Every month, more and more people decide to put part of their savings or income in alternative forms of capitalization or speculation and, among them, cryptocurrencies are one of the most attractive. Many others, meanwhile, continue to doubt about doing it or not. Therefore, if you are wondering right now if you should do like your friends and invest in Bitcoin , in this article we review several questions that could give you the answer..
Indeed, we are going to try to elucidate the most controversial aspects about the most famous cryptocurrency , such as what it is and how it works, if you can lose your money, how to start your investments, etc.
What is Bitcoin and how does it work?
The concept of digital money is not that complicated to understand, basically because most of us are already used to dealing with non-physical amounts, which we transfer, with which we pay, etc..
The difference of Bitcoin is, however, that there is no "physical" version of it , something that does happen with other currencies, and that is what makes it so attractive, on the one hand, and so feared, on the other. .
In any case, it happens that the Bitcoin is mined using an encrypted code, a series of strings of numbers and letters. The same encrypted code that, on the other hand, is the one that also allows you to unlock it..
That is to say, it is a payment method that uses blockchain technology to send data in cyberspace, in which each Bitcoin has to be extracted, although there is a definitive extraction total of 21 million units .
In turn, cryptocurrencies are 'decentralized' , which means that they are not regulated by a financial authority, such as a government or central banks, and is one of the reasons why generation 'Z' loves Bitcoin.
Should you invest in Bitcoin then?
Bitcoin is extremely volatile , at least that is one of its most salient features so far, although it is hoped that, in some time, it may even replace gold as a stable and backing asset .
That said, you shouldn't invest in Bitcoin if you don't meet the following conditions:
- Understand what you are investing in
- Be comfortable with the risk you take
- Understand statistics and data analysis
- Be sure you won't need that money anytime soon
- Availability of time to check the market and decide
What do I have to consider before starting the investment?
Well, mentioned the previous conditions, as we said, Bitcoin has its own dangers, and also its rewards. But compared to other investments, it is particularly risky, of course .
Therefore, we will always recommend that only surplus money be invested, take it almost as a game of chance, at least until you become an expert, and weigh very well the pros and cons it offers.
You can lose all your money
What's the worst that can happen if you invest in Bitcoin? That you lose all your money. Because you can lose everything. It's probably not what you want to hear, but you have to know that there is a chance that this will happen .
We can lose money when the value of Bitcoin depreciates, which is the most common in these cases, but also under different circumstances, such as forgetting access to cryptocurrencies or suffering a cyber crime.
And although the last two situations can be avoided in various ways, we want to focus on the first, which directly alludes to the ups and downs of Bitcoin , that volatility that we have talked about so many times.
This is due, neither more nor less, because cryptocurrencies are not backed by any intrinsic value. They will eventually go up or down in price , according to the trust of users.
You must be prepared to deal with that constant volatility.
Is Bitcoin a good investment for the future?
Of course, the danger of volatility is greater the faster you plan to sell the Bitcoins you have bought. But, if you are not in a hurry, you could find in them a good investment for the future.
Ultimately, Bitcoin has historically risen in price, beyond some notorious setbacks .
Some analysts say it could hit $ 80,000 in its next big uptrend . Considering this, the potential profit margin that exists is infinitely higher than that of other currencies.
How to invest in Bitcoin and make money
As with any other investment, the results will have a lot to do with when you buy and when you sell, and how timely you have been when choosing one decision or another.
We leave you a guide to invest in cryptocurrencies, and the same advice: use money that you do not need .
What are the fees when buying bitcoins?
When you go to buy Bitcoin, you have to pay transaction fees, deposit fees, withdrawal fees, etc. That is, you do not have to make accounts with all the available money because every time you manipulate it, you will leave part of it.
Alternatives to invest in Bitcoin without so much risk
If you are interested in the cryptocurrency industry, but you do not want to invest in them through the most frequent format, which consists of buying and selling them, you can always invest in Bitcoin without so much risk .
You can buy shares of companies that work with cryptocurrencies in general and Bitcoin in particular, you can do the same with companies involved in the development of blockchain technology, in Bitcoin funds, etc.
As everything ultimately depends on Bitcoin, there will be some volatility and some profit margin, but not at the extreme levels of directly owning this digital currency . Therefore, they can be a good option.
Is Bitcoin bad for the environment?
This is another of the issues around Bitcoin that has already deserved some discussion, and the first thing we must say is that, according to researchers from the University of Cambridge, this currency requires as much annual energy as the Netherlands each year, and barely 30 countries around the world use more energy than it.
Additionally, computers mining Bitcoins use up to 1% of the world's electricity supply .
This is the reason why Tesla decided to stop accepting crypto payments.
Do financial institutions support Bitcoin?
Governments, regulators, and businesses are increasingly looking at Bitcoin and its performance. Currently, firms such as Visa or MasterCard are already accepting it . You can even top up Bitcoin with PayPal.
And the same goes for the institutions that depend on the states , with countries like El Salvador that have accepted Bitcoin as one of their legal tender currencies, to mitigate the impact on their economy.
Regulators' concern
Finally, it is worth noting the concern of regulators about the network of deception that can be generated around Bitcoin, considering the huge number of people eager to make money.
A few months ago, the Financial Conduct Authority or FCA, prohibited the sale of complex derivatives that speculate with cryptocurrency movements, as a way to control these activities.
In the future, and as the sector advances, they will surely have to make other similar determinations.