Byline | Morgan Reeves
With geopolitical tension and global economic uncertainty across the world, many are turning to alternative assets to store their funds and as a means of investment. While Bitcoin and cryptocurrencies have become a popular way for investors to hedge against inflation, there is still an element of hesitancy surrounding the digital asset industry.
In this, we’ll explore the benefits and downfalls of Bitcoin in 2022.
Is Bitcoin a risky asset?
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As it stands, Bitcoin is a speculative asset. This means that investors buy Bitcoin with the hope that their investment will be profitable in the future. While this sounds risky, it is not necessarily so, if you take historic data and predicted trends into consideration. Since Bitcoin was launched, it has seen an immense return-on-investment (ROI) – performing better than any other asset class including gold and stock.
Globally, Bitcoin regulation is dynamic, which adds a layer of risk depending on where you live. Some countries (like China) have put a blanket ban on cryptocurrencies while others (like El Salvador) have adopted it as legal tender.
In terms of security, Bitcoin is decentralised and the network runs almost no risk of being attacked or hacked.
The perks of investing in Bitcoin
Bitcoin is borderless
One of the main benefits of cryptocurrencies, including Bitcoin, is that they frequently have no geographic boundaries. While regulation is still developing across the world, there is an ever-expanding list of places that accept Bitcoin.
Because Bitcoin is globally accessible (unless a region has banned it), it makes sending money to people in other countries an affordable and seamless process. It’s not only cheaper than relying on banks to transfer money across borders, but it is also quicker and there are fewer delays.
Pseudonymity and transparency
Although it is not entirely anonymous, Bitcoin offers users pseudonymity. This is because addresses are not publicly associated with and linked to users. This prevents public tracking and makes it impossible to link individual transactions to specific users. Although the transactions are always visible because the ledger of the network is open for anyone to view, the blockchain technology nonetheless protects them against fraud. Furthermore, the number of Bitcoin you hold would only be known to you as the wallet’s owner.
High reward with high ROI over years
Over the past nine years, anyone who invested in Bitcoin would have gained 29663.0% on that investment. While the industry is known for its short-term volatility, Bitcoin has performed exceptionally well over the years.
The cons of investing in Bitcoin
While it is extremely possible that cryptocurrencies like Bitcoin will transform the way that money is used, you should also be aware of the risks associated with investing in cryptocurrencies.
Here are a few factors that could be a hindrance to Bitcoin in the future:
Volatility
Bitcoin has a reputation for volatility, with reason: It has seen short-term volatility to a massive degree. For example, In December 2017, the cost of a Bitcoin purchase was just under $20,000 – a record high at the time. A few weeks later, the price had sunk to less than $7,100 after a crash from the bull run it had experienced. With Bitcoin’s short-term volatility, it’s worthwhile looking at the asset for its long-term potential.
Transactions are irreversible
The Bitcoin blockchain has never been compromised and it runs very little risk of a successful attack. Despite this, users have become victims of cyber crime and have lost their crypto funds to malicious entities. Part of this is because Bitcoin transactions are totally irreversible, compared to banking transactions which can help recover your funds in the face of a cyber attack.
Using a secure way of holding your tokens and practicing strong cyber safety combats the risk of an attack and helps keep your tokens safe.
Where do I invest in Bitcoin?
There are numerous cryptocurrency exchanges where you can buy Bitcoin. These can be centralised, decentralised, or a mix of both.
A fantastic way to invest in Bitcoin for the first time is through a user-friendly platform like Biticodes. This kind of platform is designed so that you can make trades without having to watch the market consistently. It relies on sophisticated algorithmic technology that makes trades on your behalf by using historical data trends to predict market movements. This offers a great way to get to grips with crypto trading without needing to learn the technical data to get started.
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