Should I Invest in Bitcoin? Is It Safe?
If I had a Bitcoin every time I’ve been asked that question… at October 2009 Bitcoin prices… I’d have over 333 Billion Dollars! Bitcoin has been proclaimed dead over 350 times. However, here’s the truth about how profitable it’s been to buy and hold Bitcoin (aka Hodl) at any point in time.
Bitcoin has been profitable 3795 days out of 3838 days since creation (98.88%) The Many Forms of Investing in Bitcoin Buying and Holding Trading Bitcoins Mining Bitcoins Various Bitcoin Investment Schemes Frequently Asked Questions Conclusion – is Bitcoin a Safe Investment?
Here are our suggestions for you to consider:
1. The Many Forms of “Investing in Bitcoin” Before I begin, a word of advice: Bitcoin is a very risky asset type. It is extremely volatile and even the most solid Bitcoin investment should be treated as a high risk investment. For example, in the past Bitcoin’s price fell over 80% in the course of several months (this happened a few times throughout its existence). Bitcoin is not a company or a stock, it’s a currency. If you still don’t understand what Bitcoin is, then please educate yourself before going any further. As a currency, the basic form of investing in Bitcoin simply means buying the coin. However, there are additional ways to invest in Bitcoin.
2. Buying and Holding (Hodl) The most common form of “investing” in Bitcoin is buying the currency in hopes it will appreciate in value. If you do decide to Hodl, the most important rule of thumb is this: Don’t take anyone’s advice about what will happen with the currency… do your own homework, learn about Bitcoin and come to a conclusion for yourself.
A few pointers for buying and holding Bitcoins: Never invest more than you are willing/able to lose – Bitcoin is a very risky investment and you should keep that in mind at all times. After buying Bitcoins, make sure to move them into your own Bitcoin wallet and never leave them on an exchange. If we’re talking about substantial amounts, my personal recommendation is to use a hardware wallet. If you can’t afford a hardware wallet, try a paper wallet.
Make sure to buy Bitcoins only from Reputable Bitcoin exchanges. Sometimes paying a little extra is worth the security and piece of mind.
Use Dollar cost averaging (DCA) – This means that you don’t buy all of your Bitcoins in one trade but instead buy a fixed amount every month, week or even day throughout the year. This way you average the price over the course of a whole year.
3. Trading Bitcoins Bitcoin trading is different than buying and holding. When you are trading Bitcoins it means that you are actively trying to buy Bitcoins at a low price and sell them back at a higher price in relatively short time intervals. Trading successfully requires knowledge and practice. The trading market is occupied by very large players who are just waiting for newbies to come in and throw their money away by trading aimlessly. Here’s our beginner’s guide to Bitcoin trading:
4. Mining Bitcoins For the past few years mining Bitcoin is profitable only if done on large scales. This means you will need to get expensive mining equipment and have access to free or very cheap electricity. From my perspective, it’s much more cost effective to buy Bitcoins with this money instead of using it to buy mining equipment. If you want to learn more about mining watch this video: Cloud mining You may have heard of all sorts of sites that allow you to mine Bitcoins through the web. This is known as cloud mining and from what I’ve seen these sites fall into one out of two categories: They are complete scams that will run away with your money and will never actually use it to mine Bitcoin. They are not scams, but they are bad investments since you will probably get more Bitcoins if you just use that money to buy Bitcoins instead of paying for the service (e.g. Genesis Mining, Hashflare).
5. Invest in Bitcoin Doublers / Grow your Bitcoins / HYIPs Almost every other day I get a question about a site or company that claims to double your Bitcoins, give you insane daily interest on your Bitcoins or help you invest them in some sort of complex and obscure ponzi scheme. These sites can be categorized mostly as scams or HYIPs (high yield investment programs). What these sites usually do is they take money from people around the web with the promise to give them good returns. They will then start off by paying these returns through money they get from new sign ups and create a big buzz around the site. Usually they will also have some sort of referral program so that users can bring in their friends. This will go on for around 3-4 months until one day the website will just go offline and the money will be gone. No more payments will be made and a lot of people will get mad that they got scammed. I have reviewed many Bitcoin investment sites in the past 3 years (e.g. Bitconnect, USI Tech and more) and I have yet to find a site that I can say is legit or safe to invest in. Any site that promises you something that is too good to be true is probably just a facade for scammers trying to steal your coins. How can you find out if a site is a scam for yourself? STAY AWAY FROM SITES THAT CLAIM THEY WILL DOUBLE YOUR COINS OR GIVE YOU DAILY INTEREST ON THEM.
6. Frequently Asked Questions about How do I Make Money with Bitcoin? Aside from what I’ve mentioned in this post there are several other ways to make money with Bitcoin such as: Micro earnings Owning a faucet Signature campaigns Affiliate programs Gambling Writing about Bitcoin Bitcoin related services Bitcoin Lending H Bitcoin forks You can read about these methods here.
How Much was a Bitcoin Worth in 2009? On October 12, 2009 Martti Malmi, a Finnish developer that helped Satoshi work on Bitcoin, sold 5050 Bitcoins for $5.02. This gave 1 Bitcoin the value of $0.0009.
Can You Convert Bitcoin to Cash? Yes, Bitcoin can be converted to cash. If you’re looking for physical cash you can find buyers through Paxful or HodlHodl. If you’re just looking to convert Bitcoin into fiat currency (i.e. USD, EUR, Etc.) there a variety of Bitcoin exchange available.
7. Get a Coach who can help you develop your investment goals and keep you in the “seat” of emotional and psychological stability so you will reduce the risks of making bad investment decision. When you start out, start small and learn as you go. You’ll probably make some mistakes, everybody does. You can consult with others and read information online but never follow someone’s advice blindly. Have you had any experience with different investments in Bitcoin?
Conclusion – Should You Invest in Bitcoin? By now you can probably see that there is no simple answer to this question. It’s not just a matter of should you invest, but also a matter of how to invest. Like I said in the beginning, start by educating yourself. Learn about the currency, what affects it, what are its advantages and disadvantages, etc. After you feel you’ve acquired some basic education, it’s time for you and you only to answer this question.
I’d love to hear about it in the comment section below.