The value of cryptocurrencies is determined solely by the level of supply and demand, without the intervention of governments or central banks. Crypto trading is one of the most free forms of trading, ideal territory for those who want to make money on changes in the value of a financial asset.
Digital currencies have experienced an incredible rise, which allowed those who were interested in buying Bitcoin early to earn incredible amounts of money. Of course, past performance is not a guarantee of anything later, but such a risky investment as Bitcoin is a great opportunity for those who find crypto coins as one of the most unknown, but extremely profitable tools for making a profit.
What is Bitcoin and How Does It Work?
On October 31, 2008, someone under the pseudonym Satoshi Nakamoto published a technical document entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’. The document was sent out just a month after the investment bank Lehman Brothers filed for bankruptcy, which became the largest case in US history, and the government authorized financial assistance to the industry in the amount of $700 billion.
Just a few months later, the Bitcoin network started working. On January 3, 2009, it introduced to the world a new system of decentralized digital currency without centralized management (for example, in the form of a bank or other intermediary).
BTC is the ticker symbol for a unit of currency in the Bitcoin system, its emission is finite – 21 million BTC coins. Each Bitcoin is divided into 100 million satoshi — the smallest unit of the ‘digital gold’ (similar to cents in the US dollar). Bitcoin is a means of payment of the 21st century, just like cash, that allows you to instantly pay and conduct a transaction.
Like cash, Bitcoins are stored in wallets, only in digital ones. A BTC wallet acts as a bank account, allowing you to store funds and perform transactions to other users (so-called ‘addresses’) of this peer-to-peer network. Users just need to open their BTC wallet and enter the recipient’s public address.
The wallet uses a digital signature with a private key to authorize the transaction, after which it will be transmitted to the network for processing.
Is Bitcoin a Good Investment?
If you have asked such a question and are already aware of what cryptocurrencies are, then the unequivocal answer is yes, it is worth it. Despite the fact that the cryptocurrency remains a high-risk asset, if you have certain knowledge, investing in it can bring you financial freedom quite quickly.
Investing in virtual money for the long term will also give an excellent result — experts predict that Bitcoin will reach the $100 thousand mark this year. Looking at the speed at which the main cryptocurrency breaks through all-new marks, it seems that reaching a hundred is a matter of time. Anyway, whether you should buy Bitcoin or not, undoubtedly, depends on you!
Why is Bitcoin’s Price Down?
It all started with the statement of Elon Musk on May 13 that Tesla will not accept Bitcoin as a full-fledged asset class. At the same time, it was said that the company will not sell Bitcoin (bought in March of this year for a total of $1.5 billion) and use them for operations until the cryptocurrency mining will not go with the help of ‘sustainable energy sources.” This statement simultaneously brought down the price of Bitcoin by 10% and, in fact, gave an impetus to investors to fix their participation in this asset — a sale began, sometimes chaotic.
But the strongest blow to the quotes was inflicted by the Chinese authorities on May 18, when they announced the introduction of restrictions on cryptocurrency trading. Chinese financial institutions and companies were banned from providing services related to the exchange of cryptocurrency, and investors were warned about the danger of speculative trading. The next day, the BTC exchange rate fell by 30% — the largest one-day drop since March 2020.
Is It Too Late for Bitcoin?
On April 14, Bitcoin reached record highs of $64,863.
The reason for the rapid growth is the actions of retail and institutional investors who invest in cryptocurrency to protect themselves from the depreciation of funds while central banks ‘printed trillions of dollars and pumped them into the economy,’ Anthony Pompliano, co-founder and partner of Morgan Creek Digital Assets, said in an interview with CNBC.
‘The more funds invested in Bitcoin, the faster its volatility will decrease.”
— Nikolaos Panigirtzoglou
In January, JPMorgan issued a note to clients stating that in the long term, the price of bitcoin could reach $146,000, and it itself could begin to compete with gold, CNBC writes. According to Nikolaos Panigirtzoglou, global market strategist at JPMorgan, the danger of Bitcoin is in its volatility, which is five times greater than that of gold. ‘The more funds invested in Bitcoin, the faster its volatility will decrease,” he believes.
How Much Should I Invest in Bitcoin to Start?
Nowadays, buying Bitcoin is usually classified as high-risk trading. Despite this, the number of users who start to invest in Bitcoin is constantly growing every day. Moreover, they also include institutional, i.e. legal entities with a capital of hundreds of millions of dollars.
For beginners, such investments are associated with the risk of choosing the wrong cryptocurrency that has a low potential for growth. In addition, it is necessary to have composure and not give in to panic moods. The amount required for initial investment can be very modest. Seriously – very modest.
The minimum amount of funds depends on which platform you have chosen to purchase Bitcoin or other crypto assets. All cryptocurrency exchanges have their own requirements.
On average, experts recommend investing from $50. This sum will be enough to understand the basic rules of investing and enter the market with minimum risks. But invest wisely! Divide your personal finance into small portions between different assets in your portfolio. And never invest the last money you need for life. No one gives any guarantees of profit.
Can Bitcoin Crash?
To understand when it will collapse, you need to find out the reasons that can cause its collapse. A rapid crash is possible if all investors abruptly sell their assets. What can cause a sharp exit of speculators?
The ban of cryptocurrencies by the state and the introduction of responsibility for their use;
The price of Bitcoin will reach the ceiling and everyone will want to sell it urgently.
However, if this happens, the BTC exchange rate will not fall to zero. There still will be participants who use ‘digital gold’ as a means of payment. The rate will balance and continue to grow, but more slowly and with less fluctuations.
The collapse of BTC will not cause serious harm to the economy. If we compare the capitalization of the ‘digital gold’ with Apple, the cryptocurrency is not expensive than even a third of this well-known electronics producer.
Moreover, Bitcoin’s forks can cause a drop in the exchange rate due to the competition they create. Such fragmentation confuses users and causes skepticism about the fact that the number of coins is actually limited. After all, you can divide it and double the amount of cryptocurrency. A large number of forks indicates disagreements within the community and the inability to reach a consensus, which undermines faith in Bitcoin.
The problem with the block size in the main Bitcoin chain has not gone away. The experts claim that in the near future we will see several more forks.
A Great Brand Story Is not a Guarantee of a Good Investment
Bloomberg published a statement by the head of the investment and strategic group of Goldman Sachs, Sharmina Mossavar-Rahmani, that, despite widespread public discussions about the attractiveness of investing in bitcoin, this cryptocurrency is not such either in the form of savings or as a means of payment.
Literally speaking, a currency whose long-term volatility reaches 80% cannot be considered as a real unit of value. Although blockchain technology itself has come to us for a long time, it will become part of the global financial infrastructure.
Rahmani’s skepticism towards Bitcoin is also shared by the head of the Irish Central Bank, Gabriel Makhlouf, who previously spoke about the risks of investing in this cryptocurrency, saying that such investors should be prepared for the loss of their money.
Meanwhile, it is known that bitcoins, in addition to opponents, have a lot of fans. Note that they are also bought by well-known foreign traders or, let’s say, investment fund managers. Judging by the information in numerous specialized media, they are also promoting the popularity of the cryptocurrency — their opinion as the world financial gurus is listened to most often and most of all.
While central banks around the world are playing on the decline of their currencies, bonds do not bring the desired income, the growth of the popularity of cryptocurrencies can also lead to an increase in their value, having won back investments in them.
It is also no secret that the cryptocurrency is essentially designed to become an alternative to the current monetary system worldwide, and cryptocurrency buyers, of course, want to be the first to get on the ‘train’ rushing to a new type of enrichment.
Potentially Infinite Competition
The report of the investment bank Goldman Sachs also speaks about an alarming trend for the main digital currency. His analysts studied the potential of the Bitcoin and Ethereum networks and came to the conclusion that the latter has a real chance to push BTC into the background.
The eToro data turned out to be disappointing for traders betting on the No. 1 crypto coin: Cardano (ADA) and Dogecoin (DOGE) were the most popular among American Internet users. They are followed by Tron (TRX) and Ethereum (ETH).
Bitcoin got only fifth place in the rating of preferences, although it was a confident leader just a year ago.
Meanwhile, Elon Musk’s favorite coin Dogecoin, whose price today is $0.234, occupies seventh place among the largest cryptocurrencies. It is curious that a year ago this coin was not known to most Americans at all. DOGE owes much of its popularity to the tweets of the CEO of Tesla, which literally ‘blew up’ social networks and provoked a stir.
Speaking about Cardano (ADA). The Cardano network, according to its founder Charles Hoskinson, expects to become the first blockchain and push ETH into the background. Now the price of this coin is kept around $1.43, and it is in fourth place by the CoinMarketCap rating.
Experts of the American investment bank Goldman Sachs believe that the Ethereum network and its underlying asset are the main competitors of the BTC network.
In the future, Ether may even bypass Bitcoin in terms of market capitalization, according to the analysts’ market research. Now, however, such a scenario seems fantastic, since the capitalization of BTC and ETH is $649.126 billion against $276.918 billion.
However, Goldman Sachs adheres to the point of view that soon Ethereum will attract the lion’s share of capital since this blockchain is the best platform for deploying smart contracts. In addition, the coin can get the status of the most secure crypto asset in the form of a hedging instrument against inflation.
Thus, the competition between digital currencies is in an active phase and thus delays the completion of the market maturation process. And while we can see an attempt to attract users and investors, the volatility in the cryptosphere will continue. And this undermines its attractiveness as a long term investment.
Governments Will Not Tolerate It
We can talk as much as we want about the independence of cryptocurrencies from the state, but the state is the main threat to the well-being of Bitcoin as a full-fledged means of payment. Authorities may not affect the cryptocurrency directly, but they can manipulate its citizens. If tomorrow the state bans virtual currencies, including BTC coins, and introduces criminal liability for its use and trading, speculators will begin to get rid of coins, which will cause a collapse of the exchange rate.
When China banned ICO in the country, the BTC exchange rate fell two and a half times in just two days. When Japan adopted the law on virtual currency and legalized payments in BTC, the exchange rate showed steady growth for a long time. Therefore, the question is very urgent whether the state will be able to legalize Bitcoin and other crypto assets.
In addition to the social threats that cryptocurrency carries, in the form of the use of anonymous payments for money laundering, drug trafficking, and other illegal activities, it is unprofitable for the state to legalize digital money for a number of reasons:
Threat to the national currency;
Loss of deposits;
Headache with regulation.
Today, playing with cryptocurrencies is a risky business, fraught with loss of funds. But if the state legalizes crypto coins, it will be much more profitable for citizens to transfer their savings into cryptocurrencies, which are growing in price very quickly. Many investors will begin to get rid of the national currency and transfer deposits to crypto, which will have a very bad effect on the state’s economy.
Things to Know before Investing in Cryptocurrency
Many people have heard about a new trend – cryptocurrencies, – and would like to start investing in Bitcoin and other cryptos right now. Here are some recommendations that you should know if you want your money to bring profit.
Don’t Invest More than You Can Afford to Lose
As tempting as it may be to dream of future wealth, a large investment in your favorite coin can bring you profit, also consider the worst-case scenario – the price of your coin drops to zero. Invest only the amount that you do not mind losing or only a part of the prepared investing capital. Do not use borrowed funds to invest in ‘hype’ projects. You need to be able to assess your own capabilities and the capabilities of the financial market.
Conduct a Deep Analysis
Conduct a detailed analysis of the company you are going to invest in. Study the open market data that the company publishes for shareholders – the annual profitability, the profitability of various areas, the value of assets, and other characteristics of the effectiveness of successful activities. As a result, the analysis will help to make your successful financial decisions. Make sure the information you absorb comes from reliable sources.
An excellent starting point can be objective information provided by company websites and verified news sources, as well as information from projects’ white papers. Such information allows us to understand what kind of technology is the basis of digital coins, how the latter can position itself on the market (note that past indicators should not be used as indicators of future efficiency), what kind of team is working on the project and whether the project achieves its goals.
Investments in cryptocurrencies are spurred by the so-called FOMO (the fear of missing out) – the fear of missing something. The industry is ‘hyped’ by speculation. The fact that a very small percentage of crypto assets are actually spent, they are still considered as an investment, rather than a functional tool, also indicates that the market is bloated.
Double-check the Information
Sending funds to an incorrect digital wallet. This is a mistake that people all over the world make quite often. To avoid this, you need to double-check the correctness of the wallet address to which you decided to send crypto coins. You need to make sure that you do everything carefully and slowly.
No Keys, No Coins
This investment recommendation concerns the security of your coins and the confidentiality of the personal data that provides access to them. You should always obtain your own private keys because wallets can collapse, exchanges can be hacked, and your losses can go to thousands of dollars.
Moreover, you must have offline copies of all your passwords, private keys, and other important data, if you do not want to say goodbye to your money forever. This is important because you will need to access all your cryptocurrencies, even if your computer crashes.
You Can Buy Less than 1 Bitcoin?
Bitcoin, like any other digital currency, can be bought not only as a whole but also as parts of it. BTC pennies are called ‘satoshi’, this name was given in honor of the developer of Bitcoin – Satoshi Nakamoto. Bitcoin consists of 100,000,000 satoshi, the smallest part of which is equal to 0.00000001 BTC.
Frequently Asked Questions
Is it safe to invest in Bitcoin right now?
The growing popularity of the crypto industry makes more and more people start thinking about the profit it can bring. In particular, the experts predict a rise in the price for the main crypto asset. It is noted that strong short-term fluctuations in the exchange rate, up to a collapse to 10 thousand dollars, are not excluded.
The experts advise those who intend to buy and sell Bitcoin now – to do it gradually – not to invest the entire amount of savings in BTC. If you divide your investment fund between several assets, it will help to reduce the risks of losing all your money.
Is Bitcoin still a good investment 2021?
The authoritative popularity of Bitcoin against the background of other cryptocurrencies is obvious to any user of the crypto market. Its status as the world’s first virtual asset that can compete on a par with the main fiat currencies, and the steadily growing demand for exchange operations involving BTC coins in the hope of a further increase in the rate, indicates that this currency is considered to be the most promising in the context of financial profitability.
What is bad about Bitcoin?
Bitcoin is destined to quickly become obsolete and give way to more promising cryptocurrencies. The experts guess that the main reason for this will be the problem with the speed in the Bitcoin network, which, despite the resources spent, has not been solved. In other words, the only reason why ‘digital gold’ is still alive is that a lot of money has been invested in its support.
What is the lowest amount of Bitcoin I can buy?
There is no minimum amount as a requirement for investing in Bitcoin. Maybe it’s the lowest set up by the system for buyers to acquire the first bitcoin piece. Cryptocurrency exchanges, like Changelly, allow users to buy cryptocurrency starting from several dollars. However, do not forget that most platforms charge fees for transferring, selling, or buying crypto. The experts believe that investing at least a minimum of $50 should be enough to make your investment benefit you.
Can I invest $100 in Bitcoin?
Investing in cryptocurrency is risky, but potentially extremely profitable. You can invest as little as a few dollars into crypto assets like Bitcoin, buying a few fractions (‘satoshi’) – of a Bitcoin up to $100.
Is one Bitcoin enough to own?
At first glance, it may seem that one ‘satoshi’ is such a tiny unit that even a few thousand of them are worth absolutely nothing. However, in reality, everything is a little more complicated. If we accept as a condition that the cost of 1 BTC is 10 thousand US dollars, then 10 thousand ‘satoshi’ will cost 1 USD. Now, this may seem like a very small amount, but it all depends on the actual exchange rate of Bitcoin in relation to its competitors. Some experts predict an increase in the value of the first virtual asset to half a million US dollars in the future. Accordingly, the more expensive one BTC is, the higher the cost of one ‘satoshi’.
How much Bitcoin do I need to be rich?
Most often, the answer to this question is given in the form of calculating the required number of coins to enter the ‘1 Percent Club’, that is, to enter the category of one percent of the richest crypto enthusiasts in the world. However, these calculations in different sources lead to a different answer – from 0.28 BTC up to 15 BTC. As a result, it is impossible to give an exact answer to this question for sure — at least because of the unknown number of lost Bitcoins that affect the distribution of cryptocurrency. We believe that there is no need to strive for any amounts determined by other people. Nevertheless, investments are a personal matter, so you should be guided only by your income volumes, expenses and other indicators.
What will Bitcoins be worth in 2025?
Experts are sure that with a high probability in the next 5 years, you cannot wait for negative news on the general fall of the cryptocurrency. Of course, some tokens are absorbed, but all the main projects will continue their existence and active development.
What will Bitcoin be worth in 2030?
Even in the conditions of competition with other virtual coins, Bitcoin will rapidly increase in price in the near future, although there is a risk of a small drop in value, which you need to be prepared for. Experts’ opinions differ, after 10 years, the price of the first cryptocurrency can vary from 10 to 100 thousand US dollars, it is not possible to talk about a specific cost now.
How much will I make if I invest $500 in Bitcoin?
The Bitcoin exchange rate is a dynamic, constantly changing value. Its exchange rate is updated on exchange platforms every 15 or 20 minutes. In addition, it should be taken into account that Bitcoin, like any other digital currency, has fairly high volatility. The change in the cost during the year can reach 15-20-fold scales. You can always check the current crypto rates at our platform for instant crypto exchange – Changelly.
Can 0.01 Bitcoin make you rich?
Buying 0.01 BTC today, roughly a $500 investment at current prices, can assure one a top 13% holder position. When comparing the relative wealth concentration of the fiat and Bitcoin markets, being among Bitcoin’s top 13% shares the same exclusivity as being a fiat millionaire.
Start you Bitcoin journey within minutes on Changelly.