Ah, Bitcoin, a digital enigma that’s as tantalizing as it is perplexing! Like a roller coaster ride at your favorite amusement park it’s thrilling, filled with dizzying highs and lows that need navigating. So should you buy Bitcoin? Should you dive into the crypto world now? After all these years? Aren’t you too late? Or maybe you should buy a boring old stock instead? The possibilities of investing are endless, so what should you do? Let’s look a bit deeper…
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Should I Buy Bitcoin?
Thou shalt not invest in anything thou doesn’t fully understand
The absolutely first tip is to make sure you properly educate yourself. All the tools and money in the world won’t do you any good if you don’t understand what you’re investing in and Bitcoin can be quite different to what most assume.
Even if you understand that basics, we’d still encourage people to dive a bit deeper before investing any significant amount of money. This is because Bitcoin is still quite volatile and as a result, it’s very possible that your portfolio may get a significant haircut at some point. For example Bitcoin has been known to drop 50-80% over its history.
Understanding at a very deep level why Bitcoin is The Perfect Money will help give you confidence to hold onto it, rather than selling in a fit of panic like some lettuce handed wuss. To have diamond hands you need confidence and to build confidence requires fully understanding it.
>> Deeper Dive: Why Is Bitcoin So Volatile
Benefits Of Investing In Bitcoin
To help you decide if Bitcoin is a good investment and is right for you personally, let’s have a look at the many rewards of beginning a long term investment strategy in bitcoin:
Permissionless & Pseudo-Anonymous: It can be used without having to ask anyone for permission. You don’t need to created an account, sign up to a company or tell anyone who you are to use it
Peer-To-Peer: There are no trusted third parties such as banks or government institutions involved during a Bitcoin transaction. The transaction goes directly from one person to the other. This reduces counter party risks, speeds things up and greatly increases privacy
No Carry Costs: No ongoing management fees are required that will eat away at your asset, giving Bitcoin an unheard of Carrying Cost second to none
Verifiable & Hard To Counterfeit: While other monies like a $100 bill or chunk of gold can be hard to verify unless you’re a trained expert, bitcoins are not only easy for anyone to verify using a free/cheap Bitcoin Full Node, but the process is entirely automatic and free meaning it can be set as the default for everyone, always
Censorship Resistant: As Bitcoin doesn’t require any trusted third parties and can be sent and received simply via software that’s run on any computer, it’s incredibly difficult for anyone to “ban” or stop it. To stop a transaction a government effectively has to stop the Internet
Sovereign: The Bitcoin network exists independently of any country, government or company. No one controls, owns or runs it and as such, it is completely sovereign. This makes it far more fair than any other fiat currency
Decentralized & Protected: All Bitcoin transactions are saved to the blockchain (a database if you will). A copy of this is voluntarily stored on tens of thousands of computers called “nodes” all across the world. With so many copies in so many places (even in space!) it’s one of the most distributed and decentralized networks ever created that’s also protected by immense computing power, made up of millions of independent and globally distributed networked computers called “miners”
Always Open: Bitcoin, unlike traditional financial markets or banks, is open 24/7/365 and has had 100% up-time since 2013
Downsides Retail Investors Should Consider
Before you rush out and buy any bitcoin, we want to make it perfectly clear that it’s not perfect, as nothing is. So what are some of the things that can go wrong? Well there’s a few things listed below and while some may sound bad, keep in mind they often apply to more typical investments like shares too:
Volatility: Bitcoin’s still a highly volatile asset that changes price every second, every day. Retail investors should be well prepared for the high volatility before jumping in
No Insurance: Deposits in banks are usually insured by the government in case the bank goes bankrupt, Bitcoin has no backup or insurance policy similar to when you buy shares or bonds
Protocol Risk: Although the Bitcoin network, protocol and cryptography that secures it have been battle tested over the past 10+ years, it’s still always possible that someone, somewhere finds a design flaw. That being said the protocol and code behind it is quite possibly the most reviewed and hardened in existence
Fraud / Bankruptcy: While holding your own Private Keys secures you against this risk, many users still allow other third parties to custody their funds for them (or hold the private keys on their behalf). This trust in a third party such as a centralized exchange then exposes them to other risks such as Crypto Exchange Bankruptcies, being a victim of hacking, being shut down by a government or simply doing fraudulent things
Regulation: As Bitcoin is still very new, regulations are still quite unknown and are evolving as time goes on
Hacking: While this is a risk with virtually all other assets in today’s modern world, Bitcoin is often stored by the user and not a financial institution and as such, may not be secured as well if the user isn’t very technical. This can lead to users losing their bitcoins to any number of hacking tricks that wouldn’t otherwise be possible. It should be noted though that using a dedicated Hardware Crypto Wallet and studying Bitcoin more can significantly eliminate this risk.
Managing These Risks
- Always take full control of your private keys and never trust third parties with them
- Start small with an amount of money you’re fully willing to lose
- Learn as much as you can about Bitcoin from us and others
- Don’t get greedy. Don’t buy altcoins. Don’t try and time the market, just DCA sats
- Know what your risk tolerance is going in and be prepared for volatility
Bitcoin ETFs
Historically most digital currencies have been bought via exchanges and in the case of altcoins, done so as a speculative investment. As the digital assets market has matured though we now see a number of different options for investors, specifically the new ETFs.
We tend to encourage most private investors to buy and hold their own coins, but in some circumstances it can make sense to buy via the traditional financial system and their new ETFs. As a brief overview of the differences:
Pros
- Could Be Quicker & Easier: If you already have access to general financial services and aren’t familiar with self custody, it will likely take much less time to just buy the Bitcoin ETF
- Opens New Access: If you have a pension, 401K or many other types of account services that restrict what you’re allowed to buy with the funds inside, you may now be able to redirect it towards a Bitcoin ETF and get exposure that way
- Secure By Default: You will have institutional grade security and protection of the underlying asset which, for many clients, may be better than what they’re capable of setting up on their own
- Easier Taxes: As the ETF would be just another fund in your online account, it will get rolled into the rest of your trading activity and resultant tax statement potentially making your taxes easier to fill out
Cons
- Fees: You will pay expense ratios, due to the additional third party rent seekers that are involved even if you’re just holding for years. Rates of around 1% are common and will slowly eat away at your funds over time. These fees aren’t required if you simply buy it and self custody
- Counter Party Risk: You have many trusted third parties and layers of bureaucracy in the way if you want to move or sell bitcoin in the future. They could go bankrupt, loose access to the funds, steal them or simply freeze your accounts for any number of reasons
- No Privacy: You will have to fully KYC all your funds which greatly reduces your privacy and security
>> Learn More: Bitcoin ETF
Bitcoin Prices, Market Trends & Taxes
Bitcoin’s price has been a topic of hot conversation ever since it gained value. From $1 to $100,000 there’s been predictions, claims and endless models to try and chart its progress such as the Bitcoin Power Law, Bitcoin Stock To Flow (S2F) Model or Bitcoin Rainbow Chart.
Whether bitcoin conforms to these is an entirely different thing, especially given today’s world is considerably different to even five years ago. Speculating on spot bitcoin prices is now done based on it being an inflation hedge, a store of value, an asset that can potentially save retirement funds or even in some countries, legal tender.
Taxes on the other hand are a lot more certain and should be given serious thought any time you buy or sell bitcoin or other cryptocurrencies. Most governments treat it as a property, not currency which means any event such as selling for fiat currencies or even swapping into a different cryptocurrency is a taxable event.
Hopefully this quick overview has helped give you a bit of data on how Bitcoin can be a better option than other asset classes out there, assuming you’re willing to take the good with the bad. Bitcoin has shown to be a fantastic hedge against inflation and with the spot bitcoin ETFs now broadly available access has never been easier!
>> Learn More: 10 Awesome Bitcoin Tips For Beginners
FAQ
Is It Worth To Buy Bitcoin Now?
While many think they’re “too late” to Bitcoin, this couldn’t be further from the truth. The cold hard data points to the fact that about 300+ million people currently hold crypto. That’s about 3-4% of the worlds population, putting crypto still firmly in the “Innovators” or “Early Adopters” phase. You’re not late, not by a long shot. In fact, you’re still extremely early!
Is Investing $100 In Bitcoin Worth It?
While $100 might now seem like a lot of money to you (or maybe it is), we think it’s definitely worth investing $100 in Bitcoin as it enables you to get started. With that first payment you’ll learn how to use Bitcoin, what its strengths are compared to our current dollar system and why it’s worth the high price tag people ascribe to it. Learning something new is always worth it, and if you hold that $100 in Bitcoin for at least 4 years, it’s almost certain to result in gains according to historic data.
How High Will Bitcoin Go In 2025?
Bitcoin’s price has been a topic of hot conversation ever since it gained value. There are many different models that try and predict its price, some of the most accurate ones include: Bitcoin Power Law, Bitcoin Stock To Flow (S2F) Model or Bitcoin Rainbow Chart.
