Bitcoin has caught the fancy of the crypto-crazy public to an immense extent, over the last decade or so. It may become a global reserve currency. Alternatively, it may acquire a store of value as reputable as gold. Whatever the case, there is no denying that investors are always hoping to garner wonderful profits from holding on to Bitcoin. However, it is important that they realize that Bitcoin is not part of a get-rich-quick scheme. The cryptocurrency can yield gains only over the long run. Therefore, you need to know the way to reduce your risk on bitcoin trading. It is akin to a long-term savings account.
Global Interest in Bitcoin
When it launched in 2009, Bitcoin attracted tremendous attention, for it was the first digital asset to make an appearance. Since then, it has captured the attention of beginners, and experts, in the crypto world. Many investors also feel that it may become a replacement for the physical monetary system, someday.
Some nations even began to toy with the idea of making Bitcoin legal tender. In El Salvador, the idea became a reality. Therefore, other countries, such as Paraguay, etc., are keen to do the same. Even Russia, engaged in a battle with Ukraine, declares that popularizing cryptocurrencies is the best way to reduce dependence upon the U.S. dollar. In fact, Bitcoin has in it to disrupt the importance of the U.S. dollar in a big way!
Regarding traditional investors, they believe that Bitcoin is a glorious hedge against inflation. Equally, it is a wonderful hedge against the collapse of a fiat-based economy. True, the coin’s volatility is a great concern. Regardless, investors believe that if governments and institutions display long-term interest in adopting Bitcoin, volatility is bound to reduce.
Places to Access Bitcoin
Several centralized digital currency exchanges offer Bitcoin. However, the most secure ones are in the U.S., for the exchanges there go in for high-class security measures. However, investors must adhere to the regulations formulated by the Securities and Exchange Commission (SEC), especially regarding Know-your-client (KYC). Taxation is a reality. Therefore, it is important to supply social security numbers and addresses.
The steps to access Bitcoin, are as follows –
- The investor must set up an account with the selected cryptocurrency exchange.
- The next step is to link a bank account with a crypto account.
- Some funds must go into the exchange wallet.
- The investor must then spend some of it on purchasing Bitcoin (BTC).
- Purchasing a digital wallet is an option, not a compulsion.
Benefits of Investing in Bitcoin
Bitcoin has managed to capture the attention of people from all kinds of backgrounds and occupations. They could have traditional mindsets or modern ones. It is because everyone feels that this cryptocurrency offers advantages like no other.
Reduced Risk of Inflation
Fiat/world currencies must adhere to regulations set by diverse governments. Therefore, they are at risk for inflation. Bitcoin, on the other hand, is under no authoritarian control. Therefore, inflation does not affect it. Additionally, blockchain systems/networks are infinite in nature. Therefore, digital currencies can never lose their value.
Thanks to the setting up of online brokerages, trading platforms, and cryptocurrency exchanges, across the globe, Bitcoin remains an extremely liquid investment. It is very easy to exchange Bitcoin for gold and other assets, or cash, rapidly. The fees for such transactions are unbelievably low.
Since Bitcoin promises high liquidity, it proves excellent for short-term profits investments. At the same time, because of its value in the global marketplace, it proves great for long-term investments, too.
A license/certificate should be in evidence for stock trading. Similarly, a broker must be present to ensure that the trading of shares goes through successfully. However, Bitcoin, being a cryptocurrency, does not have to confront such issues. Its trading is minimalistic. All that needs to be done is the selling or purchasing of Bitcoins at exchanges. The coins then go into the investors’ wallets.
Stock trading takes days/weeks to be completed. Bitcoin trading goes through instantly.
Crypto trading has not been around for all that many years. Therefore, newer coins keep arriving to join the mainstream. As a result, there are sudden swings in volatility and pricing. In turn, this may present new opportunities to investors for garnering coins and profits.