Investing in Bitcoin, like any speculative investment, comes with some risks. For instance, the price of Bitcoin could suffer a huge drop. An online hacking/scamming or a crashed hard drive incident can wipe out your entire stash of Bitcoin.
If you look at Bitcoin’s price history, there have been a lot of ups and downs – huge increases in price followed by some painful crashes. However, it is important to note that Bitcoin retains a significant portion of its previous gains every time its price goes down. Bitcoin was the first digital currency that made way for the current ecosystem of cryptocurrencies.
For some time now, experts and investors have been looking at Bitcoin’s future as a possible replacement to the physical monetary system. The decision to invest in bitcoin will always come down to if you are ready to take the risk.
Advantages of Investing in Bitcoin
Bitcoin performance as a currency and an investment opportunity has attracted both institutional and traditional investors. Bitcoin as an investment provides a number of advantages over other traditional investments. For starters, Bitcoin is amongst the investment assets with the most liquidity. This is mainly because of the worldwide availability of exchanges, trading platforms and online brokerages.
You can easily trade Bitcoin for gold, cash or assets quickly with little or no fees at all. Bitcoin, with its high liquidity, makes it a great investment for those who are looking for short-term profit. Cryptocurrencies could also prove to be a good long term investment because of their high market demand.
Bitcoin is immune to inflation. Unlike fiat currencies, Bitcoin is not regulated by any government. The blockchain system is infinite and crypto investors do not have to worry about inflation at all. Bitcoin and cryptocurrency trading is still in its infancy stage, though.
So there are still many unpredictable swings in prices, which will create opportunities for huge profits. For instance, people have started using automated trading platforms that help turn the market’s volatility to your advantage, making profitable trading easy. These trading platforms will use a trading robot that executes trades for the user automatically.
If you are thinking of entering the crypto market as a trader, read more about one such trading platform known as Bitcoin Storm (bitcoinstorm.io).
Disadvantages of Investing in Bitcoin
Bitcoin has been referred to as the future of money. However, it is equally important to be aware of the risks that surround cryptocurrency investing. The price of Bitcoin is almost always going up and down. The market can go through huge changes in very short time. It may be hard to get a good return on your investment because it is a very unpredictable market. It is important to keep a close eye on the market to avoid huge losses.
Bitcoin investors may be faced with the big threat of hacking. Bitcoin exchange platforms will allow people to buy and sell their digital assets using a mobile app or a website, leaving them susceptible to hacking or theft of their entire investment.
Also, the crypto market currently operates under no central authority and with no major regulations. Bitcoin is not taxed and most governments have no clear stance on it, which, as a result, leaves Bitcoin investors exposed to malpractice and fraud.
Investors can lose their Bitcoins if they lose access to their digital wallets. A wealthy investor could go bankrupt within seconds. Bitcoin is still not accepted as a payment method by many businesses and online merchants. Until there is a worldwide adoption, many companies will not recognize Bitcoin as a legitimate exchange.
However, analysts and experts say that Bitcoin will continue to grow and more businesses will accept Bitcoin in the near future. It is important to remember that in the crypto world, huge risk and huge reward are somewhat related.