Why You Should Invest $100 In Bitcoin

Bitcoin is a decentralised virtual currency, invented in 2008 by the pseudonymous 'Satoshi Nakamoto'. Its value is driven by a variety of factors, including scarcity, potential for high returns, and its decentralised nature. Investing $100 in Bitcoin can be a good way to get involved in digital currencies, but it is important to be aware of the risks, including price volatility, lack of regulatory framework, and susceptibility to digital threats.

Bitcoin's value and volatility

Bitcoin is a volatile financial asset, and its value is susceptible to fluctuations. Its price volatility is influenced by several factors, including supply and demand, investor sentiment, government regulations, and media hype.

Supply and demand play a crucial role in determining the market value of Bitcoin. The limited supply of 21 million coins means that as the circulating supply gets closer to this limit, prices are likely to climb higher. Investor actions also impact volatility. For example, "Bitcoin whales", or investors with large holdings, can influence market value by liquidating their positions. Media outlets, influencers, and industry moguls can also create investor concerns, leading to price fluctuations.

The fear of missing out on big price movements and the fear of falling victim to large downswings are primary drivers of Bitcoin's volatility. Additionally, the lack of a central bank to control its supply and its limited supply contribute to its price volatility. As a nascent asset class, Bitcoin is still in the price discovery phase, and its value is yet to stabilise.

It's important to note that investing in Bitcoin is not without risk, and there are no guarantees of returns. Before investing, it's crucial to research and understand the potential risks. Bitcoin should be considered a long-term investment and only a small part of a diversified portfolio.

Pros and cons of investing in Bitcoin

Pros of Investing in Bitcoin

• Bitcoin is the first-ever cryptocurrency, making it a prestigious and desired asset.
• It is the most well-known cryptocurrency, and most crypto traders start with Bitcoin.
• Bitcoin is decentralised, meaning there are no centralised authorities or central banks that may impose high fees or restrictions.
• It is global, so there are no exchange rates to deal with.
• You don’t need a fortune or credit history to invest in Bitcoin.
• Bitcoin is highly liquid and is among the most liquid investment assets, especially in the crypto market.
• It is transparent, and laundering money or financing crime with Bitcoin would be directly traceable.
• Bitcoin is an excellent way to diversify your portfolio.
• Because of its supply cap of 21 million coins and decentralised nature, some believe that Bitcoin is immune to economic turmoil, geopolitical problems, and inflation.
• Bitcoin has various valuable business features, such as multi-signature authorisation, that can improve transparency and security in business settings.
• Figures show that Bitcoin has a significant ROI compared to other assets.
• It is the safest crypto asset to invest in because the high number of users across the globe helps decentralise the network.
• Huge names have become major investors in Bitcoin and have been very vocal in their support.
• Smart contracts can be built on Bitcoin.
• Bitcoin is a hedge against inflation.

Cons of Investing in Bitcoin

• Bitcoin is highly volatile.
• Bitcoin transactions are quite slow and can take up to 10 minutes.
• Bitcoin has limited use and depends on internet availability.
• Bitcoin is not 100% safe and can be stolen if you hold your Bitcoins on an exchange.
• Bitcoin investing is not regulated, and a lack of regulations can lead to fraud and scams.
• Bitcoin is misunderstood and is still veiled in misconception.
• Bitcoin is not energy-efficient.
• It is now dominated by excessively big investors; serious players who’ll do whatever it takes to squeeze as much money from Bitcoin as possible.
• Community disagreements have split Bitcoin before.
• Quantum computers are a potential threat to the Bitcoin network.
• Bitcoin doesn’t work as intended and was likely never finished.
• Satoshi Nakamoto’s identity and disappearance raise many questions.

How to invest in Bitcoin

Investing in Bitcoin can be a great way to get started with digital currencies. Here are some detailed steps to help you get started:

Understand the Risks and Rewards:

Before investing in Bitcoin, it's important to recognize the potential risks and rewards. Bitcoin is a volatile asset, which means its price can fluctuate significantly. While it has the potential for substantial returns, there is also the risk of losing some or all of your investment. It's essential to do your research and understand the market dynamics before investing.

Assess Your Financial Situation:

Consider your financial situation, investment goals, and risk tolerance. Determine how much you are comfortable investing in Bitcoin. Remember, investing in Bitcoin should be a long-term decision, and it's recommended to only invest what you can afford to lose.

Choose a Cryptocurrency Exchange:

Select a reputable and well-known cryptocurrency exchange, such as Gemini, Kraken, Coinbase, or Crypto.com. These platforms offer a variety of cryptocurrencies and carry different fees and consumer protections, so it's important to compare them before choosing.

Create an Account:

You will need to provide personal information and verify your identity to create an account on the chosen cryptocurrency exchange. Make sure to use a strong password and enable two-factor authentication for added security.

Fund Your Account:

Before buying Bitcoin, you need to deposit funds into your exchange account. You can typically use various payment methods, such as bank transfers, credit cards, or debit cards, to fund your account.

Place a Buy Order:

Decide how much Bitcoin you want to purchase and place a buy order through the exchange. Follow the steps provided by the exchange to complete the transaction.

Store Your Bitcoin in a Wallet:

Once you've purchased Bitcoin, you'll need to store it in a secure wallet. You can choose between a hot wallet, which is hosted by an exchange or a third-party provider and offers faster transactions, or a cold wallet, which is a portable device that provides extra security but may take longer for transactions.

Consider a Long-Term Investment Strategy:

Historically, holding Bitcoin for a more extended period has been beneficial due to potential long-term price increases. Think of Bitcoin as a long-term investment rather than a get-rich-quick scheme.

Stay Informed:

The cryptocurrency market is constantly evolving, so it's important to stay updated on the latest news and developments. Monitor the market, follow Bitcoin-related news sources, and consider joining communities or forums to discuss investment strategies with other Bitcoin investors.

Diversify Your Portfolio:

Remember that investing in Bitcoin carries risks, and it's essential to diversify your investments. Consider allocating only a small portion of your portfolio to Bitcoin and investing in other assets to balance your risk.

Bitcoin's future outlook

Bitcoin is a highly volatile asset, and its price can fluctuate significantly in short periods. This volatility makes it difficult to predict the future outlook for Bitcoin with any certainty. However, here is an attempt to provide a detailed outlook for Bitcoin in the coming years based on current trends and expert opinions:

Short-Term Outlook (2024-2025):

Bitcoin's performance in the short term is expected to be bullish, with a potential recovery in the coming months. Experts predict that the price of Bitcoin could reach around $68,000 in August 2024 and fluctuate between $35,000 and $75,000 for the rest of the year. In 2025, Bitcoin's fourth halving is expected to take place, which could cause a spike in prices. The average price of Bitcoin in 2025 is predicted to be around $129,000, with a potential high of $141,000.

Medium-Term Outlook (2026-2029):

The outlook for Bitcoin in the medium term remains positive, with a potential price range of $143,000 to $175,000 in 2026 and further increases in the following years. By 2029, the average price of Bitcoin is predicted to be around $400,000, with a potential high of $477,000.

Long-Term Outlook (2030 and beyond):

The long-term outlook for Bitcoin is highly optimistic, with the potential for massive gains. By 2030, most of the available Bitcoin will have been mined, and the price is expected to be influenced by its acceptance and regulation. Experts predict that the price of Bitcoin could reach $1,000,000 or even higher in 2030. In the very long term, by 2040 and 2050, some experts predict that Bitcoin's price could soar to several million dollars, depending on global economic conditions and wider adoption.

It is important to remember that these predictions are highly speculative, and the volatile nature of the cryptocurrency market makes it challenging to forecast Bitcoin's price accurately. The above outlook provides a general idea of the potential trajectory of Bitcoin's price, but the actual performance may differ significantly.

Additionally, it is worth noting that investing in Bitcoin carries significant risks, and there are no guarantees of returns. Investors should thoroughly research and understand these risks before considering any investment in Bitcoin or other cryptocurrencies.

Bitcoin's value compared to other cryptocurrencies

Bitcoin was the first decentralised cryptocurrency, launched in 2009. Since then, thousands of other cryptocurrencies, known as altcoins, have been launched. Bitcoin remains the market leader, but its dominance is being challenged by other cryptocurrencies, such as Bitcoin Cash, Bitcoin Gold, Ether, Litecoin, Ripple, EOS, Stellar (XLM) and NEO. These cryptocurrencies have gained traction due to rising demand, expanded applications, and technological advances.

Bitcoin's value is influenced by its limited supply and increasing demand. There will only ever be 21 million bitcoins in existence, and its restricted supply contributes to its high exchange rate. Additionally, Bitcoin has the advantage of being the most well-known cryptocurrency, benefiting from its early start and strong reputation.

However, one of the biggest drawbacks of Bitcoin is its slow transaction speed, which has led to the development of alternative cryptocurrencies. For example, Bitcoin Cash was created as a faster alternative to Bitcoin, with a maximum block size of 8MB compared to Bitcoin's 1MB, enabling it to process more transactions per second.

Another factor influencing Bitcoin's value compared to other cryptocurrencies is its volatility. Bitcoin's price is highly volatile and susceptible to fluctuations due to various factors, including interest rate policies of central banks and investor demand. While volatility can lead to significant returns, it also poses a risk of substantial losses.

In terms of investment, a $100 investment in Bitcoin may not seem like much, but it is a good starting point for beginners to enter the world of digital currencies. However, it's important to remember that Bitcoin, like any other investment, carries risks, and there are no guarantees of returns. The amount invested should be based on an individual's financial situation, investment goals, and risk tolerance.

Frequently asked questions