Bitcoin Investment: Should I Invest in Bitcoins?
Bitcoin currency has already been used as a kind of a fiat money alternative for about 9 years. It is relatively popular all around the world. The first digital currency has made many people go nuts following the impressive ups and dramatic downs of its exchange rate. Today, in October 2018, the whole cryptocurrency industry is looking forward to observing a new crypto-“miracle”. Search engines are overflowed with all those “How to invest in cryptocurrency?”. And this is not particularly surprising. Traders and different investors who own a significant capital expect cryptocurrency to be a promising investment tool in the long term. And if we talk about cryptocurrency, that basically means Bitcoin. Well, of course, there is a number of altcoins that can be worth making investments, but the first digital currency is definitely the most popular one. People still talk about investing in Bitcoin and this topic is interesting for many traders, investors and casual users. So, let's take a closer look at this issue.
How to invest in BitcoinBefore making an investment, one should obviously choose the way he or she wants to get some BTC. First of all, it depends on financial capacities. There are indeed many different options to invest in Bitcoin, but we will focus on two main ways that are currently the most popular and probably also the most effective.
Option №1: Taking advantage of the rate differences as a way of BTC investingYou might have already come up with the question, why people are still interested in making investments in Bitcoin when it costs less than $7 thousand per a coin? Well, influencers, opinion leaders, independent experts, and different analysists are confident that we will soon observe another sustainable increase of Bitcoin rate. And that is why many people start thinking about investing in cryptocurrency to make money out of the rate differences. But what is the way to do that? It is actually pretty simple. All you need is some basics of math. In fact, investors are not really sad about the fall of Bitcoin. Many of them are even happy, especially those who believe that the cryptocurrency has a great future ahead. Today, if a trader purchases a BTC for $6,5 thousand, he or she will manage to make a good profit, in case BTC rate increases. Some really expect it to rise up to $30 thousand, and in this case, it will really be a good bargain. The key point here is whether the rate increases or not, of course.
Option №2: BTC miningBesides, users can invest the special equipment that is used to mine Bitcoin. You may already know, that each BTC is actually a kind of a reward, given for the performance of certain calculations, necessary to issue new coins. Today these calculations are rather complex and require special high-performance equipment called ASIC-miners. The more users are there in the system, the more difficult are these calculations. This is called Bitcoin difficulty and it ensures that it always takes around 10 minutes to create a new Bitcoin block. Investing Bitcoin this way means that you can get a certain number of BTC and store it till the rates grow or exchange it for another digital currency like Ethereum. However, you'd better do not think that these two investment options will bring you fast and easy profit. This is possible only if the cryptocurrency rate increases significantly and in the case of mining, if your equipment has enough performance. By the way, here is one more option of BTC investing. It`s actually difficult to say that it is a comprehensive way to invest in the cryptocurrency, but, anyway, many people use it today.
Bitcoin faucetsThese are special websites, where users can get a reward for making certain easy tasks, usually related to online advertising. These rewards are paid in satoshi. The thing is, that one BTC includes as many as 100 000 000 satoshi, so one satoshi is only 0,00000001 BTC. So it`s actually a tiny piece of the market`s largest cryptocurrency. Investing BTC using Bitcoin faucets is not really effective, as you may never manage to collect at least one single coin.
Is Bitcoin a good investmentWell, if you have already decided to invest in digital currencies then Bitcoin will probably be the best option. Not only this cryptocurrency is a market leader and the most popular digital coin, but also it has relatively good liquidity as compared to other virtual assets. Many cryptocurrency followers believe that Bitcoin has a potential to become the main means of payment in the future. However, there are also those who bet on other digital currencies, as well as those who do not consider virtual coins as an investment option at all. By far it seems that the question is it worth investing in Bitcoin remains undetermined, so let's make it a little bit more clear. Bitcoin is relatively anonymous, decentralized and has a limited number of coins available for mining. This is, in fact, why hundreds of thousands of cryptocurrency followers made their decision in favor of BTC.
AnonymityInvestors do not have to disclose their personal data. The information about each transaction is public and everyone can see the address of the cryptocurrency wallets of a sender and a receiver, as well as how many BTC were transferred. However, the information related to owners of cryptocurrency wallets is not disclosed, so the whole system is relatively anonymous.
DecentralizationBitcoin worth investing, as it has a decentralized management, which means there is no single administrative center. Transactions are carried out directly between users in a peer-to-peer network. However, Bitcoin users still have to pay certain commission fees for transfers of their virtual assets, because every transaction is confirmed and recorded in the blockchain by miners who receive rewards for this. Today small transactions are often not effective at all, as the commission fee is rather big. However, if a transaction is large, the commission fee will be relatively low.
Limited number of coinsIs Bitcoin a safe investment – “yes” is the answer of many people, who believe that a limited number of Bitcoins to be mined is a strong advantage of the digital currency. It will prevent BTC from inflation. “Why should i invest in bitcoin?” – you may ask. The answer will probably contain both pros and cons. And that`s because Bitcoin has some special features, which are:
- 24/7 trades, that allow making investments at any time;
- most indicators have a rather good quality;
- high volatility;
- possible positive prospects of cryptocurrencies and, as follows, positive expectations related to Bitcoin investments.
Bitcoin investment trustThe risk remains here almost all the time and no one can guarantee that your money is 100% safe. Here are several examples why it can be rather risky to make investments in the largest cryptocurrency by market capitalization. Yes, Bitcoin still has a decentralized management, however, in a certain way the system is getting more and more centralized. This risk of investing in cryptocurrency is related to the fact that BTC rate starts depending on cryptocurrency exchanges. Moreover, the significant part of all Bitcoins is owned by those who are engaged in mining or lease out high-performance mining equipment. Making new Bitcoins requires really a lot of computing power and gets more and more expensive. The competition within the system increases and it is almost impossible for casual users to join Bitcoin mining. That is why many people have already switched for other digital currencies that are easier to mine and can be later exchanged for BTC. In some cases, Bitcoin`s anonymity is also a risk. Anonymous deals can be used for money laundering, as there is no effective state regulation of cryptocurrency transactions.
How to invest in Bitcoin stockThere are special cryptocurrency funds, similar to mutual funds that exist in the world of bonds and stocks. These funds are managed by private parties and it influences the interest rate. For instance, some cryptocurrency funds provide 1-2% per day.
Bitcoin investment strategyThere are two main types of cryptocurrency investment strategy. The first one: investors buy BTC and sell the cryptocurrency when its rate increases. The second one: Bitcoin holders trade their digital assets on cryptocurrency exchanges. This strategy is very similar to Forex trading.
Minimum Bitcoin investmentMany people decide to invest in Bitcoin because they hope to get huge profits in the long term. So, even a small investment is considered to be rather promising by many cryptocurrency followers. Eventually, the smaller is an investment - the lower is the risk. But, on the other hand, a really small investment can just be useless. Anyway, how much to invest in Bitcoin remains an open question and everyone has their own opinion. Who said users can only invest their money? It is also possible to get BTC for free by investing one`s intellectual work. Well, just a bit of BTC, to be honest. Special websites offer users the opportunity to earn satoshi - the smallest fraction of Bitcoin - for the performance of different easy tasks, usually related to advertising. These websites are called Bitcoin faucets. The main advantage of such an option is that users do not have to invest a single penny to get a piece of BTC, however, the drawback is also rather significant - it will take a really long time to get at least one BTC.
Invest in Bitcoin miningMining is actually how new digital currency is issued. Making investments in Bitcoin mining means buying special mining equipment or renting it from different providers. Cloud cryptocurrency mining is also possible. These services lease out their mining equipment for users to rent a particular amount of processing power. There are some experts who think that cloud mining is actually the best way to invest in Bitcoin, as users don`t have to purchase, set, maintain and update expensive mining equipment. Anyway, both traditional and cloud mining still require preliminary investments.
Bitcoin investment sitesBefore making investments in Bitcoin, basically, before purchasing it, you should have a cryptocurrency wallet to store your digital assets. Today Bitcoin holders and those who want to join them are lucky to have a large variety of different cryptocurrency wallets. These are, for example, mobile, hardware, online, desktop, cold, and even paper wallets. If you are planning regular digital currency investment, we recommend having a local hardware wallet. However, it actually depends on what is more convenient for you and what meets all your requirements and there is really a number of options you can choose from. Do not forget to activate your cryptocurrency wallet. Usually, Bitcoin is purchased on cryptocurrency exchanges. It is really important to choose the right one, so we recommend taking the following criteria into account:
- a region, where the exchange is registered;
- input and output, exchange, transfer options, etc. - basically, what you can do with your funds in a digital wallet;
- commission fee level;
- security level.