Bitcoin is a digital currency that you can trade and exchange without any central control from intermediaries or mediators like governments, financial institutions, and banks.

What is Bitcoin?

Bitcoin was launched by its inventor Satoshi Nakamoto in the year 2009 as a means of performing daily transactions. It is based on cryptography and peer-to-peer software. It is undeniably true that cryptocurrency has become a popular topic in the digital age. With a 66% increase in price in the first quarter of 2021, Bitcoin is sold like hot cakes worldwide. Wondering what it is and why invest in it? This article covers it all. Read on to know more.

Why Should I Invest in Bitcoin

There are a variety of reasons as to why you should invest in Bitcoin. Let us take a quick look at a few of them.

  • Since the supply of Bitcoin is limited to 21 million coins, its value will continue to rise with the increase in demand. It will simultaneously provide currency stability  thereby ensuring buyer and owner protection. 
  • Bitcoin offers their owners a lot of benefits like speedy transaction processing as well as low transaction fees when compared to fiat currencies transactions. 
  • Bitcoin owners and users control their money, eliminating the multiple risks and restrictions common in fiat currencies. The vulnerabilities of banks to bust and boom cycles in the economy are prevented too.
  • Transactions done with bitcoin are peer-to-peer, which means holders or owners of bitcoin can send and receive bitcoin payments to anyone and from anyone around the world. 

How Can I Invest In Bitcoin?

Now that you know why you should invest in Bitcoin, your next question should automatically be “How can I invest in Bitcoin?”. Here are some of the different ways of investing in Bitcoin:

  • Exchanges: Investing in Bitcoin through cryptocurrency exchanges is easy. Bitcoin does not have an official platform as it is an open-source technology. However, cryptocurrency exchanges act as middlemen where you can invest in Bitcoin. Some of the popular ones are Coinbase, Binance, Bittrex, Vauld, KuCoin, Coinmama, etc. 
  • Buying Shares: Many companies such as Tesla, Galaxy Digital Holdings, and Microstrategy trade and own Bitcoin. You can invest in Bitcoin by buying shares from those companies. 

How To Invest In Bitcoin And Make Money 

There are many ways you can make money in Bitcoin. Some of the ways are:

  • Trading – This involves speculating the price position (both fall and rise) of Bitcoin. Bitcoin is generally traded on a cryptocurrency exchange. 
  • Mining – This was one of the earliest ways of making money on Bitcoin. It has a lower risk and tends to be safer for users. Money is earned through mining by solving complicated puzzles or math problems. 
  • Lending – Traders get cash by making use of their Bitcoin as security. With this method, traders still have ownership of their assets and can make money simultaneously. 
  • Investing – Investment is when you are buying a specific amount of Bitcoin and leaving the value to rise before selling them to take the profit. 

Can I Lose All My Money?

Yes, one can lose his money in Bitcoin through the following ways:

  • Phishing: This is one of the most common forms of financial scams. Scammers have frequently attacked cryptocurrency assets. 
  • Cybercrime: Cybercrime has increased quite a bit over the years and has affected cryptocurrency more often than not. It is important that all cryptocurrency owners and investors keep track of their assets.
  • Ponzi schemes: These are scams whereby investors are promised high and consistent returns from a cryptocurrency platform that does not exist at all. They collect money from the investors and never pay the returns back.
  • Not taking care of security: If working and investing on a cryptocurrency platform is comparatively easy, then it might be easy to hack it as well. Hackers can target any platform, enterprise, or organization, and it is essential to be careful about one’s assets.

What are the Risks Of Investing?

While there are many benefits of investing in Bitcoin, it is well accompanied by several risks. They include:

  • Cryptocurrency tends to be highly volatile: Like any other investment currency, cryptocurrency is also extremely volatile especially, because it is at its very nascent stage.
  • The crypto exchange can be hacked: Hackers can lay traps everywhere and the cryptocurrency exchange is not an impossible choice for them. 
  • Bitcoin investment is not regulated: Sinceno centralized body regulating cryptocurrency,  they tend to be unsafe for users. 
  • Exchanges can close abruptly: Who does not remember the dreadful Wall Street Crash? We all know that exchanges may close or crash abruptly without any prior warning whatsoever.  
  • Affected by discontinuation and forks: new cryptocurrencies are formed by alternating current blockchain. This process is called a  “fork” and can be harmful to cryptocurrency owners and users.

Things To Consider Before Investing 

One must always be careful before investing anywhere. Cryptocurrency is similar in nature. Here are a few things you must consider before investing in Bitcoin.

  • Identify why you want to invest in Bitcoin: It is not a good idea to invest in Bitcoin simply because it is a trend. Make sure you have a better reason and plan for investment.
  • Read a lot of Bitcoin Whitepaper: Whitepapers of the cryptocurrency are almost always available for prospective investors. Please read about the cryptocurrency of your choice and try to know more about it before investing. 
  • Join a community of crypto and Bitcoin enthusiasts online: There are active online communities consisting of cryptocurrency enthusiasts who discuss Bitcoin and why one should invest in it. You will also find authentic news about cryptocurrency there.

Final Words

With a price of 60,000 USD in April 2021, Bitcoin is here to stay. While lots of people have made money through Bitcoin, some have lost it too. So always remember to do your research, gain more knowledge about your choice of cryptocurrency before you invest in it.

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