biggest risks of investing in bitcoin (Exclusive Guide 2022)

If you have cared about Bitcoin, or any other cryptocurrency for that matter, over the past year or so, you will know that it has gone from strength to strength. Bitcoin was valued at $625/Bitcoin in April 2016 and is now trading around $2450/Bitcoin, up 438%

But what does this mean for investors? Should they view Bitcoin as a long-term investment with potential returns through profits and growth? Or should they stay away due to the volatility associated with bitcoin stocks in the stock market?

investing in bitcoin

The simple answer is yes. Bitcoin Prime can be considered as an investment opportunity and also risky due to its volatility. If you are willing to take the risk, Bitcoin investing can be profitable in the long run, but if Bitcoin is just another bubble on a par with Tulip Mania, you should avoid investing in Bitcoin.

Bitcoin investment properties

Bitcoin has many characteristics that make it attractive to investors. Bitcoin is scarce, there will only be 21 million Bitcoins created and currently, 15 million Bitcoins have already been mined.

Bitcoin is also divisible. Each Bitcoin can be divided into 100 million parts so that they can easily transact small amounts of Bitcoin between each other without having to use a smaller unit like a penny or a cent. Bitcoin transactions are anonymous. When you invest in Bitcoin, you do not need to provide any information about yourself that can identify you or where you come from, all you need is an address that contains Bitcoin and you can exchange Bitcoin with anyone else.

decentralized currency

Bitcoin is also a decentralized currency. This means that Bitcoin does not have a central authority controlling it or its value, unlike currencies such as the Australian dollar or the euro which are controlled by the respective governments and can be manipulated at will.

Risks of investing in bitcoin

The problem with Bitcoin when it comes to investing is that the exchanges where Bitcoin is traded do not meet many of the expected requirements of traditional stocks in the stock market such as earnings and growth. First, there is currently no official price for Bitcoin.

The price displayed on most websites and apps that list Bitcoin prices is determined by market demand which varies from minute to minute depending on who wants to buy and sell Bitcoin and how much they buy or sell. Bitcoin prices on exchanges also do not work like the stock market.

This means that Bitcoin is very volatile and its current price is not a great indicator of where Bitcoin will trade next week or even tomorrow. Investors should instead look for companies that offer profits on bitcoin purchases. This way they can get some return over time from investing in Bitcoin without worrying about daily fluctuations and believe it or not, there are actually several companies that offer this service:

1. Genesis Mining

Genesis Mining is Bitcoin cloud mining. Bitcoin mining is the process of verifying bitcoin transactions by solving mathematical equations that occur in the bitcoin public ledger called the blockchain. Bitcoin miners can be thought of as performing basic Bitcoin functions just like how gold miners produce more gold from the mines over time. In return, they are compensated with bitcoin which can then be sold on the exchange or used to pay for goods and services, just like any other currency.

They offer a service where you can buy hash power from them to mine bitcoin and receive daily payments every day depending on how much hash power you have purchased. The initial cost may seem high but it is a one time payment and if Bitcoin rises in value as expected, it should provide good returns.

2. Bitcoin Cloud Mining

Bitcoin cloud mining is Bitcoin cloud mining where Bitcoin miners can buy Bitcoin mining hardware, download Bitcoin software and start Bitcoin mining by solving Bitcoin blocks using their hash power.

It is similar to buying any other Bitcoin mining hardware such as Bitcoin ASICs or Bitcoin GPUs but you rent the hash power through an online provider instead of owning your own Bitcoin mining hardware. Bitcoin cloud miners get Bitcoin from Bitcoin blocks, and since Bitcoin blocks are limited to producing 21 million Bitcoins, Bitcoin has a limited supply just like Bitcoin. Bitcoin Mining Bitcoin Cloud Bitcoin miners do not have to pay for Bitcoin price volatility as the proceeds from Bitcoin mining are transferred to Bitcoin