Bitcoin has inspired an unparalleled frenzy in its decade-long existence and continues to do so even today, overriding other digital assets in the market. It has a wide cross-section of people jumping in with the hope of making a quick buck and transforming their fortunes. Getting rich overnight is close to impossible, but you can always check out how other people handle their stock holdings and strategies.
So, should you invest in cryptocurrency? To answer that with certainty, you must know how Bitcoin works, how to trade it, what propels a surge and fall in its value and how you can make the most of it.
Is Bitcoin a Sound Investment?
Anyone contemplating joining the cryptocurrency bandwagon is faced with this question: is Bitcoin a good investment? The short answer is: investing in Bitcoin carries a degree of speculative risk. Whether it is the right fit for you depends on your appetite and capability to weather such risks.
But you can’t arrive at the answer to ‘is Bitcoin a good investment?’ without weighing the pros and cons of this cryptocurrency.
It is hard to deny that Bitcoin has had a phenomenal run on the trading charts. A tendency that makes it a lucrative investment option. Here are a few clear advantages of investing in Bitcoin:
- It is the most liquid asset for investment that can be traded for cash or assets such as Gold with ease and at incredibly low fees.
- Since Bitcoin is not regulated, it carries a much lower risk of inflation.
- This cryptocurrency is still fairly young, compared to other investment assets, which means there is an incredible scope for growth and massive gains.
- You don’t need any license or certificate to get started on Bitcoin trading. Just simply set up an account and you’re ready to roll.
On the flip side, the volatile nature of this currency does bring with it some disadvantages too:
- The first and foremost is the volatility in its rates. From breaching the $20,000 mark in 2017 to hitting a low of $3,300 in 2018, Bitcoin prices have seen a great deal of fluctuation.
- Bitcoin investments are susceptible to the risk of being hacked.
- Beginners still figuring out the nitty-gritty of the Bitcoin market may fall in the trap of malpractices and fraud.
- A single crash or virus attack can cause you to lose your wallets, leading to huge losses.
Investing in Bitcoin
Once you’re clear about why to invest in Bitcoin, you now need to understand how to go about it. The process may seem complicated to beginners. Taking it one step at a time can ease you into the process:
Step 1: Choose a wallet to store your Bitcoin in.
Step 2: Link the wallet to your bank account. You can also use a debit or credit card for this.
Step 3: Sign up on a Bitcoin Exchange to trade this cryptocurrency using traditional currencies.
Step 4: Place your order and start trading. Buying a single Bitcoin can set you up for a few thousand dollars. If you’re ready for that kind of investment, you can buy a fraction of it.
Making Hay While the Bitcoin Rises
Fluctuations in the cryptocurrency space are inevitable. The only way to minimise the risk of losses and maximise returns is to understand the strategies for Bitcoin trading, trade smartly and cash in on any bullish trend. To be able to do this, you need to understand why Bitcoin is rising and predict its future trajectory. With time, research and experience, you’ll get a hang of it.