Bitcoin has taken the global money market by storm in recent years because it potentially symbolizes a new kind of decentralized finance. The same relates to other cryptocurrencies since all of them have experienced growth over the last decade, which is easy to notice with the wide availability of crypto-based payment methods on all sorts of websites ranging from online marketplaces to bonus buy casino platforms.
Apart from initial coin offerings, there are many forms of blockchain investments today, from non-fungible tokens to decentralized finance. Many cryptocurrency devotees believe that blockchain investment products might produce a new class of virtual currency millionaires and billionaires.
But folks who’ve not yet tried their hand at digital currency trading might be wondering if it’s wise to get started now. In the following post, we’ll go over the basic things you need to know about Bitcoin investing.
Bitcoin, aka BTC or XBT, is a digital asset that works like normal currency but with notable differences. One of the most important ones is the usage of peer-to-peer payment options, with the banks not charging fees for each transaction. But if you’re using a digital currency exchange or broker, they’ll probably be taking their cut for each transaction and perhaps other fees, too. There’s no physical version (i.e., coin form) of BTC either.
Every XBT is mined (created) through an encrypted code—a string of letters and numbers. The code can be unlocked with the same equation that created it. In other words, the code works like a virtual key.
Other vital facts to note about this digital currency are:
- XBT employs blockchain technology to transfer data online;
- Each BTC needs to be mined;
- XBT is finite: there are a total of only 21 million Bitcoins to mine;
- Like other cryptocurrencies, BTC is “decentralized.” This means it’s not regulated by any financial authority, like central banks or any government.
Yes, investing in XBT can be a smart idea if you want to be directly involved in digital currency trading. On the other hand, investing in companies accepting cryptocurrency payments is a safer but likely less profitable choice.
Having said that, let’s go over the pros and cons of investing in BTC below:
|BTC has historically held the promise of high returns.||Unlike regular financial trading, BTC trading lacks a circuit breaker that automatically pauses trading when prices fall too quickly. And since crypto trading goes on 24/7, dramatic price drops can occur at any time.|
|XBT is decentralized. However, many people opt to store and trade crypto on centralized platforms.||Cryptocurrency transactions are susceptible to cyber-attacks.|
|Government regulations could work against the cryptocurrency world in the future.|
|Crypto transactions are irreversible. You could lose millions of dollars simply by forgetting or losing your wallet credentials.|
|Crypto trading lacks basic consumer protections present in conventional financial products.|
Buying a piece of the coin or coins is the most popular way to invest in BTC. But other options, such as those listed below, exist, too:
- Buying Stocks in ₿-Friendly Companies: You can invest in BTC trading or even buy stocks in companies that accept Bitcoin as a method of payment;
- XBT Funds: Many investment firms are offering this kind of funds. While this cryptocurrency remains a volatile investment, it might be wiser to sell Bitcoin and recover your money rather than directly invest in BTC funds;
- Buy Shares in Blockchain Technology Providers: You can invest in blockchain technology companies. For instance, the techno platform Solana proclaims itself as the world’s fastest blockchain;
- Bitcoin ETFs: You can buy into a couple of ₿ ETFs (Bitcoin exchange-traded funds). This mirrors the price of crypto, allowing you to invest in the fund without really exchanging XBT itself.
BTC could be a sound investment only if you accept that it can be a highly risky venture that could pay dividends. On the flip side, there’s a high probability that you might lose all your money.
The prices of this cryptocurrency plummeted to a record low in 2022. So, if you’re looking to invest in crypto, it’s vital to do thorough research and go into the venture with your eyes wide open.
Since this kind of investment is a super risky enterprise, you shouldn’t buy into it if you’re not willing to lose all your money. If something goes wrong with your investment, you’re unlikely to be protected as well.
While the pros of investing in XBT are seemingly outweighed by the cons, many conventional investors have been convinced to give it a try. The blockchain industry is regularly touted as revolutionary, likely to shake up the world like the Internet did in the early 1990s. Here’s a word of warning to potential XBT investors, though: Make sure to research BTC-based investments and understand their risks before you try one out.