This article presents a few major things you need to consider and pay attention to before you make your mind about purchasing bitcoins, or any other crypto.
In the initial phases of crypto, when there was only bitcoin in the market, it was considered to be a very risky investment and therefore not a lot of people participated in the crypto investing action. However, as the time passed by and crypto became popular, bitcoinprime.io gained a better and more positive reputation among the people all around the world, as people began to show interest in the crypto.
Earlier, it was more popular and accepted in a limited market. However, more recently it has gained a reputation as a very profitable and lucrative investment tool, thereafter gaining the attention of investors from all around the world.
It should be known that like any other investment tool, crypto comes with its underlying risks as well in many different shapes and it is essential for you to understand this risk and return comparison for bitcoin before you actually proceed on with investing in it.
Following is a list of a few essential things you need to consider and carefully analyze before you proceed on with purchasing the crypto. We have carefully searched for these factors and have presented it as follows for our readers, in order to facilitate them. So, without any further ado, let’s move on to the discussion and evaluation of these factors.
Bitcoin has another name – A Bubble
In the financial analogy, a bubble refers to a situation where the price of an asset is seen rapidly rising and then abruptly shrinking down to a low point. Therefore, due to its past price trends, technical analysts have proclaimed it a bubble, as it’s a little more complex to trace the behavior of bitcoin’s value in the longer run. Bitcoin has witnessed the phenomenon several times in the past, most majorly during 2011 and more recently a few years ago in 2017.
There are several factors which sometimes boost the price of bitcoin temporarily. These factors included a successful advertising of the crypto on a high-traffic platform or its promotion made candidly or sometimes in a planned course of events by any influential personality, such as Elon Musk, CEO at Tesla and SpaceX, or any other celebrity. However, this rise is usually followed by an abrupt fall in the price of the crypto due to a loss of interest shown by the public in bitcoin.
Nonetheless, regardless of whether bitcoin is a bubble or not, the best strategy is to purchase bitcoins when there is an excess supply in the market and consequently the coin’s price is low. This should be followed by selling the crypto when there is a high demand in the market and thus the price per coin is high due to increased demand.
Bitcoin – A truly transparent crypto
A major feature of bitcoin is the digital ledger it is based on. This ledger is known as the block chain. Due to the transparency of this ledger for all the users on the BTC network, this fact puts bitcoin among the most transparent currencies all around the world. It should be known that block chain is a public virtual ledger, which means that all users have access to this ledger and thus all the users can analyze and track the trajectory of this ledger all the time.
It should be known, however, that despite this transparency of the virtual ledger and the crypto itself, the personal information and credentials of the parties involved in a transaction on this ledger are absolutely private and are not compromised to any other user or viewer on the block chain. Bitcoin network makes sure that your transactions are kept private and that your transaction details and histories are kept private.
Bitcoin’s infamous volatility
Volatility I.e., the fluctuation in the value of bitcoin is another major feature of this crypto which makes it less attractive in the eyes of the investors. This volatility is what reduces the reliability in this crypto and decreases the trust and confidence of investors towards it. Volatility is one of the most prominent features of this crypto and is known by many people all around the world. However, for those who do not know about it, volatility mainly refers to the rapid growth and shrinking of the price of bitcoin in a relatively shorter period of time. This makes the crypto quite unreliable in the longer run. However, traders who trade bitcoins on a short term basis to make lower but regular profits can still benefit from this volatility, by purchasing at lowes and selling at highs.
It should be known though, that regardless of the asset or the market you are investing in, there will always be a certain degree of risk that your assets will be subject to, either crypto or even stocks.
Just like any other phenomenon in the world, which comes with its pros and cons, there are several drawbacks associated with bitcoins as well other than its prominent advantages. Therefore, in case you are beginning to start an investment career in crypto, especially in bitcoin, you should pay attention to and carefully analyze and weigh both the advantages as well as the disadvantages of bitcoin, before actually spending your wealth on it. Just like any other important matter in life, you should always have a complete knowhow and understanding of a situation or a topic before you have to make a decision regarding it. And this article provides you with a head start in this direction. In order to have a more detailed understanding and to make a better well-informed decision, we would advise our readers to conduct research on the internet themselves as well, in order to broaden their understanding and knowledge on this matter.