Investing in cryptocurrencies involves risks, but sometimes it provides benefits to investors. The bitcoin market is highly volatile, and each investor must have complete knowledge and understanding of their bitcoin investments.
It is a growing cryptocurrency that is making its way to the mainstream, and also it is believed that it is the future of money. It might be possible that you can become a crypto nation pro login and investing in it.
So let’s understand the pros and cons of investing in bitcoin.
Merits of Bitcoin Investments
More opportunities
The cryptocurrencies that exist today are young, and these new cryptocurrencies are making their way to the mainstream. The unique features and unpredictable rise and fall in the price of cryptocurrencies like bitcoin are creating more and more opportunities for businesses to earn profits.
Businesses and companies can extend their business and can trade internationally by using bitcoin and other cryptocurrencies.
Liquidity
The rise in bitcoin popularity has given rise to crypto exchanges, thousands of online brokerages, and trading platforms, which makes bitcoin the most liquid investment asset. Individuals can trade bitcoin like gold or cash, and the best thing is that it doesn’t involve high transaction fees.
Because it is highly liquid, this makes it a significant investment like gold. Both short-term and long-term investments are made in bitcoin because of its high demand in the market.
Minimalistic trading
To trade stocks, the traders must have either a license or a certificate, and it mainly involves a broker to trade the shares of a particular company. This is not the case with bitcoin as it involves minimalistic trading.
Traders or investors can easily buy or sell bitcoins and other cryptocurrencies from crypto exchanges and store bitcoins in bitcoin wallets. Through bitcoin wallets, instant transactions can be made anywhere and anytime.
Low inflation risk
As fiat currencies involve government and are regulated and controlled by governments, bitcoin is decentralized in nature. Bitcoin is not vulnerable but resistant to inflation. The supply of bitcoin is limited, and these are no printed but mined via the mining process.
The blockchain is the technology on which the entire bitcoin network is dependent. No government or financial institutions can affect bitcoin’s price, but other factors affect bitcoin’s value. Still, as compared to fiat currencies, there is a lower risk of inflation.
Demerits of Bitcoin Investments
Online hacking
E-Commerce has given rise to online hacking, and it had become a significant threat to cryptocurrency investors. Bitcoin exchanges and trading platforms enable users to buy and sell cryptocurrencies through websites or mobile wallets quickly.
Storing and transferring bitcoins through wallets make your crypto tokens vulnerable to theft and hacking. The primary concern is that bitcoins stored on exchanges aren’t even insured by FDIC, making them more risky investments.
No regulations by the government
Satoshi Nakamoto, creator of bitcoin, designed bitcoin as a decentralized currency which means no governments or other central authorities are involved. No government means no regulations on the bitcoin market.
Currently, there are no taxes implied on bitcoin investments, and no government makes it useful for illegal trade, and it is exposed to malpractices by hackers and fraudsters.
Price volatility
The bitcoin market is highly volatile, and therefore its price keeps on changing drastically. For instance, if you had invested in bitcoin before 2017 and wanted to sell in 2017, then you can earn massive gains because 2017 was the year when bitcoin’s price reached its heights.
If you have invested in bitcoin in 2017 and wanted to sell your investments in 2019, you could have lost half of your funds because the market was down in 2019. This is the reason why investors find bitcoin a risky investment and hesitate to invest in it. Even if you want to invest in bitcoin or other cryptocurrencies, you must do technical analysis to learn about the bitcoin market.
Finite supply and limited use
There is only a finite supply of Bitcoin, and there exist only 21 million bitcoins which makes it a valuable asset. But as of now, not all people worldwide know about bitcoin, and only limited online retailers have started accepting it. Not all companies and governments consider bitcoin as a legal exchange which makes it a risky investment.