Everyone is wondering is Bitcoin a good investment?
Bitcoin has been around in 2009, but it didn’t really enter public conversation until 2017. At the time, a value of $20,000 USD per coin seemed insane for Bitcoin. Now it looks quaint in comparison to today’s values.
In February 2021, Tesla took a $1.5 billion dollar position in Bitcoin, further legitimizing digital currency and sending the price skyrocketing once more.
The price of bitcoin continues to climb, attracting the interest of investors and non-investors alike. Many people are more interested in trying to snag a piece of this cryptocurrency’s astronomical gains than really enjoy the unique attributes of an anonymous digital money.
But is Bitcoin a good investment and should you buy?
Bitcoin as an investment in 2021
Yes, Bitcoin is still a good investment in 2021. If you’re not yet investing in cryptocurrency, now is the time to start. Otherwise, you run the risk of being left behind.
If you’re trying to understand the real value of a digital currency with questionable utility that everyone is hoarding, stop. At this point, it doesn’t actually matter what Bitcoin’s inherent value is. All that matters is its perceived value — which is a lot.
Whether you thought it made sense or not, nobody cares. The richest person in the world has decided it makes sense, so that’s game, set, match.Joshua Brown
Investing in Bitcoin doesn’t really make sense and it never has, but now it’s a much bigger risk NOT to invest in Bitcoin. You can no longer afford to neglect cryptocurrency, because Elon Musk has made it matter.
How do I buy Bitcoin and other cryptocurrencies?
If you’re ready to start building your cryptocurrency portfolio, you need to see up an account with a cryptocurrency exchange platform like Coinsquare and get a digital wallet.
Coinsquare will let you buy Bitcoin, Ethereum, Dogecoin, and more. It’s as simple as sending an eTransfer from your bank to your account, then purchasing the cryptocurrency of your choice. Just like you do with the traditional stock market, make sure to diversify your investment across multiple investments.
Once you’ve purchased your cryptocurrency, you can leave it on the exchange platform or transfer to a wallet. If you’ve purchased a lot (thousands of dollars worth), then you probably want to move your crypto to a wallet for safekeeping.
Leaving your cryptocurrency on an exchange platform leaves it vulnerable to hackers or actual business failure of the exchange platform. If you think that can’t happen, yours truly lost some crypto when QuadrigaCX went under, so I assure you, it can and does.
I personally use the wallet Exodus, but there are many digital, cloud, and hardware wallets to choose from.
What exactly is Bitcoin?
Bitcoin is a digital currency, which means there are no actual coins or paper money representing it. It was started anonymously in 2009 and exists completely electronically.
The interesting thing about this is Bitcoin has no real intrinsic value. Because Bitcoin doesn’t represent something tangible, its value is determined entirely by what people think it to be worth. Which these days is actually quite a lot.
Unlike the currency of a country which is regulated by a government, no one controls Bitcoin. Likewise, there are no Bitcoin banks. Bitcoins are stored in a digital wallet on the user’s computer or in the cloud. There are risks to both of these: the wallet on your computer can be deleted accidentally or lost if your computer crashes, and a wallet in the cloud can be hacked.
Because Bitcoins are not regulated by any government, they’re not insured by the FDIC (USA) or the CDIC (Canada). So if your Bitcoins are every stolen or lost, they’re gone for good.
Why is Bitcoin so popular?
The reasons Bitcoin initially become popular are because of it’s anonymous and unregulated nature. You can use Bitcoin to buy things anonymously, which has made it popular for making illicit or illegal purchases online.
A less dark perk of owning an anonymous unregulated currency is it’s a great way to tuck away wealth outside of the risk of regular currency volatility. This concept probably doesn’t make a lot of sense for North Americans who enjoy fairly stable currency. But in countries with less political — and therefore monetary — stability, Bitcoin offers an attractive option removed from this risk of government and currency collapse.
Another important reason Bitcoin is taking off is many businesses are warming up to Bitcoin, both online and off, and accepting it as a form of payment for their products and services. The more companies that accept Bitcoin, the more utility it has, and therefore the more valuable it is likely to become.
Bitcoin as an investment
Why do people want to invest in Bitcoin? Well, for starters, this:
Bitcoin’s growth has attracted a lot of interest, even from people who don’t invest in anything.
Bitcoin is fun, exciting, and profitable, so it’s no surprise people love investing in it. If you’re ready to dip your toe in, start by allocating 1-3% of your total investment portfolio to cryptocurrency.
The downsides of investing in Bitcoin
Bitcoin is volatile af. Few investors can handle watching the price move 20% to 40% in a single day, but that’s the stomach you need to have if you’re going to hold Bitcoin as a long-term thing.
Without insurance or government backing, Bitcoin is one of the riskiest investments available, which means you probably shouldn’t make it the cornerstone of your retirement portfolio. But can you make some quick cash? For sure. Should you buy and hold? Even better.
This means your “investing” in Bitcoin is a lot more about putting money in, staying in, and hoping it pans out in a few a years.
When should I sell my Bitcoin?
Ideally, not anytime soon.
One of the hardest things to do when you’re investing is selling when you’re ahead. Why? Because if a security you’ve purchased has rapidly increased in value, you assume it’s going to continue to do so. And from how it looks now, Bitcoin probably will.
There are a few ways to avoid this type of FOMO. The first is to pick your selling target and stick to it, even if it means you’re going to check the value of Bitcoin for the next three years and kick yourself for selling so early after it quadruples in price.
The second is to buy a handful of Bitcoin and then sell it off as you hit a step-ladder of price targets, effectively capturing profits while still leaving some skin in the game. This is great but requires you have a lot of cash to start with.
The last is to make no plans to sell your Bitcoin, which is reasonable. Bitcoin has really become more about asset storage than becoming a currency to spend. Think of your Bitcoin as a buy-and-hold option, and don’t make any plans to sell until you absolutely need it.
But I’m just here to make a trade!
If you think you’re the person that’s going to be smart enough to sell Bitcoin the month/week/day before its price is cut in half, you’re not. You don’t know any more about cryptocurrency markets than the next person.
If you’re here to make money on Bitcoin that you can spend, then that involves selling your cryptocurrency, so you have to pick your exit. Cryptocurrency does not pay dividends so you won’t earn any passive income from it, which means your only choices are to buy & hold or to sell.
Bitcoin price prediction
Bitcoin will continue to go up in value for the foreseeable future. It has more legitimacy and is enjoying more popularity than ever before.
Many people project it will go to $100,000 or even $500,000. It’s possible and even likely that they’re right. I know that sounds crazy to say, but that is the direction things are headed. Failure to heed these Bitcoin price predictions means you’ll get left behind.
Bitcoin is going to continue to go up for 2021, and probably thereafter.
Is there still an opportunity to make money in Bitcoin?
Yes. People are excited about this cryptocurrency and it will likely see gains for awhile. Does this mean you should jump in? Also, yes.
You should still be investing the bulk of your wealth in the traditional stock market, but you need to own some cryptocurrency. We’re living in a time where this asset cannot be ignored, so now is the time to invest.