Bitcoin is an almost unavoidable phenomenon, especially when it comes to anyone interested in investments. In the years since its inception, Bitcoin set off a flurry of interest in the world of cryptocurrency, both for its increasing value and its use of blockchain systems, which help ensure the security of its users and transfers.
While it's true that Bitcoin and other cryptocurrencies are a growing trend with real value, that doesn't guarantee that they're a safe financial investment. For those that are asking "Should I buy Bitcoin?", we have an answer.
Yes, you should buy Bitcoin—but only if it's the right decision for your financial investment profile. Let's break down the details.
Bitcoin got its start in 2009, and its creator is Satoshi Nakamoto. As the first cryptocurrency, it established the foundations that would lead to the boom of crypto assets over the following decade.
Bitcoin is, in essence, a digital form of currency that, while similar to how we transfer funds online, has some distinct differences:
While many of other aspects exist to cryptocurrency, it's these main aspects that have made Bitcoin not only appealing as a form of currency but have also allowed its value to increase dramatically since its inception—little under thirty dollars of Bitcoin in 2009 is easily worth several hundreds of thousands of dollars in today's market.
With numbers like these, it's understandable why many people are asking "Should I buy Bitcoin?"
Why Now is a Favorable Time to Buy Bitcoin
The increasing value of cryptocurrencies, in general, is the appeal of investing in Bitcoin, but that's not all anyone should consider when it comes to buying into the crypto asset market. Like with purchasing stocks, it's essential to buy at the right time. With Bitcoin, that time is still now.
One of the most influential factors is in that thousands of merchants are accepting Bitcoin as a form of payment—and larger institutions like banks and pension funds are also getting into the cryptocurrency market.
With more places accepting Bitcoin as a form of currency, its reinforcing its value, which means that you can know your investment will be worth something, rather than a passing trend.
JP Morgan, Nasdaq, and Fidelity are some of the names that are moving into the Bitcoin and cryptocurrency scene, whether it's through investments or related products. With the growing interest in cryptocurrencies, it won't be surprising for more institutions to join the ever-increasing trend.
Additionally, the Bitcoin network has seen vast improvements since its inception. One of the earliest concerns for the flagship cryptocurrency was that scalability could become an issue, as the system has a limit of three transactions per second.
This number isn't exactly feasible to maintain the hundreds of thousands of people with interest in Bitcoin.
However, we've seen improvements in the form of the Lightning Network, which enables transactions to go through sidechains, rather than the main chain. In turn, it then becomes possible for purchases to complete much faster. If more demand grows, we can expect the network capacity to improve accordingly.
Who Should Buy Bitcoin?
Even with all these concerns, we believe that the answer to "Should I buy bitcoin?" is yes; Bitcoin has shown that the cryptocurrency model has excellent potential when it comes to finances. However, our recommendation doesn't mean that Bitcoin is the right purchase for everyone, especially as there are far less volatile means of investment available. So then who should be buying Bitcoin?
Various people can fit into the ideal Bitcoin purchaser, but there's one thing that all these individuals should have in common: you can afford to lose the money you put into it. As mentioned, the value of Bitcoin can be volatile; you don't want to buy Bitcoin and lose out when you need financial stability.
With that in mind, people who are willing to buy a small amount of Bitcoin every month with a stable income is one option. Those who have existing portfolios and want to invest a small amount into Bitcoin can also benefit.
Additionally, people who don't have significant financial responsibilities like paying a mortgage or supporting a family have less to risk with their investment, and thus are also good candidates.
When Is the Best Time to Purchase Bitcoin?
Even if you can benefit from purchasing Bitcoin, knowing the right time to do so is essential if you want to avoid taking a loss. Past trends indicate that November is usually the best month to buy Bitcoin for maximum investment, with January being the worst for returns.
Additionally, it can be worthwhile to take a small investment approach, regularly purchasing a small amount of Bitcoin over time. This method can prevent you from making a significant loss in the event of a sudden drop in market value.
Things to Know Before You Make Your First Purchase
If you've determined that investing in Bitcoin is the right option for you, it's essential to have a firm grasp of how the process looks. We've covered a lot of the basics already, but here are some additional tips to keep in mind as you begin to invest in Bitcoin—and potentially other cryptocurrencies in the future.
There's a Difference Between Bitcoin and Bitcoin Cash
With so many cryptocurrencies out there, it can be confusing to know which one the safe investment is, Bitcoin is considered one of the most reliable, but it does have a fork version known as Bitcoin Cash.
While both of these cryptocurrencies are digital money, they are not the same. For newcomers to cryptocurrency, you'll likely want to start with the original Bitcoin.
Understand the Strategies Available to You
With other forms of assets, it's common to buy and sell them for a profit as the value allows. Since Bitcoin is much more volatile, that approach isn't the best option.
Instead, purchasing Bitcoin and holding onto it will enable you to have valuable resources if the value increases over time. Since this isn't a guarantee, you should only invest with money you can afford to lose.
Within the Bitcoin community, this strategy is known as "HODLling," after a typo in a Bitcoin user post. Alternatively, you can choose to engage in day trading, which is the method of buying and selling Bitcoin by reading trends in the market.
However, if you are new to long-term investments, this method may be riskier than choosing to HODL.
Research Exchanges Before You Use Them
With the growing interest in cryptocurrencies, many exchanges are offering ways to purchase Bitcoin. While many of these are reputable, many others are not. For those who don't already have an existing portfolio, you should take some time to thoroughly research the options so that you can buy your Bitcoins securely.
Keep a Bitcoin Wallet
We mentioned that one of the risks of Bitcoin is that it's only available digitally, which puts it at risk for network complications. While the blockchain will record your transactions and purchases, a bitcoin wallet will keep your Bitcoin private keys secure, including in offline environments.
Those with a small investment can maintain one at home, but the more money you put in, you'll need a hardware wallet.
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