Bitcoin. The future of money, a cryptocurrency.
The digital currency everyone cannot stop talking about. Even people who have never heard about Bitcoin are trying to get in to a piece of that pie.
This month alone, Bitcoin has attained a 120%+ increase of $24,000+ US dollars alone to reach it’s peak of a little over $41,000 per Bitcoin on January 8, 2021.
Come January 11, 2021 today, Bitcoin lost a little bit (or a lot) of its steam (-14.02%) to $32,289.60, losing a little over $9,600+ US dollars in the past 3 days after reaching its all time highs.
Bitcoin has achieved a 32.4K% increase from when it first launched in 2009, with a 332.63% increase in this past year alone.
While the upward swings may be fun and exciting, the downward swings are scary and unnerving. With the high-highs potentially come the low-lows.
Bitcoin, along with any other cryptocurrency, is highly volatile. The value of the cryptocurrency fluctuates every minute, increasing in thousands and losing thousands.
As a new cryptocurrency investor myself, I found myself scrambling the internet to find out whatever I could and whether I needed to lock-in some of my gains or just leave it for the long term.
So, what is Bitcoin?
Bitcoin is a decentralized, blockchain-based digital money or cryptocurrency.
It is a peer-to-peer electronic cash system network that can be sent from one person to another without having to go through a central authority or bank. The blockchain technology with a public ledger accessible to everyone makes it a reliable source. There is a cap or maximum to the supply of it at 21 million, which contributes to the rise in value of Bitcoin.
Today, investors are increasingly purchasing Bitcoin to contribute to their portfolio as a hedge against inflation. Also known as “digital gold”, Bitcoin is only trending further upward due to the economic devastation that arose from the alarmingly upsurge of COVID cases, which in turn led to the government printing trillions of money to aid the country.
Here are Bitcoin Convictions to help through the Volatility :
- Hedge Against Inflation & Ease of Use
As the Federal Government is increasingly printing money and stimulus bills are constantly being negotiated, it is good to have a back up plan.
While gold & metal futures have been a long and good practice of inflation hedges, what makes Bitcoin attractive is the ease of use. It can be digitally transferred to anyone in the world in seconds without the mediation of a Central Bank.
Bitcoin can be divided into Satoshis, or up to 100 millionths of a bitcoin, or eight decimal places (ie 0.00000001). Whereas metal have to literally be melted, welded, broken pieces to get a fraction of it.
Therefore, you can buy things with 0.00001 bitcoin.
2. Scarcity of the World’s Bitcoin Circulation
There is a cap to Bitcoin mining is 21 million.
The scarcity of the cryptocurrency circulating the world means that the price of the coin has much room to increase.
3. Blockchain Ledger Integrity
The decentralized peer-to-peer network allows for bitcoin to be transacted with no central bank in the middle. You can easily send peers money in a few minutes as opposed to having to wait for days for the money to be cleared in the banks.
Also, everyone has access to the the blockchain ledger that stores all transactional data.
4. Risk to Not Own Bitcoin
Institutional investors have already adopted Bitcoin to back up their conviction with the cryptocurrency. For example, ARK Invest, Paypal, Grayscale ETF, etc.
These are only some positive convictions while there are other risks involved with owning Bitcoin.
All in all, there is no right answer to purchasing Bitcoin or cryptocurrency. Though these are basic convictions, holding cryptocurrency is very risky and causes emotional distress especially if purchased with money that you cannot afford to lose. Though that could be said for any investment. I would highly advise you to do your due diligence before deciding to follow the trend, and make sure you invest with amounts you can afford to lose.
This article is not meant to advise investment advice. Every investment and trading move involves risk; readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of WordPress.