Do you have money lying around and you can’t think how to invest it? Perhaps you’ve recently inherited some money? Then a cryptocurrency to invest in, such as Bitcoin, might be worth considering.
But what are the pros and cons of investing in this new digital currency? Will it make you rich overnight, or could you stand to lose all your money?
Here’s some real investment advice on whether Bitcoin is worth a buy.
What Is Bitcoin?
Bitcoin is a cryptocurrency. These are digital currencies that are not affiliated with any bank or country. Instead, they are created and verified by a powerful computer system known as the blockchain. The blockchain is how to start a cryptocurrency.
Holding money in a cryptocurrency is not the same as holding money in a bank. A cryptocurrency is your money. You are not giving your money to the bank so they can then make a profit on lending it out to other companies and charging them interest.
Because there is no jurisdiction over the currency and you own your money, your account can’t be closed either by banks suspicious of your financial spending patterns or by law enforcement.
Bitcoin was the very first cryptocurrency and is one of the highest valued. However, it is also one of the most volatile. This volatility is expected to continue in 2020.
It has gained a negative reputation in the press as the currency of choice of those conducting illegal operations on the so-called dark web, but it does have many benefits.
Long Term Investments vs. Short Term Profit?
The main issue you need to figure out when deciding which cryptocurrency to invest in or whether you should invest at all is how much time you have.
If you are happy to wait a decade or even twenty years for a return, then Bitcoin might be a great investment decision for you. There are short term drops in which it can seem as if you have lost a lot of money, but the long term trajectory is in an upward direction.
If you are wise, you may find that investing money in this is more profitable, eventually, than investing in property. However, it can be a risk as technology and the world is changing at such a fast pace it’s almost impossible to predict what the world will look like in a decade or more.
It’s still possible to make a short term profit from Bitcoin, which is where you invest when the market is down and hope to see your money fluctuate back up in a short period of time.
This is becoming harder to do, and to achieve a successful return, you will need to invest a lot of money in the first place. It can also be a risk as you never know if the market is going to fall further and keep on falling. You might not have the time to wait for a surge that might never come.
What Are Your Alternatives?
Be sure to weigh up what your alternatives are to investing in Bitcoin. There might be other currencies more suited to your investment portfolio. Bitcoin is well-known, but a less well-known currency could soon come to dominate.
If you have gotten in early, you could stand to make big gains.
Remember, property might suit you best, depending on your lifestyle. If you are traveling for a while, then buying a house and renting it out can be a great way to obtain a passive income to allow you to do that.
At the same time as earning money from the rent, your property will increase in value so that by the time you do come to sell it you will make a tidy profit.
However, this does come with downsides. Owning and renting out a property takes a lot of effort and may require you to hire an agent.
The tenants could end up costing you serious amounts of money if they refuse to pay rent or trash the house.
Do Some Reading
If you want to invest in Bitcoin or want real investment advice, the best thing you can do is read financial news to help you to decide which cryptocurrency to invest in and the best time to invest.
Financial news websites can let you know about the impact of recent political and economic events on traditional and cryptocurrencies. One example is the recent Coronavirus and how that may lead to revised growth forecasts.
Which Cryptocurrency to Invest In? Research Carefully
If you are thinking about which cryptocurrency to invest in or whether to convert your hard-earned dollars to Bitcoins, be sure to do some reading first. Knowing the market is very important.
Look at patterns and trends, and speak to other investors to see what they have done and where they have gone wrong. Be sure to read the news and try to get a sense of how that might play out on the markets.
Traders who successfully predicted Brexit were able to cash in on the sharp crash of the British Pound on the day following the referendum.
Be sure to check out your alternatives as well as decide what is right for you. Whilst some people are happy to put the majority of their funds into Bitcoin because they are waiting it out over ten years, you might be looking for something with a quicker return.
Where you invest your money will also depend on how much you have and how you want to spread your assets.
If you are interested in reading more about cryptocurrency to invest in, be sure to check out the rest of our site.