Estimated worldwide circulation of bitcoin is more that 9 billion dollars as of August 2016. This crypto-currency is named a most successful ever one, as the turnover and amounts of money invested in it are beyond all expectations.
Bitcoin currency exploded the market in the 2009 year as a brilliant alternative to electronic payments and financial transactions, which guaranteed the full privacy of clients’ data. Due to a highly complicated and multi-leveled process of Bitcoin’s “mining”, its price is high and currently is about 1000$ per Bitcoin.
Later on, when it was discovered that there is a breach in a security system, the rate of Bitcoin plummeted and many have lost their investments. Even now, when technology became sophisticated and extra reliable, there is still a risk of the electronic system being hacked and data compromised.
It’s a well-known correlation that the smaller the offer the higher the price. Taking into account the limited amount of Bitcoin which is 21 million units, it is better to start investing earlier than later.
Why do they consider bitcoin an investment asset?
There are non-stop discussions and arguments about whether Bitcoin is a good investment or too risky and too “intangible” one. Being an innovative digital currency Bitcoin is under the influence of many factors: changing regulations, specifics of transactions, the possibility of cyber attack, high rates volatility, etc.
Still, Bitcoin has a huge potential for a price appreciation, so investments may bring a really impressive return.
If you are interested in other types of high-yield investments, you may find it interesting to learn how to invest in stocks, options, and other financial assets.
Nowadays Bitcoin currency is considered an alternative type of investing money and some investors use Bitcoin as a diversifying element of their complex investment portfolios.
What the principle of investing
The main factor which attracts individuals (and corporations) is the full anonymity of all operations with Bitcoin. As an investor, you may buy bitcoins and get a profit in case of the crypto-currency appreciation in the future. It is the classic type of investing where bitcoin is the same asset as stocks or real estate.
Another way to get a profit from bitcoin is to get an interest from your “bitcoin deposit” by allocating bitcoins on an exchange or at the fund.
Many online services offer high interest rates on bitcoins, some of them even promise to double the money value in few days. It’s always up to you whether you are willing to take significant risk in order to catch the golden profit.
There are also official bitcoin online exchanges, like https://cex.io/ which offer a variety services related to bitcoin. There you will also find a full guide on how to operate with Bitcoin, what is the nature and origin of crypto-currency and lots of helpful information.
Crypto-currency is traded like any other currency and you may also participate in trading with the speculative purposes. Due to price’s constant fluctuation, you can receive a quick profit (or get a loss) by buying/selling bitcoin on the online exchange.
What are the risks of investing in Bitcoin
- There is a risk that demand for bitcoin will drop and it will lead to the currency depreciation.
- Bitcoin is “unendowed” asset which has no guarantees. It is officially non-regulated and can’t be an object of court lawsuits in case you were involved in fraud by operating with Bitcoins.
- There is a risk of Bitcoin’s artificial shutdown, made by the banking system, as banks consider Bitcoin a serious competitor to money.
- There is also a probability that a government may implement certain restrictions to Bitcoin circulation as Bitcoin is a perfect, untraceable tool for money laundry.
Generally, crypto-currency Bitcoin is considered a high-risk asset with potentially high profits. Thus, if your investment portfolio allows some risky assets involvement – you may add Bitcoin as well.
Benefits and reasons of investing in Bitcoin
Being fully decentralized and anonymized, Bitcoin makes a brilliant investment asset for those who does not want to reveal themselves at the open market.
Operations with bitcoins are reliable and secured inside of electronic systems, so it is expected that demand on Bitcoin will grow and the growth of its price will follow. It’s the classic investment concept called “buy and hold”: you buy an asset in hopes its price will rise over time.
Bitcoins are quite liquid as you may make online purchases and pay for services, using Bitcoin. Besides, Bitcoin has managed to get rid of its negative reputation of unregulated and unreliable currency, in spite of heavy negative media propaganda. Investors show growing interest in Bitcoin so there are no reasons to hesitate with giving it a try!