Bitcoin Investment In 2019 – Safe Or Not?

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Bitcoin is a digital currency or cryptocurrency. A cryptocurrency is managed and manufactured by the use of encryption technology called cryptography. Bitcoin is not centralized by any particular central bank or government or an administrator.

Anyone can transfer Bitcoin(s) to anyone else anywhere in the world, given that both of them use this cryptocurrency. Each transaction of Bitcoin is recorded instantaneously in the blockchain. Blockchain is the public list of Bitcoin transactions.

Bitcoin can be classified as a risky asset. Even the most assured Bitcoin investment can be considered as a highly risky investment. This is because Bitcoin’s value is extremely volatile.

But that hasn’t stopped people from investing in it or trading it using the help of systems such as Bitcoin Loophole.

Considering that its supply is fixed, boosting supply is out of the question. High demands will result in high prices. Let’s look more into why one should consider all points surrounding Bitcoin before going ahead with the investment.

Bitcoins Are Useful But Scarce

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Taking gold as an example, there is a restricted amount of it to be found on earth. Even as mining for more gold takes place, its total amount on the earth stays the same. More mining leaves to less and less gold for the future which leads to gold becoming more expensive to buy and harder to find.

The same applies to Bitcoin, there is a limited amount of Bitcoin – 21 million coins. And with time passing by, they become scarce, expensive to purchase and harder to mine due to the halving.

Bitcoin provides a predictable and safe monetary policy that anyone can verify. Its monetary policy can be considered as its most important feature.

It is also possible to check when new Bitcoins are produced and how many of them are in circulation. Bitcoin is censor resistant currency, which means you can transfer them from anywhere to anywhere else in the world and no bank can close your account or block your payment.

Thanks to the internet, information on Bitcoin is easy to access on the global level. If one is aware of the impact of Bitcoin on the global economy, its easy to understand that Bitcoin might just be a good investment.

2019 Is Probably The Last Time For Bitcoin To Prove A Good Investment

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If Bitcoin gets traction, it may no longer be as volatile as it has been. A lot of people will buy and sell and use them. Resulting in people being able to sell it at their desired price and more Bitcoins circulating in the global level of the economy.

Thus, the volume is essential to even out the volatility of Bitcoin. When that happens, the expectations of people investing in Bitcoin will increase as it will not be highly risky anymore. But that may not be the case with all people who buy Bitcoin, some might only buy it when utility arises for them.

The above scenario is an assumption for the future and according to that, as of now, you have the chance to invest in Bitcoin for a fraction of its future price. But with a highly risky investment like this comes along a highly risky worst-case scenario.

The case being, this assumption theory does not prove true in the future and you lose all your money because Bitcoin does not have a refund policy.

Assuming from Bitcoin’s performance, it has certainly hit the highest price of all time in 2019 despite having a history of declining to low prices right after hitting high values.

While it is no news that the cryptocurrency market is highly speculative, meaning even a small fluctuation can make the prices decrease. A bear market doesn’t switch to bull market overnight. But when looking for the signs of the bull market, one will only find them when it’s too late.

Just because it is a risky investment, it doesn’t that you should stop in your way of owning the cryptocurrency. Read on to know more about various investment methods and how you should ensure safety.

To Start Investing In Bitcoin, Connect A Cryptocurrency Exchange You Can Trust

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You will require to join a crypto exchange to be able to start investing in cryptocurrency. However, the research on that will probably vary depending on the region you live in.

In the States, you can use crypto exchanges such as Binance, Bitfinex, CoinBase, and Kraken. Diversification of sources to invest in is also advised so that you aren’t left totally stranded if one exchange fails.

This is because crypto exchanges have a history and a chance of getting hacked or of their owners dying without anyone else knowing the passwords and locking every investor out of their rightful assets.

Hopefully, things should get better with crypto becoming more regulated and becoming more mainstream.

Invest In Bitcoin

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Due to Bitcoin being of the highly risky asset type and extremely volatile, the most researched Bitcoin investment should be considered highly risky. For instance, Bitcoin’s price in the past fell over 80 percent steadily over several months.

This has happened quite frequently throughout the history of Bitcoin. And as we know, Bitcoin is a currency so the most basic way to invest in it is by simply buying it. Additionally, there are other ways to invest in Bitcoin as well. They are:

1. Buy and Hold – A lot of people choose to invest in Bitcoin just by buying and holding the digital currency. People who follow this method believe that Bitcoin has a long-term prosperity promise to deliver. They like to recognize volatilities in the short term as minor deviations and that they will not have such a major effect on the payback in the long term.

2. Long Positions – Some people who invest expect a more instant return by buying it and then selling Bitcoin by the end of the price rally. There are a few ways to do this, these ways also include Bitcoin’s volatility for an increased return rate if the market moves in the investor’s favor. Different sites have come into existence that provides leverage in Bitcoin trading. Meaning the site will voluntarily lend investors money in hopes that their returns increase.

3. Short Selling – Specifically in a Bitcoin bubble, some investors place bets on a decrease in Bitcoin’s value. Basically, when short selling of an asset, you borrow the asset at a particular price so that you can resell it at the same price to someone else. However, there is always a possibility of the market forces playing out against you and cost you a loss of the money that you invested.

Evaluating Risks

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It is essential to keep in mind that the high-risk factor of investing in Bitcoin is like so for a reason.

Bitcoin can be considered as a relatively new asset, the trading sites also support only if they can be classified as significantly matured. Relatively, there is not high liquidity in the Bitcoin market.

Which means that the size of trading and investment activities is relatively low. And as it is known that when liquidity in a market is low the volatility is high.

Some of the major traders of Bitcoin own considerable amounts of it, meaning that they can cause a price fluctuation easily by trading more Bitcoins in a short amount of time.

Tips To Increase Investment Efficiency

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1. People who invest in Bitcoin should also follow the changes in political and economic events, laws, and technological advancement worldwide as these factors also have a significant influence on the value of Bitcoin.

2. Well-chosen investments according to an investor’s level of knowledge and experience prove to be more profitable than dealing with something they don’t know about.

3. The best way to understand how to make your investments more profitable or how to start investing is by doing thorough research on Bitcoin. The more you know, the better you will perform.

4. Bitcoin’s proper security should always be your first priority. You should select a well known virtual wallet with the highest safety standards to keep your Bitcoins safe.

5. Never invest all your Bitcoins in a single place. That results in losing everything at once if the market doesn’t play out in your favor.

The question of whether it is a good idea to start trading in Bitcoins cannot be answered by a single statement, it is a complicated market. Still, by keeping these points in mind and doing your due research on Bitcoin you can understand better if you should start investing in the cryptocurrency.

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