Bitcoin is the decentralized currency that was born out of a disenchantment with traditional financial institutions and their use of fiat currency. The premise for Bitcoin’s existence is to allow individuals, particularly those in countries whose economies are unstable, to receive and send money without having to go through a bank or other third party.
When you receive a bitcoin payment, the funds are verified and then deposited into a “digital wallet,” from which there are many options to choose from. All that is needed is your wallet address, which is a unique identifier that allows others to send funds to you.
Transfer fees are also much lower than those of banks and credit card companies. All this makes the idea of having bitcoin very appealing.
These potential pros leaning towards investing in the cryptocurrency have many people asking: Is Bitcoin truly a safe
Is Bitcoin Safe?
Let’s answer this simply, yes and no.
Many people who own bitcoins believe the cryptocurrency is completely safe because it is decentralized; meaning there is no authority able to take away money from your account or charge you any fees. This is partly true: Bitcoins are stored in a digital wallet and nobody can withdraw them without having access to this wallet (just like cash).
But the popularity and demand for bitcoins have been growing over time, and with it, so has both its value and volatility.
This means there are two polarizing possibilities on either extreme. One is someone who invests at the right time while the price is relatively ‘low’, profits once its value rises. The other is they buy in, and the value drops significantly.
The answer is that there are both risks and opportunities available in Bitcoin trading. One should always be careful before they jump on this new bandwagon, but the possibility of high returns also increases significantly with it.
Why Invest in Bitcoin?
The most important question you should ask yourself is why you’re investing in bitcoin. Are you genuinely interested in cryptocurrency? Have you made some money and are looking for something to invest in? Or are you just trying to get rich quickly?
If it’s the latter, you should reconsider your decision. If a transaction seems too good to be true, then there will inevitably be consequences. The same applies to bitcoin trading. It is not an easy way to get rich quickly.
Good Reasons for Trading in Bitcoin
Having said that, there are many genuine reasons someone would want to invest in bitcoin. Cryptocurrency is becoming increasingly popular for a wide range of people, including young startup businesses looking to raise money. These startups can use cryptocurrencies to bypass the expensive banking procedures that are typically required when entering transactions with other companies.
There are also more altruistic reasons that motivate people to trade in bitcoin. Many people have expressed their annoyance at how world economies continue to be controlled by governments and financial institutions. Cryptocurrencies are not regulated by any government, which makes them impossible for banks to freeze or confiscate. This is making bitcoin popular with people who want more control over their money without having to worry about inflation or isolation from global transactions.
You should be willing to invest some money and not merely test it out of curiosity. Bitcoin is a risky investment, but for those that will take the risk, it could be very profitable. Bitcoin has been on a steep rise in recent years and many expect this trend to continue as more people realize its benefits.
The Risks of Investing in Bitcoin
Bitcoin is not backed by any government and prices only go up, but they can also drop suddenly and dramatically due to—among many reasons—government regulation and control of the flow of money. And even though Bitcoin is worth over $40,000 right now, the chances of it crashing down to $5 while not at all high are never zero.
Who should not invest in Bitcoins?
People who don’t understand Bitcoin should not invest in it. If you only buy Bitcoins to make a profit and do not like the currency itself, then your interest might fade when prices start dropping instead of rising.
Investing in Bitcoin can be an intimidating process for those who are not tech-savvy, which may cause the feeling of being left out. But it is still possible to get involved in Bitcoin without having the knowledge of how the cryptocurrency works, just by following the news closely and buying Bitcoins whenever prices are down or simply using services that let you invest in them instead.
If you keep up with tech-related news regularly, then investing in Bitcoin can be a safe way to earn some extra money on the side. If you choose instead to buy your own Bitcoins, then it is a good idea to either keep them in a digital wallet or let someone else do it for you. Investing in Bitcoin can help diversify your portfolio and can be a convenient way of earning passive income.
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