Bitcoin Pros and Cons The main advantage of using Bitcoin is that it is both digital money and the payment network. Bitcoin’s blockchain cannot function without BTC, and vice versa. Such a system can operate without any middlemen, government. In this article we would understand what Bitcoin is and would explore the pros and cons of investing in Bitcoin. What is Bitcoin? Quoting Wikepedia “Bitcoin is a cryptocurrency and a payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto“. It is a non-tangible electronic currency. Dec 03, · Bitcoin and cryptocurrency trading is relatively young — new coins are becoming mainstream on a daily basis. This newness brings unpredictable swings in .
Trading bitcoin pros and consThe Pros and Cons of Trading Bitcoin
Cryptocurrencies have not yet been around for long enough that they offer sufficient information about key support and resistance levels.
They will believe that trading is simply a matter of buying only and grabbing profits. Unfortunately, trends do not last forever. When trends do stop, newbie traders are not able to notice the difference… They will keep trading the same way and wonder why their trades are not winning anymore. Newbie traders get lucky with a trend and make profits by trading this trend. Then the trend ends and these beginning traders lose all of their profits and more without knowing why.
Use the charts as a map to make decisions about analysis, entry and exit. Volatility is good for trading because the price movements up and down offer trading opportunities for traders.
Nothing much can be done if price were to go sideways for 1 week, month or year. Too much volatility, however, is also not ideal for traders because it creates high levels of uncertainty.
Find decent entries and exits is more difficult if price is moving up and down like roller coaster. It also gives traders less time to react. Sure, the uptrend on Bitcoin and other cryptos altcoins seems like it has no limits and will never stop.
But market sentiment can change. And often it does on the most unexpected moments. Yes, the sentiment is bullish and yes it can stay that way for a while. However, always keep in mind that sentiment has its ups and downs. Nothing is fixed. First of all, we are not experts on the internal decisions and directions that the Bitcoin community and developers are discussing. But obviously Bitcoin made a hard fork split between two camps, which resulted in Bitcoin and Bitcoin Cash.
If you know more about this potential 2nd rift, please add a comment below. Of course, a new split could potentially undermine the confidence of investors and the market in Bitcoin and perhaps also other cryptocurrencies. Bitcoin and other cryptocurrencies are non-centralized and not created by any central bank. If altcoins become very popular as a means for transaction and storing wealth, then this could it more difficult for central banks to conduct monetary policy.
In fact, could it perhaps make central banks obsolete in the long run? This remains to be seen but it could have the following effects:. Deflation is undesirable for governments with higher levels of debt because the debt become more expensive in real terms. Moderate inflation provides indebted countries to reduce the nominal value of their debt but without jeopardising their economies.
Deflation also means less income via sales tax and wage tax and also less consumption as companies and households save their money. It remains to be seen how governments and central banks, especially from the West, will respond in the future to such trends.
Make sure to subscribe to our newsletter , as we will be updating you on the latest developments. Bitcoin and other cryptocurrencies offer an independent path from governments and central banks but also the banking world. The block chain technology bypasses the traditional banking world, which threatens a part of their fees, income and revenue.
Banks could try to counter this by advocating for more regulation on Bitcoin and altcoins. The first question is whether the concept of cryptocurrencies will manage to survive in its current form. The next step is to analyse which crypto will emerge as the winner and become or remain the most dominant one in the future. At the moment Bitcoin is the most favourite cryptocurrency when ranked on volume of transaction, price, and total market capitalization.
But will it be able to keep its lead and remain number one in the next decades or will there be a challenger that is better equipped to handle technological advancements. Here is a quick introduction of other cryptocurrencies:. Some Forex, CFD, commodities and stock index traders are hesitant to trade altcoins because their instruments offer enough trading opportunities on their own. They do not want to learn a new instrument if their Forex or CFD trading is working well for them, which of course makes sense.
The currency markets offer a wide range of currency pairs that trade within established support and resistance levels. However, traders might still want to consider following cryptocurrencies as they compete for investments and attention in the global arena. We mentioned 8 points that make trading Bitcoin and cryptocurrencies less attractive when compared to Forex and CFD markets.
But there are some advantages too. Here is our list of pros but feel free to add your own ideas in the comment section. Bitcoin has managed to overcome multiple hurdles in its short but lively history. Bitcoin is being frequently used a method for payment and more vendors and stores are accepting Bitcoin. Are you worried about government debt, central bank quantitative easing, and the value of fiat currencies?
It should be noted that such an insurance should never be a large part of any portfolio in our view. A hedge is more a way to mitigate risk of an economic recession or even an economic downturn which is when other assets become less valuable. You can hedge with the help of markets. Bitcoin is becoming more accepted as a payment method and as a storage of value.
Shops are offering the ability to make Bitcoin payments and there is an increase in Bitcoin services. The media is also covering Bitcoin in more detail as the price grows and the application of the currency increases. Although people from the West might not see it, the cryptocurrencies do actually solve problems for citizens of many countries. Here are some issues that could stimulate demand for cryptocurrencies:. The first 3 of these points are less problematic for Europe, Japan, and the US who for instance have not seen high levels of inflation for a while but altcoins could be a guard against inflation.
These countries also have free movement of capital. Here is an example of our chart analysis. You can catch the momentum by joining our telegram group for free. We provide signals and analysis for cryptos, fx, stocks and commodities. It is still too early to tell but could big players like banks and even countries secretly be buying cryptos and Bitcoin to hedge their assets and reduce their vulnerability on the US Dollar and Euro?
It remains impossible to impossible to answer for sure but one could speculate whether this trend is occuring. Russia, China, oil exporting nations, and maybe even Australia could perhaps be using cryptocurrencies and the mining process to reduce their reliance and dependency on the US Dollar.
You can also trade cryptos , including altcoins, with one of our supported providers. Big players could be looking to reduce their exposure to the US and the EU perhaps due to the large debt that the West has gathered in recent decades. The Great Recession of pushed the budgets of the governments and the balance sheets of the central banks to the max.
Big exporters like China and oil exporting nations like Russia and Saudi Arabia might want to be less dependent on the US Dollar and other western currencies. They might also doubt their ability to pay back the debt via inflation and weak economic growth. Ultimately all traders need to take their own decision but the above mentioned points hopefully help sort out some of the pros and cons.
The answer will also depend on your risk appetite and your method of trading:. SWAT course and trading system. This site uses Akismet to reduce spam. Learn how your comment data is processed. It is definitely not the right asset for anyone and you need to be aware of that if you want to avoid unnecessary stress. You have probably noticed that all of the above 3 profiles have one thing in common: they are not investing more money into Bitcoin than what they can afford to lose.
If you are a person that can handle wild market swings and that has some money set aside for high-risk investments, then Bitcoin might be a good option for you.
In a research report by Finder. Since the research only involved a few thousand people, these numbers may not be entirely correct, but it does give you an approximate idea of the group of people that you are joining when you buy your first Bitcoin. Having a framework that you can follow will make it a lot easier for you to handle the wild price swings of this digital currency. Although there are a few more, in this article I will show you the 3 most popular Bitcoin investment strategies that you can start following today.
Yes, that is not a typo. This is by far the simplest way of getting exposure to Bitcoin because it does not require any active management from your side, and since Bitcoin has been in a long-term bull trend ever since its inception, it might also prove to be very effective. Dollar cost averaging is a strategy also often used in stock market investing. It essentially consists of buying small chunks of an asset periodically every week, or every month in order to minimize the risk of buying at the top.
Therefore, if you are not comfortable with timing the market then dollar-cost averaging may be the right Bitcoin investment strategy for you. Finally, the last strategy is to actively manage your portfolio. This can be done by selling some of your Bitcoin after it has gone up a lot, and by re-buying them cheaper if there is a drop. You may also go on a margin trading exchange like Bitmex , Deribit or Bybit , where you can open a leveraged short.
Instead of selling 4 Bitcoin when you think that the price is going to drop, what you could do is send 2 Bitcoin to Bitmex and open a short with 2x leverage. When the price then drops and you think the bottom is in, you can now close the short at a profit and use the profits to buy more Bitcoin. Needless to say, this strategy should only be used by people that are experienced with the matter and that are familiar with the risks of bitcoin trading.
The macro price cycle occurs in the form of multi-year bull markets that push for new all-time highs, and that is then followed by a year bear market. On the micro level, Bitcoin is known to follow patterns in certain seasonalities. As pointed out earlier, Bitcoin is a highly speculative asset and you should never invest more money that you can afford to lose. A good mentality hack to use before investing in Bitcoin is assuming that the money you are planning to invest is gone forever.
If that thought makes you nervous, then you were planning to invest too much. That being said, if you are going to start investing a bigger amount into cryptocurrency, then try to own 1 whole Bitcoin first. After you own your first Bitcoin, then you are now in a good position to also invest in other cryptocurrencies.
Both coins are focused on becoming a digital currency. BCH has a significantly lower hash power computing power than Bitcoin does and its blockchain is hence significantly less secure. With that being said, if you are just getting started and are looking for the best cryptocurrencies to invest in , then you should stick to Bitcoin since many people consider it the safest bet in the cryptocurrency space.
Once you are more familiar with the technology and this asset class, then you might want to also buy some altcoins like BCH. In late , another new fork happened. Should I buy Bitcoins or Ethereum?
They wonder if Bitcoin still is worth buying now that it has already gone up so much in value, or if they should buy altcoins like Ethereum instead. So, while the decision if you should buy Bitcoin or Ethereum is one you have to make, what we can do for you is to outline some relevant facts for you. This is especially powerful for fin-tech applications as Ethereum can completely cut rent-seeking intermediaries like banks out of the equation.
This not only applies for value transfer, but also to loans, digital representations of assets like companies listed on the stock market, and trading without the need for a central platform like a stock exchange.
If you want to learn more about Ethereum then a great starting point is our article about real-world use cases of Ethereum. Since Ripple has developed into a very powerful coin in the market, we should also keep it in mind as an option.
This digital currency currently ranks as 3 on Coinmarketcap, although it has beaten Ethereum in market capitalization a couple of times. When choosing which cryptocurrency to buy most of, everyone has his own factors or reasons to always keep in mind. Some look more into security considerations, others more into ease of use, etc. This all depends on the user and his own technical ideas.
Setting aside other features, Ripple stands out for having a very strong community. The transaction system of Ripple is more similar to what a bank would like. Bitcoin can normally manage around 5 transactions per second. On the other hand, Ripple can process around 1, transactions per second. That makes it pretty clear that Bitcoin and Ripple are very different cryptocurrencies.
Bitcoin dominates the market as a store of value, and Ripple looks forward to dominating the fast transaction system. This means that transactions could technically be censored on the Ripple blockchain, and funds could be confiscated.
Buying Bitcoin is a lot simpler than most people think. Coinbase is a great cryptocurrency exchange for beginners because it is not only safe and trustworthy, but it is also extremely easy to use. So the first step to buy some Bitcoin is to create an account on Coinbase , this just takes a few minutes and the exchange will initially only ask you for your name and email.
After you verify the confirmation email to confirm your email address, you have the option to complete a basic identity verification where you submit your ID or Passport. You may only have to do this if you are planning to buy a large amount of Bitcoin.
Note: This is a common practice in cryptocurrency exchanges and Coinbase has to do this identity check with large buyers to stay compliant. After your funds arrived, which depending on your bank may take up to days, you are now ready to buy Bitcoin.
Alexander has worked in community growth for multiple cryptocurrency companies. In his free time, he writes articles sharing his industry insights. You can get in touch with Alexander on LinkedIn.
I count my self to be successful in trading because of his amazing strategy of Mr Frankie…. CoinDiligent is the go-to resource for cryptocurrency traders. We write in-depth trading guides, valuable exchange reviews, and share priceless trading tips from top crypto traders. Should I Buy Bitcoin in ? Should I buy Bitcoin? Do you know any other asset that has offered similar returns? Probably not. Risk Disclaimer. Investing in Bitcoin is very risky.
Never invest more than what you can afford to lose.