Buying Bitcoin Decisions –
by Joff Paradise | 19 May, 2021 11:05 am | News
Buying Bitcoin in 2019?
As an investor in Bitcoin for some time now, making the argument for buying bitcoin is an easy one. While the price is currently well below its all-time high of $20K, bitcoin has been an incredible investment with excellent returns. $1K invested two years ago would have earned a 344% return overall, and a 210% annualized return as of this posting. Of course, a decision to take profits now and then would have made that $1,000 investment even more lucrative. That said, it is understandable why many hesitate before buying Bitcoin. The price is volatile, it has dropped dramatically since the same time last year, and there are some bad actors in the crypto-space that have damaged its reputation in the eyes of nocoiners.
Since nocoiners (person who has no Bitcoin) are most likely the ones asking if buying Bitcoin is the right thing to do, let’s take a stab at decision analysis. We’ll start with a list of pros and cons, that’s always helpful when making tough decisions. Then we’ll look at some important considerations every individual should make before investing.
Pros of Buying Bitcoin
- Bitcoin is the most popular, and liquid of all the cryptocurrencies
- Bitcoin is only 10 years old – with unlimited growth potential
- Bitcoin could be a hedge against financial uncertainty
- Bitcoin requires no third party involvement to use, own or trade
- Bitcoin is actually owned by those who invest in it
- Bitcoin volatility can lead to big profits for informed investors
- Bitcoin low supply helps to avoid inflation, offering a store of value
- Bitcoin privately stored can never be confiscated from the owner
- Bitcoin supply cannot be manipulated by any government, bank, organization or individual
- Bitcoin factors affecting its worth are not centralized to a government or bank
- Bitcoin can be sent anywhere in the world at any given time
- Bitcoin payments are final and can be made without divulging personal information
- Bitcoin can be backed up and encrypted to ensure the safety of your wealth
- Bitcoin’s underlying blockchain technology offers superior security
- Bitcoin price is currently low compared to all-time highs
Cons of Buying Bitcoin
- Bitcoin price is highly volatile and can go up or down at warp speed
- Bitcoin is a digital vs. physical asset that is not fully understood
- Bitcoin is not backed by legal protections like other investment assets
- Bitcoin comes with no insurance policies
- Bitcoin threat of theft is high if not properly stored
- Bitcoin mass adoption is still in its infancy
- Bitcoin can be difficult to understand and mistakes can be costly
- Bitcoin purchase is still relatively cumbersome
- Bitcoin could face future regulatory issues that could impact the price
- Bitcoin could be outpaced by another cryptocurrency
- Bitcoin could face scaling issues in the future
An effort was made to include all the pros and cons in the list above, forgiveness requested if any were missed. What the list clearly defines is that everyone interested in investing should familiarize themselves with the asset before doing so. Skimping on your education will not pay off when it comes to buying Bitcoin. Those of us who believe cryptocurrencies are here to stay have tried our best to provide insights into the buying, selling or trading aspects – so the information exists for everyone’s benefit.
While it is true that some investors lost money by buying Bitcoin, that is equally true for any number of investments including stocks, bonds, and real estate. Investments can decline in value due to equity risk, interest rate risk, currency risk, liquidity risk, concentration risk, credit risk, reinvestment risk, inflation risk, and more. Various types of risk need to be considered at various investing stages and for different goals of each individual.
While this meme is funny, it also notes just one of the many ways we choose to spend our disposable income.
At least Bitcoin has the potential to pay off