Bitcoin is one of the most reliable cryptocurrencies that you can get your hands on at the moment. Bitcoin was developed in the year 2009 and since then has provided a great market for cryptocurrencies. While a number of other cryptocurrencies have also been produced in recent years, the popularity and demand for Bitcoin have never been replaced by the others. Recently, a tweet from Elon Musk the CEO of Tesla has caused a significant Buzz around Bitcoins. Recently he bought Bitcoins worth $1.5 billion which has caused a huge upsurge for Bitcoins in the market. The value of Bitcoins is not regulated by any central authority and is subject to the popularity created by man. When Elon Musk himself showed support for this cryptocurrency, the price of it manifolded. The high price of cryptocurrencies at the moment makes it seem like a lucrative investment. The question however remains, is it a good investment in the long run?
The Volatile Nature of Bitcoin
Bitcoin is very famous for its volatile nature. The price of Bitcoin rises and falls in quick succession and can hardly be predicted from before. Before you make any investment it is very important for you to measure the advantages against the risks of the investment in question. You might have noticed that the price of Bitcoin is at an all-time high and has been steadily increasing in the past few months. However, there is no protection as to where the value of Bitcoin may stand in the future. In the mere span of 2 years of two years for example between 2017-2019, the value of Bitcoin had increased from just $1000 to $17,000 and then had again fallen back to $3000. The volatility involved in Bitcoin makes it quite a risky investment.
While it is true that most investments are risky in nature, there are some predictions that statisticians can make with the help of economics in order to set a predictive value. However, for the case of Bitcoin, such predictions are not always possible. While there are some believers that Bitcoin is about to become a global currency in the future there are just a handful of businesses at the moment that accept Bitcoin as a viable means of transaction. If Bitcoin is not accepted by the majority of businesses as a medium of payment, the existence and value of Bitcoin will be under threat. While on the one hand, Bitcoin may have a wonderful future, it might also lose all its value.
Investing in Bitcoin Safely
There are several Bitcoin exchanges like ethereum-code.me that allow you to invest in Bitcoin safely. As it is quite unpredictable, most people try to stay away from investing in Bitcoins. However, if you are keen on making an investment in Bitcoin it is important that you do it safely. The most important step in making such an investment is to have a portfolio that is quite diverse. You do not want to invest a lot of your money only to have lost it all when and if the price of Bitcoin plummets further. You must also try to aim to invest in various companies rather than just sticking to one as this diversifies your opportunity. Additionally, you must only invest the money that you can bear to give up on. While this applies to all major investments, it is particularly true for Risky investments like Bitcoins. With the gaining popularity of Bitcoin, it might seem like a safe option for investment, but you have to factor in its volatility.
It is important to note that risk tolerance when it comes to money, is also something that you have to keep in mind when investing in Bitcoin. The upsurge in its price may make it look like a good investment, but you cannot ascertain what the future holds. If you have enough money to invest, it is better if you stick to other options like mutual funds and stocks because it is not the most fruitful time to invest in Bitcoins. Even then, if you are truly interested, you might want to take into account the movement of Bitcoin in the past years and only then make a decision either for or against this investment.