We have all seen the swinging nature or bubble of the crypto market. Bitcoin reached its all-time high in December 2020 at $19000. Now, the same question is asked Should I buy bitcoin?
Since 2016, I have been an investor in cryptocurrency. I’ve seen many ups, downs, and I can tell you that I don’t think so.
On the other hand, any investment, including government commodities, is not safe. Risk is everywhere. You can however add Bitcoin to your existing portfolio to be a visionary digital currency and reap its immense benefits.
Over the last 3 years, Bitcoin has seen a low of $1000 and a high of $19000. Long-term, I recommend investing in Bitcoin. I first invested when it was $500.
However, it isn’t the end. Much more is possible. This guide will answer all your questions about Bitcoin. Its adoption, future growth possibilities, and, most importantly, investment risk analysis.
Bitcoin, the only decentralized cryptocurrency that was introduced in 2009, saw its price rise from 0.01$ up to its peak of 20,000$.
It looks like you’ve been investing around 100$ initially, and that has risen to 0.2 billion USD at its highest.
This was 2017 and Bitcoin became a worldwide phenomenon. Then, we saw the decline. Now it has broken the 2017 record. Should I invest in Bitcoin?
This guide will highlight the pros and cons of the current monetary system, and how Bitcoin can help solve them.
Bitcoin is a decentralized blockchain-based digital currency that was first introduced in 2009 by Satoshi Nakamoto.
Bitcoin’s main purpose is to eliminate the need to have a central authority or third party transact your assets.
It is a digital currency. You can’t touch it like fiat currency or paper currency.
As a general rule, if someone promises to sell Bitcoin in physical currency for money, it is likely a scam.
Bitcoin’s supply is limited to 21,000,000 coins. At the moment, approximately 18.5 million coins remain in circulation.
The new generation of Bitcoin has a fixed block size, which in May 2020 was 12.5 BTC every 10 minutes, and it will continue to drop to 6.25 BTC each block after 4 years.
After four years, supply will drop half off and this could be your first answer to the question Should I Buy Bitcoin?
Safety is another side of investment.
Bitcoin is safe for investment?
Safety is a term that refers to the level of risk taken by security agencies or their backed agencies.
Bitcoin is a decentralized currency, which isn’t controlled by any central authority such as banks or governments. It is easy to move between places using Bitcoin.
Is it safe to purchase Bitcoin?
It is a free-circulating currency and is not legal tender from any country or agency. This means that if you suffer any misfortune, you will be the sole responsible.
If you’re technically aware of its safety, it doesn’t need to be taken. Why?
You could lose your Bitcoin if you don’t keep it in the best Cryptocurrency wallet. Bitcoin is an innovation in technology that can be adopted as a new currency.
We used to have Gold and Copper, but we now use Paper and plastic currencies like USD, GBP or credit and debit card. Perhaps the future is in the digital currency.
We have a comprehensive guide that will cover every aspect of Bitcoin’s operation.
Potential and Advantages
The world currently relies on a single currency, which is controlled by a handful of central governing bodies.
These central governing bodies are responsible to print or mint new currencies on the market. They are also the ones who control inflation and decide the value or price of this money.
The current monetary system is designed in a way that money will lose its value in the future.
One negative policy by the government can cause financial markets to be disrupted and inflation.
As we saw in Zimbabwe and Venezuela, hyperinflation has occurred where the money value lost its purchasing power because of the government’s failed financial policies and increased money supply.
Bitcoin is the best way to overcome central banks’ attempts to print more money and create hyperinflation.
We have witnessed a significant increase in Bitcoin adoption by Venezuelans. This ensures that their money is more secure than their local currency. Image Credit CoinSwitch
Bitcoin does not have a controller. Its maximum circulation supply is 21 million coins.
Technical code’s governing policy is such that no one can create or replicate Bitcoin, and the supply cannot be increased.
It was not known that Gold could have been this big before 2700 years ago, when it was first discovered.
Even early adoptions of the Gold were difficult. I discovered Wikipedia records that individuals could not hold the Gold.
The standardization of Gold meant that it could be exchanged for USD at a fixed rate. This was the beginning of gold becoming a fully monetized commodity.
Every country now has its own gold reserve, which is currently valued at 9 Trillion.
Few people claim Bitcoin as their new digital gold because of the many limitations of Gold and the ease-of-use Bitcoin. Here are some reasons.
Easy to Transport
Gold is a tangible asset that requires additional security and advanced transport facilities to move between places.
Bitcoin, however, is a digital asset that you can store or transfer to any place in a matter of minutes.
Storage of gold will require a physical vault that is extremely secure and under strict surveillance.
Bitcoin is easy to use. You can either have a physical wallet or cold digital wallet storage. Your asset will be completely secure. The interesting thing about Bitcoin is that it could also be stored in a small device such as a pen drive.
Digital Verification. Transparent
Bitcoin is not a physical asset like gold. However, gold can only be proved by physically visiting the vault.
Bitcoin is a digital transparent asset that can be used at any time. Anyone who wants to verify its ownership can visit the blockchain wallet and do so in just a few moments.
Each asset movement on the network is signed by a private digital key. This means that no one can steal your Bitcoin without it. You can also add security layers to increase security.
Lower Environmental Impact
While we have witnessed the gold mining, it requires a greater disruption of nature when people are trying to extract Gold from the environment.
Bitcoin mining is done on a computer that consumes electricity. This is much less destructive than Gold Mining.
These advantages alone show how powerful Bitcoin can be. Is it worth buying Bitcoin now?
You will decide if you want to buy bitcoin in 2022 or not.
Let me explain the safety and risk involved in Bitcoin holdings from both a technical and legal perspective.
Is Bitcoin worth buying or holding?
It is possible to see the issue from two different perspectives: one about its price volatility, and another about its legal challenges. We will try to highlight both to get the most important points.
First with Legal Challenges
It is clear that Bitcoin was created to replace the current financial system with central fiat currency.
These fiat currencies also have the power of central government bodies, and all institutions such as banks and governments are assuring that their holders have fixed purchase value guarantees.
However, we still have instances of hyperinflation and financial crises.
Bitcoin holdings could prove difficult at the moment, as many countries have not accepted it as a legal tender and governments are questioning its legitimacy.
A lot of news has been reported that many countries are currently working to regulate the acceptance of Bitcoin.
Legally speaking, we haven’t heard of any country declaring Bitcoin illegal.
A few countries, such as India, have RBI directed banks not to support cryptocurrency exchanges. A petition was filed by the supreme court by members of the crypto enthusiast community.
But as usual, the supreme court of India in its cryptocurrency trading on the market, but Bitcoin is the only decentralized cryptocurrency.
Bakkt, NASDAQ, and Fidelity have all announced that they will start trading or experimenting using Bitcoin.
These institutions are focusing on how to manage volatility and minimize market risk.
- IBM using BlockChain Technology
IBM already launched the IBM Block Wire using Stellar blockchain technology, which supports worldwide banks. Image credit to IBM
- Ripple to Financial Institutions
Ripple (XRP) is another digital cryptocurrency that has been accepted by many financial institutions. This is due to its low transaction fees, and its scalable network.
- JP Morgan & Facebook Cryptocurrency
After following the Bitcoin trend, JP Morgan announced that it would launch its own cryptocurrency. Facebook just released its whitepaper about the creation of Libra Facebook Cryptocurrency.
These are all positive vibes that will boost Cryptocurrency industries, and eventually lead to the boom of Bitcoin, the mother of all Cryptocurrencies.
Bitcoin is a digital currency that is worth purchasing. However, there are some risks associated with bitcoin which could limit its adoption worldwide by the central authority.
What Are the Risks of Bitcoin?
It is important to determine whether it is worth buying Bitcoin now or later before making a decision.
Potential Hacking Bitcoin
Bitcoin’s mining network is what protects it. People like you and me can contribute to its hash power to clear or solve transactions.
There are currently billions of computers around the globe that run these mining nodes in order to receive the Bitcoin free of charge and to help secure the network.
There is also the possibility of 51% attacks, in which if one person is able generate 51% total hash power, he could be able hack the network easily.
It is almost impossible to do so in the virtual world. However, this is a risk that should be raised by central governing bodies for its adoption.
Another part of the transparent Blockchain network will make Bitcoin transactions anonymous.
Your identity will be determined by a pseudonymous number and no one can link the transaction with your real-world identity, which could increase illegal activities.
Although your transaction will be transparent on the network, only the owner can confirm that it is actually his.
Volatility in Bitcoin’s Prices
It’s impossible to guarantee it. The price is a fixed price. As you can see, in 7 days the price moved 2.49% higher and then maybe -14% in the next 7 days.
Current market circulation supply of coins is approximately 18.5 million, which is almost 80%.
According to The Forbes report, the USA holds 75% of the total gold reserves. Its currency USD is used for international trade.
Bitcoin adoption can end that power and take power away from the federal governments.
It is difficult to do as the total value of Gold reserves is currently close to 9 Trillion USD, but total cryptocurrency market is approximately 564 billion USD.
Do your first intelligence check before investing in Bitcoin.
Bitcoin holdings can be difficult because it is a digital asset and requires security. A small security breach could endanger your hardcore earning potential in just a few seconds.
Another problem is the scalability. Currently, Bitcoin can only clear 7 transactions per second. However, other payment networks like Mastercard and VISA are capable of clearing more than 2000 transactions.
Although there have been few proposals to scale Bitcoin transactions per second, Lightning Network is still in its early stages and nobody can prove its success.
High Transaction Charges
Transaction fees will be charged for every transaction made on the Bitcoin network. This will occur because the BTC price is increasing which will make it unfit for the Micropayments.
Another Blockchain network, such as EOS or Ripple, has solved the problem of transaction fees.
Below are some highlights of Bitcoin’s potential risks for adoption worldwide. Let me then briefly highlight the potential use cases of Bitcoin Blockchain Network.
Bitcoin Use Cases
Bitcoin’s main vision is to replace central fiat currencies with decentralized cryptocurrencies. It is built on a Blockchain network.
If Bitcoin adoption in the real world is possible, then it would only be used as a decentralized cryptocurrency.
To build smart contracts on Bitcoin Blockchain, no one can use it.
There are many exchanges available that will allow you to buy Bitcoin, but you may have to pay a lot in transaction fees.
To minimize transaction and trading fees, and to reduce initial fiat to Bitcoin conversion costs, I’ve created an ultimate guide.
This ultimate solution guide will show you how to buy Bitcoin or other cryptocurrency locally, or convert Cryptocurrencies into fiat.
Wrap up: Should I Buy Bitcoin Now!
Bitcoin is now an alternative to centralized currencies for anyone who wishes to invest in the future and make money.
It is also a highly volatile asset whose price can change in any direction. Many people lost billions of money at its peak and many others made more profit.
The real adoption of Bitcoin has begun. Many large institutions have already announced support for the Blockchain network.
I recommend investing in Bitcoin with a small portion of your assets. If you feel confident enough, you can make your decision. But don’t put all your eggs into one basket.
This comprehensive analysis was very helpful. It gave me a clear idea of whether it would be worth it to invest in Bitcoin or should it be bought in 2022. Please leave your comments about Bitcoin in the comment section.
Last Updated : March 14, 2022 by Editorial TeamPublished : March 14, 2022