Dec 20, · Another buy thesis of bulls is that bitcoin's utility is growing by the day. More businesses are accepting digital tokens for payment, and a broader swath of people are buying bitcoin tokens for. Dec 07, · When I saw the price of bitcoin fall to $9,, I pressed buy, defying the wisdom of two finance titans and my wife. One hundred dollars, or bitcoins. (A . Oct 27, · How We Chose the Best Places to Buy Bitcoin. We looked at more than a dozen of the best places to buy and sell Bitcoin online and settled on the top 6 places based on a number of factors. These factors included the history of the exchange, customer reviews, the fees each charges, the strength of features for each digital wallet, and the speed.
Who should buy bitcoinsI bought $ in bitcoin. Here's what I learned
This makes individual transactions a lot cheaper and throughput seemingly ceilingless. The main limitation of LN is that it can only process as many transactions as many Bitcoins are locked in the network in the form of a channel. That being said, the growth of the network capacity has been remarkable and shows no signs of stopping anytime soon. With scalability solved, Bitcoin now has what it takes to truly become a global form of money, which leads us to the next point.
Aside from thousands of merchants accepting Bitcoin worldwide, an interesting trend to watch is one of citizens in third world countries adopting Bitcoin to protect their wealth. As can be observed in the chart above, the trading volume of Bitcoin in Venezuela has gone through the roof. This is a clear sign of people adopting Bitcoin as a new currency when their national currency has failed. Finally, big investors all around the world are starting to get increasingly interested in Bitcoin.
Many speculate that this is not only due to quickly growing adoption but mainly due to global economic uncertainty and fear due to the outlandish amount of debt that is the foundation of the fiat money system. Large institutions, like Fidelity, Nasdaq, and JP Morgan have all publicly announced that they are buying Bitcoin or that they are building bitcoin-related products for their millions of clients.
However, this is likely just the tip of the iceberg. It is very probable that dozens of additional institutions and possibly even Governments are also working behind the scenes on Bitcoin infrastructure but have not announced so to the public yet.
Is it safe to buy Bitcoin? Absolutely not, and everyone telling you otherwise should probably not be trusted. Bitcoin is still a very young digital currency, and also a new highly volatile asset. Furthermore, Bitcoin is still largely an experiment and you should treat it as such.
You should never invest in Bitcoin more money than what you can afford to lose. Due to the speculative nature of Bitcoin, even mere rumors like a country potentially regulating Bitcoin can already cause a significant price drop and deep losses for investors. Bitcoin is a network, and hence unlike Gold, its existence could potentially be threatened by a single bad actor. If Bitcoin mining continues becoming more centralized, the risk of a network attack may become greater as Bitcoin starts threatening the currencies of major Governments.
On the flip side, if Bitcoin mining were to become more decentralized, the bigger Bitcoin becomes the stronger the blockchain gets. This would make a successful attack a lot more challenging. We have seen over and over again that the first version of a technology is often not the one that ends up sticking around forever.
This has been the case with mobile phones, cameras, and even social networks. Fact is, there is a very little precedent on this and therefore this point might indeed hold true. Bitcoin is built on a deflationary model, meaning that the value of money increases over time. This is a strong contrast to the fiat money system, which through inflation is designed in a way that money loses its value. There are two main schools of economics that explore these two economic models: Austrian economics and Keynesian economics.
Austrian economists believe that the world needs a deflationary monetary system to flourish, while on the other hand, Keynesian economists believe that inflation and debt are necessary to encourage economic growth. As stated earlier, once Bitcoin grows to a certain size where it starts to threaten major fiat currencies, Governments may take coordinated action to shut Bitcoin down. One approach would be to illegalize Bitcoin exchanges and hence prevent investors from buying it.
They might even go as far as legalizing Bitcoin and making anyone holding coins legally liable. Something similar has already happened back in when the US Government made it illegal to hold gold , and confiscated this precious metal from its citizens. That being said, unlike Gold, Bitcoin is not a physical asset that can easily be identified by the Government. An individual could simply memorize the private keys to his coins, or even send them to friends or family abroad with just the click of a button.
Therefore, such an endeavor could only be successful if coordinated on a global scale. And as history has shown in multiple instances, Governments are notoriously poor at coordinating on an international level, which would make a crackdown of this magnitude rather unlikely. Bitcoin is still a new high-risk and extremely volatile asset that should be treated with caution.
It is definitely not the right asset for anyone and you need to be aware of that if you want to avoid unnecessary stress. You have probably noticed that all of the above 3 profiles have one thing in common: they are not investing more money into Bitcoin than what they can afford to lose. If you are a person that can handle wild market swings and that has some money set aside for high-risk investments, then Bitcoin might be a good option for you.
In a research report by Finder. Since the research only involved a few thousand people, these numbers may not be entirely correct, but it does give you an approximate idea of the group of people that you are joining when you buy your first Bitcoin. Having a framework that you can follow will make it a lot easier for you to handle the wild price swings of this digital currency. Although there are a few more, in this article I will show you the 3 most popular Bitcoin investment strategies that you can start following today.
Yes, that is not a typo. This is by far the simplest way of getting exposure to Bitcoin because it does not require any active management from your side, and since Bitcoin has been in a long-term bull trend ever since its inception, it might also prove to be very effective.
Dollar cost averaging is a strategy also often used in stock market investing. It essentially consists of buying small chunks of an asset periodically every week, or every month in order to minimize the risk of buying at the top. Therefore, if you are not comfortable with timing the market then dollar-cost averaging may be the right Bitcoin investment strategy for you.
Finally, the last strategy is to actively manage your portfolio. This can be done by selling some of your Bitcoin after it has gone up a lot, and by re-buying them cheaper if there is a drop. You may also go on a margin trading exchange like Bitmex , Deribit or Bybit , where you can open a leveraged short.
Instead of selling 4 Bitcoin when you think that the price is going to drop, what you could do is send 2 Bitcoin to Bitmex and open a short with 2x leverage. When the price then drops and you think the bottom is in, you can now close the short at a profit and use the profits to buy more Bitcoin. Needless to say, this strategy should only be used by people that are experienced with the matter and that are familiar with the risks of bitcoin trading. The macro price cycle occurs in the form of multi-year bull markets that push for new all-time highs, and that is then followed by a year bear market.
On the micro level, Bitcoin is known to follow patterns in certain seasonalities. As pointed out earlier, Bitcoin is a highly speculative asset and you should never invest more money that you can afford to lose. A good mentality hack to use before investing in Bitcoin is assuming that the money you are planning to invest is gone forever.
If that thought makes you nervous, then you were planning to invest too much. That being said, if you are going to start investing a bigger amount into cryptocurrency, then try to own 1 whole Bitcoin first. After you own your first Bitcoin, then you are now in a good position to also invest in other cryptocurrencies.
Both coins are focused on becoming a digital currency. BCH has a significantly lower hash power computing power than Bitcoin does and its blockchain is hence significantly less secure. With that being said, if you are just getting started and are looking for the best cryptocurrencies to invest in , then you should stick to Bitcoin since many people consider it the safest bet in the cryptocurrency space.
Once you are more familiar with the technology and this asset class, then you might want to also buy some altcoins like BCH. In late , another new fork happened.
The only gold that's available is what's been mined or is still underground. When the only parameter of scarcity is written computer code, that's not true scarcity. Another buy thesis of bulls is that bitcoin's utility is growing by the day. More businesses are accepting digital tokens for payment, and a broader swath of people are buying bitcoin tokens for the first time. According to financial services company Fundera, around 2, U.
More than a dozen multinational companies also accept bitcoin. Slam-dunk proof of increasing utility, right? Not so fast. There are not nearly enough tokens in existence to drive widespread adoption, based on these figures. As one additional note, there are about Removing these nonemployer businesses leaves 7. Census Bureau in According to Fundera, just 2, of these businesses are accepting bitcoin. Bitcoin bulls are also pretty convinced that the most popular digital currency is now a bona fide store of value: i.
When coupled with the central banks' pledge to keep its federal funds rate at or near record lows, it's pretty evident that the U. Crypto investors believe that a ballooning money supply is a green flag for bitcoin to head significantly higher.
The issues I have with the store-of-value thesis are twofold. First, bitcoin isn't backed by any other asset or government. Therefore, it has no tie-ins or official relationship to the movements of the U. Implying that a ballooning money supply should push bitcoin higher is nothing more than a dart throw. Second, store-of-value assets are designed to maintain their value over time and protect investors from volatility. Yet in March, bitcoin nearly lost half of its value in a hour period.
In , bitcoin lost about half its value in about six hours. This isn't how a store-of-value asset behaves. Bitcoin optimists will also crow about bitcoin leading the digital payments revolution. Going cashless could resolve the issues created by certain regions of the world being underbanked.
Additionally, the blockchain technology that underlies bitcoin could revolutionize the payment processing and settlement time frame, especially in cross-border transactions. While I don't disagree that a digital payments revolution is underway, or that blockchain could offer global financial and supply chain solutions, bitcoin isn't the vessel that's going to make this vision a reality.
The interesting thing about blockchain is that it can be tethered to multiple types of digital currency, be used in conjunction with fiat currency, or can operate independent of a tethered token. There's absolutely zero evidence that bitcoin is necessary to support a blockchain revolution. To add, buying bitcoin tokens does not give an investor any ownership in the underlying blockchain.
With no ownership in the solution that has the potential to actually drive this digital revolution, bitcoin investors are pinning their hopes on other investors being willing to pay more for a currency that exists only in computer code than they did. So, why is bitcoin rallying? I'd surmise it's a combination of short-term emotions, technical analysis i.
After all, it's nowhere near as easy to bet against bitcoin as it is to bet against a publicly traded stock. History has proved that sentiment can shift at the drop of a pin in the cryptocurrency space. I'd suggest investors keep their distance from bitcoin.