Is Bitcoin a good investment? Should I invest in Bitcoin? Bitcoin is not only the first cryptocurrency but also the most famous of more than 5,000 cryptocurrencies currently available.
The collective madness has grown around Bitcoin over the past decade. It is difficult to predict whether this cryptocurrency will eventually be proven to be a big investment or just a storm that passes.
The sensation of wealth or destruction leaves several vigilant investors, but others want to pursue opportunities for the benefit of investing with Bitcoin.
When the richest person in the world gives his support to a virtual currency you know it’s big business.
ELON MUSK told users of an online social media application that he thinks that virtual currency, Bitcoin, is a “good thing”. His comment resulted in the Bitcoin value increased significantly.
What Is Bitcoin?
Bitcoin is a revolutionary technology that enables a new way to send payments over the internet. You can think of it as an open accounting system where thousands of computers all over the world work together to track ownership of digital tokens called Bitcoins.
When you send someone Bitcoins, the transaction is broadcast to the entire network. After it’s verified it’s recorded in a public ledger called the blockchain. The blockchain contains a record of every bitcoin transaction that has occurred since the system began and it’s shared and maintained on the network so everyone keeps the books so to speak.
Most currencies are issued by a central authority that controls the money supply. Bitcoin is a peer-to-peer system, so there is no central authority instead bitcoins are issued to users who help process transactions in the network this is known as bitcoin mining.
Bitcoin miners are specialized computers that do the work required to verify and record transactions in the blockchain. As a reward for their work, the miners earn bitcoins and this is how new bitcoins are released into circulation. With Bitcoin, you can send any amount of money to anyone anywhere in the world as easily as sending an email.
How Bitcoin Works?
Bitcoin is made as a way for people to send money through the internet. The digital currency is intended to provide an alternative payment system that will operate free from central control but also be used as traditional currency.
Each bitcoin is basically a computer file stored in the ‘Digital Wallet’ application on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoin to others. Each transaction is recorded in the public list called Blockchain.
This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies, or undoing transactions. To fully understand how cryptocurrency works, let’s have a look at these terms and context:
Bitcoin is powered by open-source code known as the blockchain, which creates a shared public ledger. Each transaction is a “block” that is “chained” to the code, creating a permanent record of each transaction. Blockchain technology is at the heart of more than 6,000 cryptocurrencies that have followed in Bitcoin’s wake.
Private and public keys:
A bitcoin wallet contains a public key and a private key, which work together to allow the owner to initiate and digitally sign transactions, providing proof of authorization.
Miners — or members of the peer-to-peer platform — then independently confirm the transaction using high-speed computers, typically within 10 to 20 minutes. Miners are paid in bitcoin for their efforts.
Investing In Bitcoin
Now that you have already basic knowledge about Bitcoin, the question that pop-up in your mind is “Should I invest in Bitcoin now?”
Many Bitcoin supporters believe that digital currency is the future. Many individuals who support Bitcoin believe that it facilitates a much faster and low-cost payment system for transactions throughout the world.
Although not supported by government banks or central banks, Bitcoin can be exchanged with traditional currencies; In fact, the exchange rate of the dollar attracts prospective investors and traders who are interested in currency games.
Indeed, one of the main reasons for the growth of digital currencies such as Bitcoin is that they can act as an alternative to national fiat money and traditional commodities such as gold.
The Rise of Bitcoin in 2021
Since December 2020, Bitcoin has enjoyed dramatic highs and lows. On December 16, Bitcoin prices reached $20,000 for the first time. On January 3, 2021, the value jumped above $ 34,000, meaning the Cryptocurrency gained almost $5,000 in the first few days of 2021. Then on February 9, 2021, the value briefly reached a record high of $48,000 after the Tesla carmaker has revealed that it had bought $ 1.5 billion worth of cryptocurrency.
On February 21, the coin rallied to a new peak at $ 58,354 before falling dramatically two days later as low as $ 44,845.72, a loss of 18.4% for the day and a decline of almost a quarter of the week. On March 13, the mainstay Crypto then reached a new record of $ 61,701.
Buying a Bitcoin
Investing in Bitcoin is similar to investing in stocks, but it is far more unstable due to daily swings in Bitcoin. Most people buy Bitcoin through exchanges, such as Coinbase.
The exchange allows you to buy, sell, and hold the cryptocurrency, and set up a similar account by opening a broker account – You must verify your identity and provide several types of funding sources, such as bank accounts or debit cards. Main exchanges include Coinbase, Kraken, and Gemini. You can also buy Bitcoin from a broker like Robinhood.
Regardless of where you buy your Bitcoin, you will need a digital wallet to save it. This might be called a hot wallet or a cold wallet. Heat wallets (also called online wallets) are stored by exchanges or providers in the cloud.
Online wallet providers include Exodus, Electrum, and Mycelium. A cold wallet (or cellphone wallet) is an offline device that is used to store bitcoin and not connected to the internet. Some cellular wallet options include trenches and ledgers.
Investing in Bitcoin Today
Wherever you choose to hold your Bitcoin, people’s philosophy on how to invest varies. Some purchases hold for the long-term, some buy and aim to sell after price rallies, and others bet on prices decrease.
Bitcoin’s prices from time to time have experienced a large price shift, running as low as $ 5,165 and as high as $ 28.990 in 2020.
Like stocks, you can buy and hold Bitcoin as an investment. You can even do it in a special retirement account called Bitcoin IRAs.
“I think in some places, people might be using Bitcoin to pay for things, but the truth is that it’s an asset that looks like it’s going to be increasing in value relatively quickly for some time,” Marquez says.
“So why would you sell something that’s going to be worth so much more next year than it is today? The majority of people that hold it are long-term investors.”
Why You Should Invest Now?
Last year it has become one of its kind – global pandemic, market uncertainty, countrywide lockdowns, travel restrictions, etc. However, we witnessed an increase in financial assets – Bitcoin. The new-age digital currency saw price recovery.
Digital currency which was once seen as mysterious by many people in the past has now exploded in value and popularity.
It has become the mainstream and major giant financial institution such as PayPal, Visa, JP Morgan, etc., now offers Crypto services, and more retail investors are interested in buying Bitcoin now more than before.
Despite its volatility, bitcoin has surged in value, especially in the past year. We could attribute this Bitcoin rally to two things: Better trust and Global Trends.
The world now witnesses Bitcoin associated with more institutional investors such as Tesla, Microstrategy, etc. Most institutions are now considering changing their cash reserves to be Bitcoin as hedging against the financial crisis.
Bitcoin’s Worth in 2021
Some people like the fact that Bitcoin is not controlled by the government or banks.
People can also spend their Bitcoin anonymously. Although all transactions are recorded, no one will know which ‘account number’ was yours unless you tell them.
Bitcoin is now closer to $100K than it is closer to $0. Recent developments throughout the Bitcoin world are proof of the fact that it is getting closer to being the main asset.
Analysts believe that if the trend continues, Bitcoin may reach $ 100K at the end of 2021. Predictions are based on the stock-flow-model – 94% correlation at the price of Bitcoin. This model is used to measure the scarcity of commodities such as gold.