With Bitcoin prices soaring its all-time at over USD 40,000, a lot of people are wondering if Bitcoin is the best investment moving forward. Bitcoin is even projected to grow to as much as USD 400,000, this is insane and imagine how much you would earn if you invest now. 

What is Bitcoin?

Bitcoin is a cryptocurrency that works like gold, a commodity, which has its own value just like gold and the price of it can fluctuate. Bitcoin is utilized with blockchain technology and this allows transactions to be decentralized as it is one of blockchain’s main strengths which is to provide valid users access to the database anywhere. 

Bitcoin is unique as it has only 21 million quantities in the world, there are still Bitcoins that are in the process of being mined by others. This makes Bitcoin more valuable than fiat money as it has limited supplies and no one will be able to produce more Bitcoin after the 21 million number of Bitcoins being discovered. 

Bitcoin is very high-valued as it will be replacing middle man parties such as the banks for processing transactions. This allows transactions to be faster and transparent since all the records will in the ledger and this also provides more security. The security comes from the encrypted keys that are equipped with Bitcoins, preventing hackers from stealing Bitcoins. 

However, Bitcoins are yet to be controlled or backed by any banks or government. 

Why Bitcoin is a good investment?

• Liquidity – Bitcoin allows you to trade it easily for cash or assets like gold instantly at low fees. This makes Bitcoin a good short-term investment as it allows you to have high liquidity as you can trade it away quickly if you want and you can also hold on to it for long-term growth. 
• Lower inflation risk – Bitcoins are not controlled by governments and this means that they are immune to inflation as the blockchain system is infinite which means that you don’t have to worry about them losing their value. 
• New Opportunities – With Bitcoins, they are another investment instrument that you can use to diversify your portfolio and grow your wealth. It is still a growing product and you can make a lot of returns as time goes on. 
• Many other big companies are investing in it – There are many companies that are starting to invest in cryptocurrency such as Square as they invested around 50 million dollars in Bitcoin. This shows that Bitcoin is expected to be something that will be having great growth. 

Why Bitcoin is a bad investment?

• High Volatility – As much as Bitcoin might sound great with its all-time high of $40,000, the price of Bitcoin has been very unpredictable and it has fluctuated a lot over the past few years. This may cause short-term investors to suffer as they might make some mistakes with the price since there is no telling of how Bitcoin price is going to change. 
• Too many people holding on to it – Bitcoin was first created as a form of currency and people are supposed to use it for transactions. But many people are buying it and holding it for long-term investments with no desire to circulate Bitcoins. Rather than having buying power from Bitcoin, there is only 60% of bitcoin tokens being used. This might cause Bitcoin to have little growth in its value as there might not be enough supply for widespread adoption. 
• Fraud – Since most people who own and use Bitcoins have not acquired their tokens through mining operations, their tokens are being stored online. This makes Bitcoin exchanges a target for hackers, malware, and operational glitches. If a fraud gains access to a Bitcoin owner’s computer hard drive and steals the private encryption key, the fraud could transfer the stolen Bitcoins to another account. 
• Regulatory Risk – As Bitcoin is not being controlled by the government, there are chances where Bitcoins could be used as a channel for financial crimes such as money-laundering, black market transactions, and tax evasion to take place. 

Moving forward

The potential of Bitcoin is very powerful and it is really possible that it could grow to over $400,000. The problem lies in the effort in which governments or organizations are going to do something about security. Do analyze your risk appetite and decide if Bitcoin is the investment for you. 

You can also read up on methods of saving money to allocate your money for the start of your investment journey!