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How Solid is Bitcoin as an Investment Opportunity?

How solid is Bitcoin as an investment opportunity
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You’ve probably heard about Bitcoin as an investment opportunity – experts have been claiming it’s the next big thing for years.

With that in mind, how solid is it as an investment opportunity at the moment?

This article will attempt to answer that question by using evidence about the cryptocurrency market. We will also use past indicators to attempt to predict the next Bitcoin bull run. 

Bitcoin – A Viable Investment Opportunity?

The current price of Bitcoin is around $13,000 USD to 1 BTC, which is high. This high price scares people off from investing in Bitcoin. 

However, it’s important to put this price in context. Bitcoin reached a high of over $20,000 USD to 1 BTC at the end of 2017.

When put in that context, the current price of Bitcoin does not seem nearly as high. 

Anyway, here are some reasons that Bitcoin is a viable investment opportunity for 2021 and onwards. 

Decentralized Finance (DeFi)

First things first, DeFi is the next big thing in cryptocurrency. It’s basically the results promised by many companies that had an initial coin offering (ICO) in 2016 and 2017. 

And just like the ICO craze, Bitcoin will rise with the inevitable DeFi craze. 

This is the primary reason that we expect Bitcoin to have another bull run at some point in the future.

The Popularity of Bitcoin is Increasing

It’s undeniable that Bitcoin is not simply a tool for investors to make money by speculating. Bitcoin is slowly becoming a viable alternative to traditional financial institutions. 

It will become even more popular as more and more transactions become digital. The transition to online transactions was magnified due to the Coronavirus pandemic, and we fully expect online transactions as technology becomes more integrated into our daily lives.

It’s Still Secure

A common complaint about Bitcoin involved the potential for a hack of the blockchain. However, a hack of the Bitcoin blockchain has not occurred in the history of Bitcoin.

It’s becoming increasingly apparent that Bitcoin is simply not possible for anyone to hack, which makes it much more suitable for online transactions than the current, not very insecure financial system.

If Bitcoin does get hacked, then this sentiment will obviously. It just doesn’t appear to be something that is even possible. Nor is it something that you should seriously worry about happening.

It’s Been 3 Years since the last Cryptocurrency Bull Run

Cryptocurrency Bull Run

Bitcoin, and cryptocurrency as a whole, appears to operate in 3-4 year boom-bust cycles. It’s been almost 3 years since the last bull run, so it stands to reason that Bitcoin is due for another bull run. 

It’s no surprise that DeFi will likely serve as the catalyst for the next bull run right around the 3 year mark of the current bear market in cryptocurrency.

Blockchain Bloat Isn’t a Problem

A common complaint posed by many in the cryptocurrency community is blockchain bloat. For those that don’t know, blockchain bloat is when the blockchain becomes so large that it becomes very inefficient for miners to make updates to the blockchain. 

This was supposed to become a problem at some point in 2020.

However, blockchain bloat simply hasn’t been nearly as big of a problem as many have expected. 

It’s at the point now where no one other than those with a vested interest in the downfall of Bitcoin even mention blockchain bloat as a problem with Bitcoin.

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In addition to that, if blockchain bloat does become a problem, then the blockchain could simply be truncated to reduce the amount of code that must be downloaded. Alternatively, mining fees will increase to a level that makes it more profitable for miners to mine Bitcoin.

Due to that, many experts do not take blockchain bloat as a serious threat to the viability of the Bitcoin project.

No Other Alternative Has Emerged

There have been many cryptocurrencies that have claimed they are “the next Bitcoin.”

None of those alternatives have materialized to anything close to Bitcoin. Some, such as Monero, have minor success for a niche market.

But none have come close to the ubiquity of Bitcoin.

Yet again, it’s becoming more and more apparent that Bitcoin might, in fact, be too big to fail if that were possible. 

At this point, the only way Bitcoin could be usurped by another cryptocurrency is if Bitcoin were to have a major loss of a trust due to a hack of the blockchain. As mentioned previously, that does not appear to be something that will happen.

Final Verdict on Bitcoin as an Invest Opportunity

Due to the reasons listed above, we believe that Bitcoin is a solid investment opportunity. Of course, it’s risky because it is a cryptocurrency. However, Bitcoin is the safest cryptocurrency for investment purposes. 

How much should I invest in Bitcoin?

We only recommend investing as much as you are willing to lose into Bitcoin. This means that you should not invest your life savings into Bitcoin (unless you are willing to lose your life savings).

Most experts recommend a maximum of a 10% allocation to Bitcoin because it’s classified as a high-risk investment. The allocation could increase depending on your risk tolerance, though.

Are there any other good cryptocurrencies?

Of course. 

Ethereum, Litecoin, Bitcoin Cash, and LINK are all viable investment alternatives to Bitcoin. They are riskier than Bitcoin because they don’t have the ubiquity that Bitcoin has when it comes to cryptocurrency. The potential for massive earnings, however, is much greater with lower priced cryptocurrencies than it is with Bitcoin. 

Is investing in Bitcoin legal?

That depends on your jurisdiction. It’s legal in most jurisdictions, though.

You will have to pay taxes on all realized gains from your Bitcoin investment. It is usually possible to write off realized losses from your Bitcoin investment, so that is a positive of investing in Bitcoin. Learn More.

How to stay safe when investing in Bitcoin?

Staying safe when investing in Bitcoin is much easier than you might think. All you have to do is follow these basic guidelines:

  • Buy Bitcoin from a trustworthy cryptocurrency exchange.
  • Keep Bitcoin in your wallet and not the exchange.
  • Don’t lose the private key to your Bitcoin wallet.

If you follow those basic guidelines, then you have a near 0 percent chance of getting hacked or scammed out of your Bitcoin investment.

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