As experts at 7bitcoins, we provide our readers with the information that they need to make informed decisions when it comes to cryptocurrency. This article discusses all the basics regarding investing in Bitcoin and should give you a good idea as to whether or not Bitcoin is a good investment for you.
Investing In Bitcoin
Bitcoin, also known as “BTC,” is considered the most volume-popular cryptocurrency in the world because of its longevity and credibility. Bitcoin can be a good potential investment for anyone who wants to gain direct exposure to the demand for digital currency. Despite this, it is important to keep in mind that, like any other investment, Bitcoin also has its risks and it is important to do your research before you invest. In short, Bitcoin, like many other investments, is considered high risk, high reward – meaning that the potential profit might be higher than with other investments, but on the flip side, your money is at higher risk.
There are various ways to invest in Bitcoin, both directly – such as bitcoin mining, and indirectly – such as investing in corporate stocks of companies that use Bitcoin technology.
The Pros & Cons of Bitcoin
While there are many potential benefits of Bitcoin, there are also risks to consider. As with any investment, it helps to do your research and understand what you are getting into before deciding to start trading with or investing in Bitcoin. Below is a list of pros & cons to consider when thinking about investing in Bitcoin.
Some of the pros of Bitcoin include:
- Accessibility and Liquidity – Bitcoin is easily accessible and reasonably versatile, it can also be converted to fiat currency (for example GBP or USD) with minimal effort.
- High Potential Return on Investment – while the cryptocurrency market is volatile, there is still great potential to have high returns on your investment when you invest in Bitcoin.
- Transparency and Anonymity – the blockchain is open to public viewing, therefore making it transparent. While Bitcoin is transparent, the risk of leaking personal information is removed by the anonymity that comes with it as Bitcoin users are identified by a numerical sequence and not their personal identity.
- Decentralisation – Bitcoin operates independently of a particular bank or government. This means that the control and decision-making components of bitcoin are not linked to one entity but rather to a distributed network.
- Low Fees – Bitcoin provides the space to cut out the middleman through peer-to-peer computing, thus reducing transaction fees significantly.
Some of the cons of Bitcoin include:
- Unpredictability – Bitcoin is unpredictable due to the volatile nature of the cryptocurrency market. Many factors influence the cryptocurrency market such as the global economic climate, cryptocurrency news and rumours, celebrity endorsement and political landscapes.
- Limited Use – while Bitcoin remains the most popular cryptocurrency around the world, there are still very few companies that accept Bitcoin as a legitimate form of payment. There is hope amongst those in the cryptocurrency industry that as the adoption rate increases, Bitcoin will be accepted more broadly as a legitimate form of payment.
- Irreversibility – transactions made using Bitcoin are irreversible, so if a mistake is made regarding the amount of Bitcoin sent or the receiver it was sent to, for example, there is no way to reverse the transaction.
- Limited Government Regulation – even though decentralisation is a big benefit of Bitcoin, it also comes with its risks. Because there is little to no government regulation regarding Bitcoin, there is a lack of legal protection when transacting with it.
Is Bitcoin Worth Investing In?
The value of Bitcoin investing involves many factors that need to be considered therefore, one cannot plainly say whether Bitcoin is a good or bad investment. Investing in Bitcoin looks different for every person and some factors that determine whether Bitcoin is a good investment for you include things like your risk tolerance, financial goals, financial stability and investment strategy.
To ascertain whether Bitcoin is a good potential investment for yourself, it helps to determine what your investment goals are and what you are hoping to get out of investing in Bitcoin. Some examples include building a passive income, building up savings, becoming a full-time investor etc. Once you have determined what exactly you would like to get out of an investment, you can decide whether or not Bitcoin aligns with that goal.
As mentioned earlier, Bitcoin is a very high-risk, high-reward investment. This is because it is a volatile asset – meaning that its value can fluctuate dramatically over a very short period. The reason for its volatility is that Bitcoin has no intrinsic value – which means it is not backed by any physical asset such as gold or silver and because it is decentralised, there is no central regulator to ensure that the value remains stable. In addition to this, Bitcoin’s value is not linked to the profits of any one corporation or entity, instead, the value of Bitcoin is dependent on market demand. The more people that invest in Bitcoin, the higher its value will be. Similarly, when the interest in Bitcoin decreases, so does its value. For this reason, potential investors should pay special attention to the rate at which Bitcoin is being adopted globally as this directly affects its value.
Although Bitcoin is its own form of investment, it has the immense potential to cross traditional investment boundaries. In reality, some of the most valuable assets of the modern era can be used in conjunction with bitcoin. An example of this is tokenization in real estate. The potential of Bitcoin and its integration into other forms of investing is vast and should not be overlooked.
How To Invest In Bitcoin For Beginners
If you are a beginner wanting to invest in Bitcoin, there are five easy steps for you to follow which we have explained below.
- Step 1 – Join a Reputable Bitcoin Exchange
- Step 2 – Get a Reputable Bitcoin Wallet
- Step 3 – Connect Your Bitcoin Wallet To a Bank Account
- Step 4 – Buy Bitcoin
- Step 5 – Manage Your Bitcoin Investments
How Much Should I First Invest In Bitcoin?
There is no set amount that beginners should invest in Bitcoin. This amount will differ from person to person based on certain factors. The most important factor to consider is the amount of disposable income you have available. The money you use to invest in Bitcoin should not be money that you are reliant on, because there is the risk of losing that money when you invest in an asset like Bitcoin.
Once you have established your available funds for investing, you can consider what percentage of your investment capital to invest in Bitcoin. A good percentage to invest in Bitcoin is between 5 and 30 per cent. As a beginner, between 5% and 15% would be a sensible start to your Bitcoin investing venture.
Is It Safe To Invest In Bitcoin?
The actual bitcoin technology is secure because of how it is structured. Once a transaction has been verified, it cannot be reversed. In addition to this, all the computers in the network need to verify a transaction for it to be successful, making it hard to hack.
With this being said, investing in Bitcoin is not inherently safe or it is important to keep in mind, that like any other investment, Bitcoin also has its risks and it is important to do your research before you invest.
While the technology that makes up Bitcoin may be secure, the cryptocurrency market itself is inherently volatile and thus it poses risks. Essentially, Bitcoin, and cryptocurrency investments, like many other investments, can be seen as high risk, high reward – meaning that the potential profit might be higher than with other investments, but at the same time, your money is at higher risk. You need to remember that the money you invest in Bitcoin can all be lost, which is why it is important to never invest money that you are reliant on.
Can You Lose Money Investing In Bitcoin?
As with most investments, there is a risk of losing money when investing in Bitcoin. This means that you could potentially lose your money when investing in Bitcoin due to the volatility of the cryptocurrency market.
You can also lose money investing in Bitcoin if the price drops, you lose access to your Bitcoin wallet, your exchange crashes, or you get scammed. Bitcoin is at risk of “pump-and-dump” schemes, so it is important to be aware of the risks involved in investing in Bitcoin so that you can try to avoid them.
How To Be Successful In Bitcoin
There is no simple recipe for success when it comes to investing in Bitcoin because the cryptocurrency market is unpredictable and can change at any time. There are, however, tips to help you increase your chances of success with Bitcoin investing. Below is a list of general tips to help you make the most of Bitcoin Investing.
- Educate yourself – acquire as much knowledge as you can about Bitcoin prior to investing in it.
- Develop a strategy – decide on your goal and formulate a trading strategy to follow based on that goal.
- Diversify your portfolio – it helps not to put all your eggs in one basket and to invest in other assets other than just Bitcoin. Stay informed: Keep up with the latest news and developments in the Bitcoin world to stay informed about potential opportunities and risks.
- Be prepared for volatility – as already discussed, Bitcoin is known for its volatility, so it helps to be prepared for the inevitable price fluctuations.
- Keep your Bitcoins safe – use a reputable and secure digital wallet to store your bitcoins and make sure you keep your backup secure.
- Be patient – Bitcoin works best as a long-term investment and success may not come quickly, so it helps to be patient and not act impulsively.
Bitcoin Investment Calculator
If you would like to calculate your Bitcoin investment, you can simply use a crypto profit calculator to do the work for you. All you need to do is fill in the relevant fields and then the calculator will do the rest of the work.
How Much Is $1 In Bitcoin?
As previously mentioned, the value of Bitcoin fluctuates constantly so there is no set conversion rate. If you want the real-time value of Bitcoin in your specific currency, you can use a currency converter to get the exact value.
Frequently Asked Questions About Bitcoin Investing
Is Bitcoin Worth Investing In?
This will depend on what you want to achieve through Bitcoin investing. There is no simple “yes” or “no” answer.
How Much Should a Beginner Invest in Bitcoin?
Between 5% and 15% of your investment capital.
Is It Safe to Invest in Bitcoin?
While Bitcoin technology is secure, there is a risk in investing in Bitcoin.
Can You Lose Money Investing in Bitcoin?
How Can I Calculate My Bitcoin Investment?
You can use this crypto profit calculator.
How Much is $1 in Bitcoin?
This currency converter will give you the exact amount of Bitcoin in your currency.