand and supply of Bitcoin. The supply of Bitcoin is fixed at 21 million coins.

Is Bitcoin a Good Investment?

With the cryptocurrency craze at its peak in 2017, investing in Bitcoin became popular among the masses. However, the recent fall in the prices of cryptocurrencies has instilled a sense of fear among investors.
However, let’s not forget that the same was predicted in 2014 when Bitcoin was trading at around $350. Now, in 2019, Bitcoin is still trading above $4000.

This means that while it is true that the value of Bitcoin fluctuates, it always trends upward over longer periods of time. This makes it a good investment and if you have a long-term investment horizon, you can make a lot of money with it.

While it is true that Bitcoin is a good investment, it is also true that there is no such thing as a risk-free investment. There is no guarantee that the value of Bitcoin will rise significantly in the coming years. There are various factors that affect the price of Bitcoin and there is no certainty that these factors will play in your favor.

What’s more, there are also various other factors that can impact your ability to transact or even hold on to your Bitcoins. These include the future government regulations, technological risks and hacking risks. However, if you can manage these risks and hold on to your Bitcoins for a longer period of time, you can make a lot of money with it.

Why You Should Not Invest in Bitcoin

As we have discussed above, Bitcoin is a good long-term investment. However, there are a few reasons why you should not invest in Bitcoin.

• Leverage - The biggest reason why you should not invest in Bitcoin is because it is a highly leveraged investment. This means that if the price of Bitcoin goes up or down by even 1%, it can have a massive impact on the value of your investment. So, if you are investing in Bitcoin, you should be prepared for some really high volatility.
• Volatility - We discussed above that investing in Bitcoin can be very risky because of its high volatility. The prices of Bitcoin fluctuate quite significantly. For example, in 2017, the price of Bitcoin increased by almost 2000%, but in 2018, the prices of Bitcoin fell by almost 80%.
• Limited Understanding of the Fundamentals - Another reason why you should not invest in Bitcoin is because you may not have a deep understanding of the fundamentals of the Blockchain technology. This is because the price of Bitcoin is closely related to the demand for the Blockchain technology.

5 Reasons Why You Should Invest in Bitcoin

Great Potential for Growth - Bitcoin has all the potential to become the standard for digital currencies. As such, the demand for Bitcoin will only increase as the years go by. This will translate to an increase in the price of Bitcoin as well.

• Limited Supply - The supply of Bitcoin is limited to 21 million coins. This means that as the demand grows, the supply of Bitcoin will decrease, and this will increase the price of Bitcoin even further.
• Widely Accepted as a Form of Payment - Bitcoin is widely accepted as a form of payment online because of its underlying technology i.e. Blockchain. As more and more people come online and transact online, the demand for this digital currency will only increase. This will, in turn, increase the price of Bitcoin even further.
• Government Regulation - The government is currently working towards regulating the digital currency market, and this is a good thing for investors as well. This is because governments want to curb money laundering, tax evasion and other illegal activities by regulating the use of Bitcoin. Once the government regulations are in place and people start to trust cryptocurrencies, the price of Bitcoin will definitely increase.

While it is true that Bitcoin is a good long-term investment, it is also true that there is no such thing as a risk-free investment. There is no guarantee that the value of Bitcoin will rise significantly in the coming years. There are various factors that affect the price of Bitcoin and there is no certainty that these factors will play in your favor.

What’s more, there are also various other factors that can impact your ability to transact or even hold on to your Bitcoins. These include the future government regulations, technological risks and hacking risks. However, if you can manage these risks and hold on to your Bitcoins for a longer period of time, you can make a lot of money with it.