In this article we will discuss Bitcoin investing. Is Bitcoin a safe investment? Investing is like a game, and every investor is in it to win, right? No one wants to splash their very hard-earned money into assets and financial instruments that will never materialize.
To a significant number of people it is never about the amount of investment income that they can expect to gain within the set investment horizon, but about the surety of the returns. It is all about the certainty that one will not lose their money by investing it in a given asset.
Investors have invested their money through numerous financial instruments, and due to the accumulated historical data, it has become easier for the public to identify which one has a better risk profile.
Ideologies have actually been formed about which asset combinations are the best to rely on to grow ones’ wealth. Many investment gurus have actually profited a great deal from offering advice on how to go about such investments.
In 2009, Satoshi created the first publicly and most renowned cryptocurrency known as Bitcoin. There was no historical data to back up the legitimacy of this new currency, only new ideologies about how it works and why it is safe.
Just like any new product in the market, the uptake and acceptance of Bitcoin were initially low but the trend changed with time.
The introduction of other cryptos such as Ethereum, Ripple and Lite coin further strengthened Bitcoin’s position in the market. Everyone who is keen enough on the pricing of Bitcoin has witnessed the rise of its price from less than a dollar to a price higher than $12,000.
The rise in the price of this cryptocurrency has not been a smooth and upward trajectory. In fact, for more than 300 times, some investment analysts have proclaimed the death of this currency and investment instrument.
One decade later, and Bitcoin is still alive and gaining more interest from the public. Now, one of the major concerns you would hold is whether Bitcoin is actually a safe investment.
Before I move into breaking down the main concepts revolving around its safety, I would like to retaliate the fact that in 2009, the value of Bitcoin was at $0.0009. As an investor who believes in the numbers, think about how much money you would be looking at if you had purchased this cryptocurrency back then.
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Understanding Bitcoin – an Investment asset
When Satoshi Nakamoto created Bitcoin, his intention was to bring a digital currency to introduce a decentralized currency that would be used to purchase goods and to pay for services. Simply put, he wanted Bitcoin to be digital proof of any transaction, without needing any form of assistance from a third party. With all pre-existing methods of digital currency, it is necessary for the bank or credit card company to validate your transaction.
Like any other currency, however, Bitcoin was and is still subject to price fluctuations. It is actually one of the reasons that led to investment analysts claiming that Bitcoin will eventually not stand the test of time.
As much as the prices of Bitcoin are erratic and very erratic for that matter, it cannot be sidelined as not being a safe investment. As I will show you later in this article, investing in this cryptocurrency, regardless of the quantity, could be the best decision you ever made.
You can agree with me that an asset that has been profitable for more than 85% of the time it has been in the hands of investors is actually one that is stable enough.
I know most people get discouraged from investing in this digital asset due to these price fluctuations, and the tension it creates, but let us crunch the numbers and see how much we stand to gain
Success in the numbers
As we earlier on agreed, the numbers do all the talking when it comes to investments. It is not prudent to invest in any asset out of pure speculation. Whereas you may end up succeeding out of sheer luck, this approach is flawed at best. It actually one of the many tactics that cons apply. They will come in and tell you that a particular commodity will be worth more a very large amount of money in the future, and use all types of tricks to ensure that you do not get a glimpse of the numbers.
In October 2010, the price of Bitcoin was $0.15. Let us assume that a passive investor decided to put aside only $300 to purchase this crypto.
He or she would have purchased an equivalent of 2000 BTC.
If the same investor decided to cash out the Bitcoin any time in 2019, he or she would have earned any amount between $12,000,000 and $24,000,000.
Many people understood that Bitcoin was here to stay and was brave enough to purchase this crypto.
One decade later, there are those who are still waiting for a sign that this is the right way to go, which is quite understandable.
My hope is that you are not waiting to read such a review in 2029, wondering why you did not take a bold step to invest in Bitcoin, based on the amount of money it will worth at that time.
Everything in the current world is going digital and paperless. Just as some paper currencies are stronger than others are, there are also digital currencies that will dominate the paperless currency era. Which is why you should purchase Bitcoin early enough, for you to be in possession of the most valuable digital currency.
Further to that, the digital framework, which cryptos operate in, has been widely adopted.
The widespread adoption of blockchain technology
Did you know that there are more than 1600 digital currencies in the world? I can assure you that most people only know that Bitcoin is the only cryptocurrency that is operational. The attention it has received from the media has made people judge the entire cryptocurrency ecosystem based on the trends observed in the uptake and pricing of Bitcoin. What most people do not know is that Bitcoin, along with those other digital currencies, is based on the technology known as the blockchain.
This technology is gaining strength by the day, with most organizations coming up with their in-house distributed ledger systems that work just like how Bitcoin payment works.
This should tell you that the world is gradually opening up to the use of digital currencies, a trend that is actually expected not to slow down. It also shows that the concept of cryptocurrencies and blockchain will finally become an integral part of the business in the near future.
Next, we can look at the outlook of the investment environment.
The safe investment environment
Another major reason why people have shied away from Bitcoin is the many scams that had previously hit the crypto ecosystem. Con artists took advantage of the fact that most people were not conversant with the cryptocurrency concept and conned a significant number of people.
This has led to the introduction of new and tighter regulations, which shut out all crypto scammers. The regulations, coupled up with better access to the wealth of information about cryptos has helped suppress the fear experienced previously.
With the understanding that the regulations being put in place will take care of scammers, and blockchain technology through which the use of cryptos is dependent on is being adopted at a very fast rate, your next big issue would be about the safest approach to invest Bitcoin.
So far, there are two main safe approaches to investing Bitcoin: Hodling and Trading in Bitcoin.
Plain and simple, holding means holding Bitcoin (recommended to do in the safest way with an OFF-line wallet)
If you have not encountered the term before, hodling means the buying and holding of currency with the hope that its value appreciates. The practice of buying and holding assets is not new to the investment arena, lest you wonder whether hodling has a new approach in this case.
Like with the other assets and commodities, all you have to do is to purchase the Bitcoin, store them safely and wait for a time that you can cash them out at will. Those who have already tried this approach have established several rules that you should follow in order to ensure that you do not lose your capital. These include:
– Regardless of who it is that you are seeking advice from, do not invest without doing your own research about Bitcoin to determine whether it meets your desired investment specifications.
– Never invest an amount of money that you are not willing to lose (this is a universal rule that applies to all types of investments). If you decide to hodl Bitcoin, you should not exempt yourself from this rule.
– Only purchase Bitcoin from a reputable and well-known source.
– Use the Dollar Cost Averaging approach – with this approach, all you are required to do is to buy your Bitcoin in several tranches distributed over a certain period. You can, for instance, purchase your cryptos in small quantities every week throughout the year. The average of the final price of your Bitcoin ends up being inclusive of the one-year course.
Withholding, investors are required to store their Bitcoin through the cold storage approach, which is hacker-proof. The cold storage wallet provided by companies such as Regal Wallet can securely hold your Bitcoin for as long as you want. What is more? Multifactor authentication is required to access the Bitcoin stored in the wallet, making it harder for hackers to access your digital currency.
Holding can work perfectly for you if you are a long-term investor. It is also a very sound investment strategy for those who do not have the time to keep on checking up on their investment, due to work commitments.
If you have all the time to follow up on the growth of your investment, and you want to have the adrenaline rush as you make the money, then trading in Bitcoin is the way to go.
Trading in Bitcoin
Those of you who have had their experience with Forex trading can relate to this investment approach. As opposed to buying Bitcoin and holding it over the long term, you can participate in the active purchase and sales of these cryptos.
The logic is to buy the Bitcoin at a low price and sell them as soon as the prices hit your desired high price. All you have to do is to ensure that you are relying on a reputable and reliable trading platform. It is also advisable to only rely on this approach if you have the time to study the cryptos market to identify the trends, else large players will capitalize on your ignorance to eat into your capital as fast as they can. That said, however, if you have already traded in other currencies, it is highly likely that you will have an easy time trading in Bitcoin.
At this juncture, I am sure you have a clear glimpse of the outlook of how people go about investing in Bitcoin. If you are still having doubts about it, then we can think about the future of Bitcoin
Cryptocurrencies: A very promising future asset
Promising? You might ask. Well, here is the thing about volatile assets such as cryptos: your chances of success are high if you focus on a long-term investment horizon.
Most investors who focus on the short-term horizon end up being frustrated due to the pandemonium caused by the regular highs and lows in the prices of Bitcoin.
In the last month of 2017, for instance, the value of Bitcoin was at a strong $20,000. By the end of 2018, the price of this crypto was $3000. With this kind of movement, you are likely to get frustrated and cash out your Bitcoin before it is “too late”.
In another scenario, the price of Bitcoin on 20 November 2015 was $327. As of 24 October 2019, the value of one BTC is $7462. If you had purchased your cryptos in 2015 and held on to your investment despite the shake-ups in 2018, you would be raking in massive profits today.
If you had purchased the cryptos in 2009, then your life would have changed for the better.
Bottom line, Bitcoin is a safe investment, which if bought and held over the long-term can benefit the investor massively. The new regulations put in place have done away with scammers, and the cold storage approach has kept the hackers at bay. Now all you have to do is to follow the procedures and tips I have outlined and then wait for the value of your Bitcoin to grow.
(and FULLY Insured Bitcoin Investing Method)
I hope you found this article helpful and that you know have a better understanding of if Bitcoin is a safe investment? As of now, the new question I can pose to you is: How many Bitcoins will you be worth one decade after reading this article? Please share your comments and questions below as I will be more than happy to answer!
I wish you success!
Michael, founder of Gold Retired