Bitcoin is almost synonymous with cryptocurrency, while in reality, there are so many forms of cryptocurrency. But the currency has developed such a strong reputation as being the face of cryptocurrency. It has had a major impact in making cryptography mainstream, and many alternatives have been forked from the project.
It’s also relatively notorious and has had its fair share of negative reputation. Many consider it bad for the environment due to the mining sector, while others have more political reasons. Eventually, Bitcoin is a financial option with great viability, and unless you’re living in a country where it’s illegal to own it, it might be wise to have some. Here’s why:
Pros
Bitcoin has major advantages, many of which are fairly obvious while others are generally not considered by the average person. An ensemble of all of these features make it a valuable investment:
Liquidity
Liquidity refers to how easily a particular asset can be sold to convert it into physical cash without affecting its market value. Indirectly, liquidity also reflects on how popular and valuable that currency is, as liquidity will go down if no one wants to trade in that currency. Bitcoin is becoming widely accepted, and naysayers are slowly changing their negative opinion about cryptocurrency. El Salvador recently became the first country to be a legal tender of Bitcoin and it’s expected that other countries will follow suit.
Many people are using Bitcoin for currency exchange as it can provide more incentive than trading native currency. With high liquidity, most currencies and sellers work with Bitcoin. Liquidity is extremely important as you want to own a currency that you can easily utilize to buy things you need. It’s expected that people will be able to walk into brick and mortar stores and be able to purchase everyday items with Bitcoin instead of physical cash.
Decentralization
While most traders don’t consider this, but one of the best facets of Bitcoin is that the cryptocurrency is unregulated by banks or other financial authorities. There’s no taxation policy on it and theoretically, it’s unlikely that any could be imposed on it. No government can freeze your account, demand you to hand over your Bitcoin either.
They’re also securely kept and you’re not accountable to answer about them in front of any financial authority. The general control that FIAT money has doesn’t exist for Bitcoin and most cryptocurrencies in general. It’s a currency by the people, for the people.
High Value
The reason people prefer Bitcoin over other cryptocurrencies is because of its high value. In March 2017, Bitcoin had a value of $975.70. In December, it rose to an astronomical $20,089. While many argue about what led to the bull market for Bitcoin in 2017, it changed the landscape for the currency.
It’s never entirely safe to use the term all-time high for Bitcoin as time and again, it has reached new peaks. With increasing liquidity, more appreciation from the general public, Bitcoin is here to stay. Many expect that Bitcoin will reach anywhere from $397,000 to $500,000 in 2030 for a single Bitcoin.
Anonymity
Bitcoin operates on the blockchain, which maintains a ledger of all of the transactions taking place. The blockchain uses keys, which are secure and can’t be forged to maintain fake transactions. Similarly, users can have multiple public keys which prevent others from tracking them down. Due to the secure nature of the Bitcoin account, external entities can’t check either on how much Bitcoin a person owns.
You can also generate a new wallet address if your current wallet becomes publicly known. Bitcoin transactions don’t require extra personal information, which only increases the layers of anonymity for its users.
Cons
Despite its many advantages, just like any financial investment, Bitcoin doesn’t come without its fair share of risks and flaws. Here’s what you need to be aware of:
Volatility
Volatility refers to the fluctuation in value that a cryptocurrency can experience. Due to a myriad of factors, the price of a currency can go down. Bitcoin is notorious for being volatile, with its price often fluctuating within minutes. It has experienced major crashes, with one major dump leading to Bitcoin dropping from a whopping $65,815 to a much insignificant $8,200 back in October 2020.
While most volatility events aren’t as significant as the one from October, major market moves cause the price to change a lot. It doesn’t ruin the viability and feasibility of Bitcoin as a trading unit, but it does require awareness that it’s a risk that people need to acknowledge before trading.
Irreversible
Every completed transaction on the Bitcoin blockchain is irreversible. Unlike your bank transfer, where you can rectify mistakes and revert the transaction, the same can’t be said for Bitcoin. Once the transaction is done, there are no changes possible. In case you’ve sent the Bitcoin to the wrong wallet, you can’t get them back.
If you’ve decided that Bitcoin is an appealing option, head on over to the best crypto trading platforms. Crystal Ball Markets is a reliable CFD cryptocurrency trading platform that ranks among the top crypto trading platforms. They’re some of the best cryptocurrency brokers, and apart from crypto, it also doubles as an energy trading platform to trade Brent Crude and WTI CFDs.
They have developed a solid reputation as one of the best Forex trading brokers. On their trading platform, you can also easily start trading currencies. Their website also offers several useful resources like the economic calendar, for new traders to stay in the loop regarding major economic events that may affect the financial markets.
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