Cryptocurrency has become quite a popular investment in recent years. In 2013, only 7 cryptocurrencies were available, but their number has grown to more than 20,000 – impressive, isn’t it? Collectively, their value is more than $1 trillion, but despite cryptos being already so big, there’s still a lot of room for growth in this exciting industry. Current trends show that people are becoming increasingly interested in cryptocurrencies, with a rising number of investors learning to purchase Bitcoin with debit card for a streamlined purchase.
According to statistics, there are currently more than 295 million users of crypto worldwide. While 33 new cryptocurrencies are introduced weekly, Bitcoin makes up around half of the entire value of the crypto industry. For so many years, it has dominated the market, and nothing in this sense has changed to this day. So, those seeking to dip their toes into crypto investing may want to start with Bitcoin. However, before doing so, it’s essential to understand the pros and cons of such an investment so you can decide if it is suitable for you.
Pros of Purchasing Bitcoin
Independence From The Government And Central Banks
Bitcoin has a decentralized nature, which means it doesn’t depend on a central bank or the government. This feature is what sets Bitcoin apart from the traditional system, transferring control to a distributed network. A decentralized blockchain network provides a trustless environment, as each member has access to the same data.
Moreover, decentralization plays a role in optimizing resource distribution, ensuring that the promised services are offered consistently and perform better, and, at the same time, reducing the possibility of catastrophic failure.
Potential For Substantial Returns
Bitcoin is a volatile asset (as any other cryptocurrency, for that matter), experiencing dramatic price changes on a monthly and even daily basis. For example, in December 2022, Bitcoin’s price was around $16,000, and it rapidly surpassed the $22,000 mark in March 2023. Fast forward, at the moment of writing, it revolves around the $63K mark – with the ATH exceeding $72K earlier this year.
The spikes and dips in price depend on many factors, and this cycle is normal, considering that Bitcoin is still a relatively new asset in the market. The movements in Bitcoin prices offer opportunities to investors, allowing them to build their wealth by buying the asset at a lower price and selling it at a higher one.
Accessibility
One of the most significant advantages of Bitcoin is its accessibility. All that is required to use Bitcoin is a smartphone or a laptop, and you can start investing easily. You don’t need any credit check, identification verification, or background to begin your journey in the crypto world. Unlike old financial institutions, investing in Bitcoin is a fast and seamless process, enabling anyone to make transactions online.
Transactional Speed
Speaking of transactions, with Bitcoin, transferring money to someone else can be done in just a couple of minutes, which is one of the reasons why cryptocurrencies have become so appealing.
With financial institutions, it takes around 3-5 days to settle transactions, while wire transfers take 24 hours.
Inflation Protection
In an uncertain economy, Bitcoin is seen as a hedge against inflation. Bitcoin’s hard cap has only a limited number of coins, and as the growth of money supply surpasses the growth in Bitcoin’s supply, Bitcoin’s price will naturally rise. As there are only 21 million Bitcoins, the increase in demand will likely increase the value of the asset as well, thus helping prevent inflation.
Cons of Purchasing Bitcoin
Massive Volatility
Satoshi Nakamoto, the creator of Bitcoin, imposed a limit of 21 million Bitcoins, which means the asset was designed to be scarce. Although this scarcity makes Bitcoin a valuable cryptocurrency, it also contributes to its volatility. But of course, other factors lead to its volatility, such as its future value and uses, and so on.
All of this means that Bitcoin can lead to losses as much as it can lead to substantial profits, and due to this reason, it is essential to assess your risk tolerance and determine whether cryptocurrency is the right investment for you or not.
Irreversibility Of Transactions
Bitcoin transactions cannot be reversed, which means that if you send an amount to the wrong recipient, you can’t do anything about it. Therefore, it’s easy to experience purchase regret due to the transaction’s anonymous and unregulated nature.
Moreover, since you hold your digital assets in a crypto wallet, you can quickly lose your investments if, for some reason, you no longer have access to your private keys. This could happen due to a virus that corrupts your wallet’s records or because of a hard drive crash.
Environmental Concerns
Bitcoin’s mining process is quite complicated. Miners must solve complex mathematical problems to ensure transaction verification and develop new blocks in the blockchain. All these processes require significant computational power, thus resulting in major energy consumption.
As the Bitcoin network continues to grow, so does the energy that miners consume, therefore creating greater environmental concerns. Fortunately, these concerns are being addressed, with mining companies exploring renewable energy sources to power their operations, like wind or solar power.
So, Should You Purchase Bitcoin Or Not?
Well, this is something you can only decide on based on your own circumstances. It’s worth noting that everyone has a different financial situation, so what’s suitable for someone else may not be right for you. Deciding whether or not to invest in crypto also depends on whether you’re willing to take such significant risks.
Still, the benefits are great, so if you believe investing in Bitcoin is suitable for you, you could reap substantial rewards. In order to make a decision that’s right for you, consider conducting thorough research. This is one of the most important things to do because it will help you understand what Bitcoin investing is all about.
Take the time to weigh the pros and cons of such an investment and study the expectations and risks associated with the crypto market. Also, keep in mind that there tends to be a lot of hype around it, but you must view things from an objective perspective. Chances are, you won’t get rich overnight if you invest in crypto, so make sure to approach this investment carefully and strategically.
