You like many other people may be wondering whether you should invest in Bitcoin. Unless you have never followed any financial news at all, it is likely that you are aware of the fact that this cryptocurrency has risen in value exponentially. However, that does not necessarily mean you should invest in it. Every investment requires careful consideration comma which means getting to know what it is and what its pros and cons are as well.
What Is Bitcoin?
Bitcoin is a fill form of digital money or online money. This means you can exchange it for other currencies such as US dollars or Euros, and that the value fluctuates compared to other currencies. What is different time ever is that bitcoin is not centralized. This means that there isn’t a central bank or government that manages it and potentially miss managers it.
Should You Invest in Bitcoin? Pros and Cons
Looking first at the advantages:
- It is very easy to send money through bitcoin, with a taken just seconds to send money anywhere in the world since there is no Bank intermediary period this is one of the key things that has made bitcoin so popular.
- There is a limited supply of Bitcoin. In fact, there are exactly 21 million bitcoins in total, with only very few of them not having been mind yet. Once they have all been mined, no other bitcoin will ever be created. This guarantees is a value since there is a few need supply.
- Bitcoin is highly private period it isn’t 100% anonymous but close. Any transaction is available on the blockchain but this does not show your personal identifying details. This means you don’t have to worry about a bank spying on you.
- It is very cheap to conduct a transactions. You don’t have to pay MasterCard or visa fees as a merchant for instance.
At the same time, there are disadvantages, including:
- Bitcoin is risky and the price could fluctuate at any moment. Indeed, there have been many occasions where it grows in value for months at a time and then suddenly had a 50% drop overnight. It is not a stable currency.
- The transaction speeds are starting to slow down. The way to avoid this is to choose a cryptocurrency other than bitcoin such as ethereum for instance. Bitcoin miners are doing all they can to once again speed of transaction speeds but if they fail in that it is likely that people will simply move over to a different one and it will lose all its value.
- You cannot reverse a bitcoin transaction. This is due to the anonymous nature which essentially means that once you have conducted a transaction there is nothing that can be changed anymore. Hence, if you make a mistake, your money is gone.
So should you invest in Bitcoin? Only you can answer that question. Every form of investment has risks and bitcoin is no different. You know how much risk you can comfortably carry in your investment portfolio.