What are the benefits of investing in Bitcoin?

Last Updated on 7th February 2022 by Jeffrey Camerda

bitcoin and cryptocurrencyThe bitcoin phenomenon has spawned collective insanity in the past decade. Cryptocurrencies are unpredictable. It’s difficult to predict whether they will serve as the global reserve currency or a store of value as popular as gold. Investing in bitcoin brings with it a chance to make massive profits, but some investors are wary about the thrill of riches and ruin. 

Cryptocurrencies such as bitcoin are revolutionary technologies and less risky in 2021 than in 2012. In El Salvador, fiat currency became legal tender this year, and other countries will likely copy this move to attract creative innovation. Other nations may prohibit it entirely as a measure to preserve fiat money. It appears as though 2022 will be the year of mass adoption of bitcoin in the global geopolitical climate.

Traditional and institutional investors alike have been attracted to bitcoin due to its outstanding performance as both a currency and an investment. If you are unsure about whether Bitcoin is a good investment, you can learn more about its benefits.

Liquidity

With trading platforms, exchanges, and online brokerages available worldwide, Bitcoin is considered to be one of the most liquid investments. Bitcoin can be instantly converted into cash or other assets like gold with incredibly low fees. Bitcoin is an ideal investment vessel in terms of short-term returns because of its high liquidity. Over the long term, digital currencies have a high market demand, which makes them a good investment.

Lower Inflation Risk:

While governments regulate most world currencies, bitcoin is not affected by inflation. With the blockchain, your cryptos can never lose value, as the system is infinite.

New Opportunities:

It is only relatively recently that Bitcoin and cryptocurrency trading has become mainstream – more coins are appearing every day. As a result of this newness, prices can swing drastically, creating a way to profit massively.

Simple Trading:

Holding a stock trading license or certificate is a prerequisite for stock trading. If you want to trade the shares of a company, you should do so through a broker. Bitcoin trading, however, is a simple process: Buy or sell bitcoins from exchanges, then store them in your wallet. In addition to its instant nature, Bitcoin transactions are also faster than stock trades, which could take days or weeks to settle.

User Anonymity and Transparency:

Despite not being completely anonymous, Bitcoin users can have multiple public keys and are identified with numerical codes. This means that no public tracking or tracing of the user is possible. 

Blockchain technology ensures that transactions are safe from fraud despite being permanently viewable, so you’ll always know what’s going on. Further, the wallet owner is the only one with access to how many bitcoins are in the wallet.

It would be possible to generate a new wallet address if your wallet address became public if you wished to maintain your anonymity. With Bitcoin, the user’s data is not required for transactions, which puts it in a class of its own when compared to traditional currencies.

Freedom from central authority:

Unlike a central bank or government, Bitcoin is decentralized, meaning no single authority regulates it. You don’t have to worry about the government demanding your coins. Moreover, Bitcoin is incapable of implementing a taxation system. 

Since the price isn’t tied to government policies, users have more control over their money. The main advantage of Bitcoin for cryptocurrency users is this.

High return potential:

There can be drastic changes in Bitcoin prices daily and monthly. The cost of Bitcoin peaked at $20,089 in December 2017 from $975.70 in March. It was the first time in history that Bitcoin exceeded $64,000 in April 2021.

Bitcoin users may find that even though prices fluctuate a lot, the high return potential can be seen as one of its benefits. With Bitcoin’s popularity growing, many investors and businesses have decided to embrace it as a form of global currency. The higher return potential is aided by this, especially in the case of lower-priced purchases.

Furthermore, some investors believe Bitcoin could reach prices as high as $500,000 by 2025, further demonstrating its long-term value. Since Bitcoins are fixed at 21 million, this shows their long-term worth. Moreover, many believe that Bitcoin’s value will rise over time due to a supply cap within a defined time frame.

Disadvantages of Bitcoin investment:

It is equally important to be aware of cryptocurrency investing concerns, even though Bitcoin may be the future of monetary exchange. A few reasons have been given for why Bitcoin might be a bad investment. Investment success often depends on balancing pros and cons.

Volatility:

Whenever the bitcoin price fluctuates, it ripples back and forth. Suppose you bought bitcoin on December 17, 2017, at $20,000, and the price fluctuates every few minutes. It was worth less than $7,051 several weeks after you invested. If you hold for years, you won’t do well in 2021, but many investors do not have the patience.

Threat of online hacking:

The only way you can be 100% secure is to take custody of your private key, and this can only be done if you use a trusted exchange like Coinbase or Gemini. It’s possible to do this using crypto wallets like the Ledger Nano X or Coinbase Wallet.

 

Jeffrey Camerda

Dr. Jeffery Camerda, PhD, is a financial planner who specializes in wealth management and retirement planning.With a PhD in Economics and Financial Planning, Jeffery represents the highest level of financial planning expertise and achievement in the USAIn addition to preparing you for a career in financial planning, a PhD in economics and finance also prepares you for academic pursuits, such as becoming a university professor in teaching or doing research.Here at the Wealth Builder, our financial advisory company was founded in 2007 and services all across the USA with over 16 years of expertise.In order to provide the finest advice and services, we pay close attention to the specific financial circumstances and requirements of each client.In order to guarantee that our clients don't get a sales pitch for insurance or investments, as well as a lack of conflict of interest from a prospective commission-bearing corporations, Jeffery focuses on fee-based services. Financial planning for wealth managers, financial well-being workshops, and personal financial planning packages are all part of the company's offering.Jeffrey Camarda, PhD, CFA, EA is also the founder of the Family Wealth Education Institute, is a member of the Financial Planning Association and serves as the Chairman of Camarda Wealth Advisory Group

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