Despite being the most popular form of cryptocurrency, Bitcoins are a highly volatile asset. Following the recent news, you will notice the volatile nature of this cryptocurrency. Several people are hesitant to invest in Bitcoin for this very reason. Investing in Bitcoins can indeed be very risky, but you can make a profit if you have the will and patience. Although, various cons deter investors from investing in Bitcoins and other forms of cryptocurrencies.
Read on to know further to have an overall better understanding.
Points To Remember When Investing In Bitcoins
Bitcoins are growing rapidly and experiencing many users that trade them. Despite the increased popularity of Bitcoins, this form of cryptocurrency has some cons that every financial investors need to know. Before trading in Bitcoins, you need to get familiar with these cons. Read on to know further.
- Volatile Nature
When Satoshi Nakamoto created Bitcoin, he set the limit of bitcoins to 21 million that can ever exist. Hence, its scarcity makes Bitcoin so valuable, but it also makes them volatile.
- Non-regulation of government
Bitcoin is a decentralized currency which can be both an advantage and a disadvantage. The negative aspect of decentralization is that the government does not regulate it. The lack of regulation leads to a lack of legal protection. It also is very susceptible to scams and is generally irreversible.
- Irreversibility
As the government does not regulate the transaction and are done anonymously, there is a lack of security. It is important to double-check the amount, and the recipient as once the transaction is done it’s irreversible. Several Bitcoin users can keep their investments safe by storing them in a cryptocurrency wallet. This can put you at risk of losing your investments as well.
Advantages of Bitcoin Trading-
Bitcoins are now the most trending cryptocurrency options that financial investors crave to invest in a lot. The traction that Bitcoin creates in the exchange market is remarkable. With all the disadvantages Bitcoin has, its advantages heavily outweigh them. Knowing about the benefits Bitcoin has will enable you to invest in them better.
- Liquidity-
The major advantage of cryptocurrency is that it has no limitations and borders, and Bitcoin follows suit. Bitcoin is very versatile and accessible; hence; it becomes easier for you to invest in them. Nowadays, you can use Bitcoin to pay for your goods and services, and the list is ever increasing. It also makes it very easy to spend money while traveling to another country. Moreover, with all the transactions you make through Bitcoin, you incur no transaction charges.
- Complete anonymity and transparency-
The investors who trade Bitcoin use numerical codes to identify themselves and have multiple public keys. Hence, ensuring there is no public tracking and you enjoy an anonymous transaction. Moreover, the transactions cannot be traced back to you. The transactions you make are completely viewable by enhancing the transparency of your transactions. Even with the transparency, it keeps you safe from fraud as it uses blockchain technology. If you store the Bitcoins in a crypto wallet, no one else can view it.
- You are independent of central authority
Governments and banks have no regulation or authority over Bitcoin. Hence, no government can freeze or demand your coins. Moreover, governments have no viable way to levy taxation on this currency. Hence, you get complete control over the amount of Bitcoin that you can possess. The price of Bitcoin is not linked to any government policies, which gives you complete autonomy.
- Potential of High Returns
As mentioned earlier, Bitcoins are highly volatile in nature and can change drastically daily or monthly. Several users of Bitcoin view this as one of the benefits of Bitcoin because it can result in a high return. Moreover, with a growing number of users, many investors are also investing in cryptocurrencies. Thus, you can increase the return value from investing in them.
Final Words
So, these are certain advantages and disadvantages every crypto investor needs to note while investing in Bitcoin. With a smarter investment plan, you can achieve a higher profit. Log onto Digital currency to avail of a very easy and seamless transaction process.