Whether or not you should invest in bitcoin depends on what you believe is the value of bitcoin, and what you believe will happen to the value of bitcoin over time.
There are three broad types of answers. The first is “for fun.” It’s a game, and the fun is learning about it. There are people who speculate very seriously that bitcoin will become the biggest thing ever, but they don’t know what they’re talking about. They’ve surely made some bad bets along the way. Maybe they have a crystal ball. If you’re betting against them, it wouldn’t be wise to bet against your own predictions.
The second type of answer is “for profit.” You think bitcoin will go up in price, and you want to buy low and sell high. If you think it won’t go up in price, well then, why bother with bitcoin at all?
Bitcoin is the first successful cryptocurrency. It has attracted a lot of new interest as a result, because it’s the only cryptocurrency that has managed to grow in value without going bust.
But if you want to invest in bitcoin, you should know what you’re buying. Bitcoin isn’t really money – it’s a lottery ticket for financial freedom. Like other investment vehicles, bitcoin comes with risks and rewards. For the risks, see above. But because bitcoin is a pure financial instrument with no underlying value, its price may be more volatile than your average stock or bond.
On the plus side, it’s easy to buy and sell: all you need is an email address and your bank details. And unlike some investment vehicles, you can get bitcoin almost anywhere there’s an internet connection – at least at the moment anyway. That means if there are any sudden shocks in financial markets, bitcoins can be bought on very short notice and sold quickly to protect your gains.
Bitcoin is a volatile asset, and its price has been very uneven in the last year. I haven’t invested in it personally. But it is fascinating, and if you like investing you should keep an eye on it.
If you are interested in investing, the first thing to do is read this blog, which explains what bitcoin is and why people are interested in it, but does not make any recommendations about what you should do.
Investment decisions are personal. You have to decide for yourself whether bitcoin is right for you.
Bitcoin is the most widely used alternative currency. It can be used to buy merchandise anonymously online, but it’s best known as an investment. People buy bitcoins in order to make money by selling them later at a profit.
The rate of return on bitcoin investments has been volatile, but a recent study found that the average investor would have earned 12 percent annually over the past five years — better than a 4 percent annual return on U.S. Treasury bonds, and more than double the returns from gold or silver.
In fact, bitcoins are not like other financial investments in one crucial respect: They’re not tied to the fortunes of any particular person or group of people.
Should I invest in bitcoin? You can’t go wrong with money.
To answer the question, you need to understand two things: how it works and how it is regulated. If you understand those two things, you will be able to make your own decision about investing in bitcoin.
Let’s start with the basics. Bitcoin is a new form of currency that was created in 2009 by someone (or some group) using the alias Satoshi Nakamoto. It’s not backed by any government or central bank, so there is no way for governments to force bitcoins out of existence. Unlike traditional currencies such as euros or dollars, bitcoins aren’t printed at a fixed rate. They’re produced by people running computers all around the world solving mathematical problems using software that’s publicly available.
You can think of bitcoin like this: It’s kind of like gold, except instead of being mined from the ground and used as money, it’s created electronically by computers solving math problems. That means there are a limited number of bitcoins in circulation – 21 million, to be exact – and there will never be more than that number. So unlike gold, where more can be mined every day if demand grows, bitcoin production slows down over time because there are only 21 million bitcoins in total.
If you ask a hundred people about the best cryto to invest in, you’ll get hundred different answers. The reasons will vary, but the main one probably won’t be “because I think it’s going to make me rich.” A lot of people who buy bitcoin are only interested in it as a speculative investment. That is not an altogether irrational thing to do. What is important, though, is understanding why.
One reason might be: “I believe that cryptocurrencies are going to become more significant in the future and that I can time my investment for maximum profit.” There is no doubt that the cryptocurrency market is currently extremely volatile and there have been a lot of spectacular price movements over the last few years so this reason may well merit consideration.
On the other hand, many people are buying bitcoin simply because they think it’s cool, or because they want to get rich quick, or because they think it’s just another bubble and they want in on it while it’s still cheap. It would be very difficult – if not impossible – for an individual investor to time the purchase of bitcoin with sufficient accuracy to be able to take advantage of any future rise in its price.
Bitcoin is just the latest example of a greater revolution. The idea that information can be moved around the world for free, with no chance of interference from governments or banks, and that it can be securely stored and moved again, is not new. It’s an old idea that has been around for centuries.
What is new about Bitcoin is that it has gone from being a hobbyist project to now being used by millions of people all over the world. The problem with many money systems is that they don’t scale well. With Bitcoin, you don’t need to trust thousands of people in different countries to keep your money safe; you only need one.
With fiat money, however, the opposite problem occurs. You have to trust thousands of individuals in different countries to keep your money safe because there’s only one national currency: the U.S. dollar or the euro or whatever else you’re using. With Bitcoin, however, you only need one person: whoever manages the software that runs your computer (or phone or tablet). And so far this person has been pretty trustworthy: he hasn’t stolen any Bitcoins himself, and he hasn’t even hacked his own website-the entire network has been hacked only once (in 2011).