Is Bitcoin as lucrative as many claimed or is it more like a smokescreen that might vanish after a while and would it be an online scam? There is no doubt that Bitcoin is one of the fastest-growing asset in the world today. In many economies, it has been used as legal tender with some retailers openly announcing that they do accept Bitcoins for transactions so much so that people were reportedly buying beer using Bitcoins.
Good or bad investment?
Whatever the outcome may be, Bitcoin is a form of investment. Whether it is a bad or good one, this remains as anybody’s judgement. After all, Bitcoin is supposedly more volatile since it is traded in a more open platform as compared to any other forms of investments. The question of whether Bitcoin is a good investment continues to linger around the analysts and investors alike and we try to address this issue.
How do we judge?
To understand how good an investment Bitcoin is, the price would be the most important factor. To say that it has surged up to 900% at one time would put it in a very positive light for any investor, both seasoned and novice.
- Customers – There has been a lot of enquiries about Bitcoin. Customers are concerned about how it works and if they are at risk of being cheated. This is quite a plain theory really since Bitcoin functions the same way as any other currency. You have it, you keep it and you use it. If the value goes up, you can sell it make a profit.
- Value – Like any other currency, the value of Bitcoin fluctuates. But unlike the conventional paper money, Bitcoin is not physical. The value might surge and drop drastically. This means that the $100 Bitcoin you have today might be worth thousands tomorrow or otherwise!!
- Longevity – Bitcoin can be kept for a longer time. This is because there is no central control of Bitcoin from any authority. As long as there are active traders, Bitcoin exists.
- Acceptance – Bitcoin is now accepted mostly online. In some countries across Europe and America, they are beginning to experience a higher uptake from merchants in accepting Bitcoin as a legal currency. However, this is very slow in Asia with other new payment methods gaining ground. One such platform is Samsung Pay and AliPay, both of which have their ready customer base before even launching (South Korea and China respectively). Such competition will surely deter the implementation of Bitcoin in these markets
Volatility of price
No matter what any one tells you, Bitcoin prices are very volatile. It could drop about 40% and then experience a spike increase of double or triple, all within a week. The best way to keep the price in check is to keep a Ledger hardware. This is something that requires certain technical knowledge which would be more suitable for the tech-savvy.
Timing is everything
You need to enter the market at the right time. This is not an easy task as there is never THE right time for investing. You can however, do some research on the price and behaviour before entering the market. This means that it would be good if you look for Altcoins which is less speculative as compared to Bitcoin. When you invest into Bitcoin, chances are you will have to wait for a longer time which is about a year at least.
Always do your homework
There is no shortcut to success. This simply means that you will have to do some homework before investing. The idea here is to understand the market and the behaviour or Bitcoin before you even consider injecting your funds. While Bitcoin can be a good option for investment, you must learn its mechanics.
To do this, you should learn more about the technology that Bitcoin operates on. The 2008 Satoshi white paper is a good point to start and it is short, concise and easy-to-understand. Once you learn about the technology, you get to know its behaviour better.
Be cautious and not be too greedy
It is easy to over-invest and you run the risk of getting burnt. Any sound investor will know that risk is inherent to any form of investment. Because digital currency is still very new in the financial markets, you can never fully expect what could happen in the near or long-term future. After all, the bond and stock markets have decades of history which in a way is more stable.
Pricing of Bitcoin
Experts will tell you that you should not be chasing Bitcoin prices. You should do your homework, decide on an entry point and then get in. Try not to buy Bitcoin all at once. The idea here is to invest a little, wait for a while and then invest a bit more.
Look for alternatives
Bitcoin is not the only currency you can invest into. There are several others that you might want to consider so as to diversity your investments. This includes the likes of:
- Stellar(branch from Sipple)
- Bitcoin Cash
- and hundreds more
So, is Bitcoin a good investment? It is if you are not in a rush to use the money. For long-term investment, it surely is.