Cryptocurrency is the buzzword in the modern digital space. The rise in cryptocurrencies has given birth to crypto wallets, decentralized exchanges, and various other trading platforms. While multiple crypto coins are competing for a better price, Bitcoin, which is the first-ever fully functional cryptocurrency, is taking the market by storm.
Bitcoin has the best price today which makes bit trading online a highly profitable prospect for any investor. In this article, we shall look into various arguments that will reveal the potential of Bitcoin and show the recommendations on whether to invest in Bitcoin.
Benefits of investing in Bitcoin
Let us see why investing in Bitcoin can offer you high returns in the coming years.
#1. Value of Fiat currencies will decline:
Monetary policies cause a constant value decline of fiat currencies that gives rise to higher inflation. As a result of inflation, the value of Bitcoin will be high due to its liquidity and high demand making it profitable to invest in.
#2. Limited amount of Bitcoins in circulation:
There will never be more than 17 million bitcoins in circulation. Hypothetically, we can not discover 21 million bitcoins, unlike fiat currencies. Furthermore, around 3.7 million bitcoins have been lost because of individual bitcoin owners’ loss of private keys. This limitedness gives the ecosystem a certain balance in its operations.
#3. Bitcoin will become mainstream:
With more and more financial institutions, commercial enterprises, and tech corporates getting interested in digital currencies, the existence and popularity of bitcoin keep increasing. As more and more investors are putting their money in digital crypto assets, in the near future Bitcoin will surely be the most prominent mainstream crypto.
#4. The Blockchain Technology itself:
Blockchain technology is the ground where digital currencies thrive. Since it is a decentralized mechanism and can be used for secure transactions while keeping its users’ anonymity it gets favored by most investment enthusiasts. Moreover, it helps bypass additional transactional fees imposed by traditional banks and other NBFCs.
#5. Bitcoin’s value will increase:
Just like Gold, the relevance of Bitcoin is dependent on its popularity and demand in the market. Bitcoin is the most widely used currency with easier transaction mechanisms firmly established via the regulatory authority. It doesn’t only increase the reliability but also ensures a better future for Bitcoin.
Potential drawbacks of buying Bitcoin
Here are a few arguments to heed if you are planning to invest a significant amount of your portfolio into Bitcoins.
#1. The exponential growth rate will stagnate:
Though Bitcoin’s value will rise in the future, the exponential resurge will surely deteriorate over time. Although predicting the investment future is not possible, Bitcoin will not possibly keep its get-rich-quick promise intact in the coming years.
#2. Volatility:
As with every investment scenario, Bitcoin’s value can also plunge. The volatility factor of Bitcoin makes it highly risky to make an investment compared to a traditional stock market. Moreover, It is painful to lose a lot of wealth or assets in a matter of minutes. So, it is wise to think twice before investing in digital assets such as Bitcoin.
#3. Altcoins:
With the rising market trends, other crypto competitors are joining the market that comes with more features and better promises. As of today, there are more than a thousand competitive cryptocurrencies in the global market. The most prominent among them is Ethereum which has approached a handsome value in the market while using blockchain technology to power tamper-proof, decentralized financial contracts besides maintaining a payment network.
#4. Government regulations:
As of 2022, China has banned cryptocurrencies while India has planned to put a tax on cryptos while declaring private coins as banned. Soon a time will come when other governments will put new regulations on the decentralized Bitcoin Network making it very unprofitable to deal with Bitcoins.
The Bottomline
With Bitcoin, there are endless possibilities in the finance industry. But with revolutionary technology comes its drawbacks. For this reason, you should never invest a sizable amount of your portfolio. As the saying goes, “Never put all your eggs in one basket”. Try diversifying your portfolio while still investing in Bitcoin if your want a stable income out of it. Otherwise, if you have plenty of disposable income, the risk is worth taking.
