Individuals and organisations are warming up to BTC as the best investment alternative that overcomes fiat currency’s weaknesses. You may have heard the news of how Bitcoin’s value is rising, especially during the COVID 19 period. But you may wonder whether digital currency is a safe investment vehicle. If you’re in this dilemma, please keep reading to find why it’s safe to invest in Bitcoin.
Attributes of Bitcoin
Before delving into the main reasons why Bitcoin is a secure asset to invest in, it’s critical to understand the digital currency’s main features. As a digital currency, Bitcoin has two characteristics that make it distinguishable from the conventional currency. These include:
- Decentralised: Bitcoin operates independently, and it isn’t subject to any control by third-parties or authorities. The virtual currency gives users the autonomy to make or receive payments without any controls or imposition of fees.
- Security: the digital currency is supported by the blockchain system, secure and highly immune to scams.
Why it’s safe to invest in Bitcoin
Multiple attributes make Bitcoin a safe digital currency for your investment. These include:
Digital currencies are developed on a blockchain system, explaining how transactions are written into blocks and time-stamped. The procedure is sophisticated. The outcome is a virtual ledger of digital currency transactions that’s difficult to scam or tamper with. Also, while making transactions, two-factor authentication is required. And this further enhances the safety of the system. For example, before you start transacting on the system, you’re asked to enter your password. An authentication code is sent to you through a mobile device for verification.
Additionally, blockchain technology can’t be counterfeited or stage-managed. The cryptography used to process digital currencies doesn’t allow transaction reversal.
Unlike credit cards that use a pull mechanism, digital currency uses a push mechanism. This means that Bitcoin users don’t need to add any information like their names and addresses when initiating a transaction. And this further adds a layer of security when transacting on the decentralised system.
Bitcoin has a cap on the amount that can be mined-21 million. Contrastingly, fiat currency doesn’t have an exact number of pieces that can be printed. This means that during economic challenges, governments can print more currencies to bailout the economy. While this may be a welcome gesture, the elephant in the room is inflation. Inflation here means that people have money but can only buy few items.
Although gold is used to hedge against inflation, it’s ineffective because people don’t know its exact value. And remember, President Nixon lowered the value of gold in 1971 to enable the Federal Reserve to raise enough money to help the country.
On the other hand, Bitcoin’s minting is finite, and miners can only create a maximum of 21 million. This means that there will be no time we shall have an oversupply of the commodity, which makes it a perfect hedge against inflation.
Many people spend most of their time in the digital landscape. It’s therefore reasonable that we have virtual gold. We require a commodity that’s scam-resistant, accessible, digital, and conveyable. And Bitcoin has all the above features. So it’s the best alternative to gold. You’re safe if you invest in it because it offers the best hedge against inflation.
Unlike the Federal Reserve that is shrouded in secrecy, Bitcoin is transparent. And users can see what’s happening on the network. Two key aspects make Bitcoin a unique currency: Transparency and Decentralisation.
As for the Federal Reserve, citizens do not know how many transactions take place over a period of time. Nor do they understand how many currency pieces of the fiat currency are circulating.
Central Banks may print money daily, which may inflate the economy. And if you’re an investor, your assets may lose value during inflation. Sadly, we don’t know how much money the Federal Reserve prints and how it uses it. However, if the government used BTC, we would understand.
So, if you’re a smart investor who wouldn’t like their investments to be stage-managed by different entities, you should seriously consider Bitcoin.
Bitcoin is uncensore:
Capital censorship is one of the challenges that many investors in some countries face. China, for example, prohibits the buying of gold and foreign currency. Individuals used to conduct such businesses through Macau, but it isn’t easy to do so these days. And cross border traffic is keenly watched, making sure that nobody smuggles money out of the country.
The good news, however, is that Bitcoin isn’t censored because it’s a decentralised currency. Even in the countries where Bitcoin exchanges are illegal, the network is still active there.
Therefore, for countries with strict capital controls, Bitcoin is a worthy investment. You can also invest in BTC as a store of value that nobody can take away from you.
Positive regulatory developments:
In the early years when Bitcoin emerged, there were no rules to govern the industry. And some countries prohibited BTC and other digital currencies.
However, nowadays, only a few counties have banned BTC. Many countries have embraced Bitcoin as both a payment method and an investment vehicle. To further streamline the industry, some countries are drafting protocols that Bitcoin users should observe. These positive gestures show that the industry has gradually come of age, and soon it will be streamlined. So it’s critical to consider it as a safe and viable investment vehicle.
Long-term Bitcoin investment is profitable:
Since its creation in 2009, Bitcoin’s value has been rising. Although the digital currency has occasionally experienced its dips and valleys, it rises fast to continue with the upward trend.
For those who are jittery of Bitcoin’s price volatility, it’s advisable to consider it a long-term investment alternative. The People, who bought it at $50 in 2010, would quickly sell it at $100 in 2017.
Ethics behind Bitcoin:
some investors choose Bitcoin not because of the price question but because of the wisdom behind its development. And such investors regard Bitcoin as a movement that they must be part of. The principles of BTC mean so much to some people.
- Transparency: means minimal control by a third-party or the so-called big brother.
- Decentralization: this means that third-parties can’t freeze your investments.
- Immutability: Transactions can’t be changed, meaning that there is no opportunity of performing shady deals behind your back.
Early adopters of Bitcoin were visionaries who were yearning for financial freedom. And Bitcoin offered them a haven due to the strengths mentioned above.
The digital currency was created after the housing crash of 2008 as an alternative vehicle of investment. Many people understand that the financial crisis happened due to large banks handling people’s money irresponsibly. After their irresponsible behavior, they were in the financial doldrums, and governments wanted to bail them out using their money.
This is how Bitcoin comes in. Unlike the traditional investment assets that are subject to manipulation by big banks and governments, Bitcoin is transparent, decentralised, and immutable. And the BTC mentioned above gives you financial freedom.
As you enjoy your financial liberty, Bitcoin also comes with a profit. For example, people who invested in Bitcoin early after its creation made massive wealth.
Bitcoin is a new asset class:
Bitcoin is a new asset class, which is poised to replace gold as a store of value. An investor can diversify their asset portfolio by embracing Bitcoin to maximise their returns. Because of the asset’s qualities of transparency, immutability, and decentralisation, it’s safe to invest in.
Bitcoin is a highly liquid asset because of its existing trading websites, exchanges, and virtual brokerages. You can readily exchange Bitcoin for cash or other commodities like gold at a low fee. Because of its high liquidity, Bitcoin is the best asset for short-term investment objectives.
Standard stock trading has different requirements. Besides a certificate or license, you must pass through a stockbroker to trade your business’s shares. These procedures, however, aren’t present in Bitcoin trading. Apart from being a secure system, BTC trading is minimalistic. You only buy the digital currency from the exchanges and put them in your wallet. Furthermore, Bitcoin transactions are prompt and don’t take many weeks. Platforms like bit-pal.io can help you in trading your Bitcoin fast.
Besides its superior blockchain network, many people choose Bitcoin as a way of empowering themselves. Many people believe that they deserve better services than what the standard solutions offer. Bitcoin, therefore, is a strong statement that people want specific solutions that respond to their needs. The security issue is well catered for through its decentralised technology, immutability, and transparency.
Bitcoin is the best option for investors who want to diversify their asset portfolio. It has inbuilt security features that make it fraud-resistant. So nobody can steal your investments. Investors can benefit from features like a decentralised network, peer-to-peer quality, and transactions that are irreversible. Besides, multiple individuals and organisations are now warming up to the idea of digital currencies. You shouldn’t be left behind!
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.