Tech » Cryptocurrency

Bitcoin Investment – Is it a Good or Bad Choice?

Ryan Green | Updated On December 21, 2023

According to a study by the financial services company deVere group, around 82% of millionaires choose Bitcoin. While it is said that its value is the same as the other precious metals, for its limited quantity and selective use cases. 

Well, you must have heard of these currencies from Bitcoin news, or somewhere else before. To understand it, we’ll explore a bit of its history. In August 2008, a domain name bitcoin.org was registered. A group or person, using the name Satoshi Nakamoto, introduced the cryptography mailing list at metzdowd.com, he stated, “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”

The launch of Bitcoin SV was the introduction of cryptocurrency to the world. It is a virtual currency designed to work as money and a mode of payment outside the control of any person, or entity, removing third-party involvement in finance-related investments. 

In the article, we are going to discuss the advantages and disadvantages associated with Bitcoin and the world of cryptocurrencies. 

Key Features of Bitcoin

Before we examine the pros and cons of this virtual currency, let’s take a quick tour to review its key features of it, to make an easy understanding of how it works. 

• Bitcoin is the world’s largest cryptocurrency by market capitalization.

• Using a decentralized ledger system (blockchain) this currency can be created, distributed, traded, and stored, though it cannot be destroyed like a fiat one. 

• It has a transparent ecosystem, as the ledger board shows all the transactions made and the identity of receivers or traders. This leads to an exposed environment. 
• In comparison to other banking transfers, BTC is faster. The money can be sent in a few minutes using this currency all around the globe, while the banks can take up to days for the same process.

• It is easy to buy this coin. You don’t need to follow any documentation process or go to banks, etc.  

So, these were several factors why Bitcoin is hyped in the trade market. Now, let’s take a look at the reasons why high-net-worth individuals like to invest in it. 

Why Do HNW People Invest in Bitcoin?

Being a leading digital currency, operating on a peer-to-peer network without a central authority and in a decentralized manner, BTC is the choice of eight out of ten millionaires, according to a study. Let’s find out significant reasons why. 

• Macroeconomic Factors: Macroeconomic factors like the global pandemic Covid-19, etc., led to a rise in the popularity of cryptocurrencies.

• Institutional Acceptance: Many financial and non-financial institutions are accepting Bitcoin. This worldwide acceptance of digital currency increased its credibility. 

• Decentralization: It has also attracted many investors that are looking for ways other than traditional systems subjected to government control and regulations. 

• Unpredictability: This is one of the main reasons why investors are interested in BTC. This currency is highly volatile, the prices can fluctuate drastically and in a short period. 

• Limited: It has a limited supply of only 21 million coins, making it a scarce asset. This means, even the rise of other cryptocurrencies will not affect its value in the coming years.

These are the intentions behind millionaires showing interest in it. Now, we’ll discuss the pros and cons in the next section. 

Pros and Cons of Bitcoin

If you are also interested in investing in such currencies, you should first consider the advantages and disadvantages stuck to them. So, let’s discuss them before concluding. 

Pros –

1. Convertible – They are highly accessible and versatile. It takes a few minutes to complete a transaction through this medium anywhere in the world, and they are now globally accepted. 
2. Decentralized – As already discussed, they are dependent on a central authority, and highly decentralized, which means it is not regulated by a single government or central bank. 
3. High-Returns – They change drastically and in just a matter of minutes or hours, they can spike up to 100 percentiles. 
4. Transparent – The ledger board of transactions on a Bitcoin is public to every trader. The identities and transactional information of BTC can be retrieved by anyone, anytime. So, this characteristic makes it transparent. 

Cons –

1. Non-Governmental – While the decentralized nature of it can be bliss to some investors, the chances of scams and fraud lance also rise. 
2. No Minimum Valuation – As there is no minimum valuation of this currency. If a big corporation decides to discontinue the transactions, it will immensely affect the prices. 
3. Irreversible – If the transaction from Bitcoin is done, it is impossible to get it back. Since the transfers are anonymous and unregulated, mistakes in the process can’t be undone. 
4. Limited Usage – Even though the use of currency is rising around the world, it is still not widely accepted by big and small corporations. Also, it puts a limit on money spent by users, unlike other payment options such as debit or credit cards, UPI, etc. 

These are some perks and consequences associated with the piece of exchange worth considering before making any investing-related decisions. 

The Bottom Line

Before putting your capital into trade, it is highly advised to do thorough research on the currency or the company you want to stake your money in. Though cryptocurrencies now are secured with cryptography, as a new technology, it is still hypothetical, and it is essential to learn the threats involved. 

You can take some professional advice or hire a financial expert that will assist you in decision-making for all your trade-related selections and settlements.