Pros and Cons of investing in bitcoin

Cryptocurrencies such as Bitcoin are gaining a lot of attention these days, not only because they have skyrocketed, but also because they have grown by around 8 percent in the last 7 days. You may be thinking of getting in: perhaps your children have already done so and made a fortune, leaving you with a severe case of “fear of missing out” or FOMO. Could now be a good moment to buy?

Top 6 Reasons why Bitcoin is a good investment

Following are some good reasons to invest in bitcoin:

  1. Bitcoin is getting more widely recognized, with many business industries using it as a method of payment. The price of bitcoin is now displayed alongside gold, traditional stocks, and bonds on websites and financial programs regularly.

 

  1. Bitcoin’s blockchain technology is transparent and secure for conducting transactions that avoid the customs fees imposed by banks and financial companies.

 

  1. It is a new and digital form of gold. Since around 550 B.C., gold has been used as a store of value. Bitcoin is only 12 years old, yet it is already widely accepted and significantly more convenient to use in transactions.

 

  1. Bitcoin can be bought on sale as well. On April 13th, 2021, Bitcoin reached an all-time peak level of $64,899. As of August 16th, 2021, it has lowered to an interim level of $48,000­- 27 percent discount.

 

  1. The monetary and fiscal policy of the US Central Bank will cause a decrease or collapse in the dollar value. This is currently causing significant inflation.

 

  1. Unlike physical currency, more than 21 billion worth of bitcoins will never be unearthed, and an approximate 3.7 million worth of bitcoins have been missing, meaning they will never be found without a private key. So apparently bitcoin of more than 17.3 million worth will never be in circulation.

 

Top 6 Reasons why Bitcoin is not a good investment

As compelling as these reasons are, I believe the reasons to either avoid or go cautiously are considerably more compelling. These are as follows:

  1. Over the past five years, Bitcoin is still going way up, so, with a longer-term perspective, you’d be buying quite high. Bitcoin has gained an astonishing 7876 percent over the five years.

 

  1. In the next five years, Bitcoin cannot climb almost as much as it has in the last. The future of any investment cannot be predetermined, but in my opinion, if Bitcoin will continue to go up as it did in the past five years, Bitcoin will be worth over $88 trillion in five years, four times more than the gross domestic output of the USA for 2020. That will not happen. Bitcoin’s get-rich-fast days are going to be over soon.

 

  1. Bitcoin has numerous competing crypto rivals, some of which have more utilities. Thousands of cryptocurrencies exist and there are no obstacles in launching new ones. Dogecoin was reportedly introduced as a joke, but it had a value of 43 billion dollars by 18 May. Ethereum is worth about half Bitcoin’s value & uses blockchain technology to keep a transparent payments system, as well as to record computer code that may be used to operate tamper-proof, transparent financial agreements and apps.

 

  1. Bitcoin could be cracked down by the United States government and other governments. Governments could ban cryptocurrencies in a worst-case situation. Bitcoin has already drawn IRS attention.

 

  1. For decades the reasons for dollar devaluation and hyperinflation have come up yet never materialized. In 1980, gold was acquired because all the money that was being printed was worth little paper money. However, Japan has been carrying larger deficits than the US & facing deflation-dropping prices rather than growing prices for decades.

 

  1. Bitcoin can be more unpredictable than your guts can bear. Anytime the stock market falls, I listen to people’s misery as they relate their losses. Bitcoin will certainly make the stock market appear stable in contrast.

 

My Suggestion

I am fascinated by Bitcoin and the probability that it will destabilize the financial industry in the same way that the internet transformed retail. However, this is far from clear.

When investing in bitcoin, I strongly suggest you put a tiny portion of your money & only if you can manage to lose all of it. It is a high probability that it will be worth something or nothing in five years. I advise you to invest between or less than 2 percent of your capital in Bitcoin or other cryptocurrencies, especially if you are over the age of 50.

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About the author

admin1997

Hi. I'm Shoaib Humayun, a passionate blogger with an interest in everything. This blog guides people about their ideas.

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