investing bitcoin

What is a Bitcoin Investment and Should I Invest?

Posted on Posted in Alternative Investments

When it comes to bitcoin, there are three kinds of people. There are those who invest in bitcoin, those who are totally against investing in bitcoin, and those who have no idea what a bitcoin is. Most people fall into category three. Today, I will answer the question: should I invest in bitcoin?

Many investors are worried that they will miss out on the bitcoin opportunity if they do not invest right away, others wonder if it is taking too much risk with their money. The truth is that the whole crypto-currency universe is still very difficult to understand, and with very little data available to analyse it, investing in bitcoin is done so using nothing more than pure speculation. Even legendary investor Warren Buffet has cautioned against investing in a business that you do not fully understand.

It has grown too fast in a short time. It’s speculative, and hence I don’t recommend investing in bitcoins. – Suresh Sadagopan, Certified Financial Planners (Mumbai)

According to the experts, bitcoin is definitely risky and there is high volatility. Because of this, it is recommended that investors begin with a very small amount, like one to two percent of their total wealth. Moreover, investors are cautioned to not buy bitcoin if they do not know how to store them safely. Storing them on a mobile or laptop is very risky.

For the purposes of investing, bitcoins are similar to any other currency or commodity investment. This means that when it comes to your investment return, bitcoins face the same uphill battle as alternative investments.

The big trouble with bitcoin is that there is not a clear understanding of how the crypto-currency’s price works, or what can suddenly cause a surge in its value. In other words, at any given time, bitcoins are worth whatever the market says they are worth. With that in mind, the future of bitcoins and crypto-currencies, in general, is very unpredictable even for those who do understand crypto-currencies.