Bitcoin, the first and most popular cryptocurrency, offers high potential returns but comes with high volatility and a lack of regulation. Secure transactions via blockchain technology attract investors, but price swings and the potential for scams pose risks.
Virtually anyone, whether they have an active investment or not, is familiar with Bitcoin. The pioneer of the cryptocurrency world, Bitcoin has remained the king since its introduction in 2009. Now 15 years along, Bitcoin has made some people very rich.
That said, investing in Bitcoin isn’t as rosy as it may seem. There are plenty of good things to like about Bitcoin but some clear downsides as well. Let’s take a closer look at the good and the bad when it comes to investing in Bitcoin.
Pro: Return on Investment
The single biggest reason to invest in BTC is its potential growth. Cryptocurrency is an up-and-down venture but Bitcoin has been on a relatively solid upward trajectory since its inception in 2009. There have been ups and downs (more on that later) but Bitcoin now sits at around $54,000 per token.
There are a handful of investors who got in on the ground floor and are now reaping the benefits. Even those who came along much later are riding the wave and seeing their investments climb to new and incredible heights. Some industry experts believe that Bitcoin could top the $100,000 park by as soon as 2025.
Con: Volatility
It isn’t all sunshine and roses when it comes to Bitcoin. One of the most talked about points regarding Bitcoin is its volatility. There have been more than a few major corrections throughout the history of the cryptocurrency, some of which have sent panicked investors into a tailspin.
As recently as 2021, Bitcoin experienced a 53% crash. From December 2017 to December 2018, Bitcoin fell by 84% after the bubble burst. It is not uncommon for Bitcoin to have falls of 20% or more, especially given the lack of regulation in the industry. It inevitably goes back up but those falls have been quite a lot for investors to handle at a given time.
Pro: Security
Bitcoin isn’t completely anonymous, as some other cryptocurrencies are, instead identifying users through a specific numerical code. Those private keys, however, are quite secure. It is the only way to prove that you are the owner of the cryptocurrency wallet and that no one else has access. Moreover, there is no “lost password” type of system where a key can be recovered.
The blockchain itself is essentially a public record of transactions. It mathematically guarantees that the transaction in question comes from that specific owner’s wallet. It is far more secure than virtually any other form of transaction happening right now. Users feel safe when using Bitcoin and that is a huge selling point.
Con: Lack of Regulations
Though most investors focus on the rises and falls of Bitcoin, the lack of regulation is another critical issue. Though decentralization is crucial for the very core of cryptocurrency, it also presents the problem of regulating the industry. Scammers and thieves are a major part of the crypto world and have been a major reason why other coins have not been able to grow at the same level as Bitcoin.
Though the SEC, the top regulator in the United States, continues to implement regulations, other government entities are not following them. Bitcoin is also taxed, so it has to be reported as capital gains or losses on your tax return. The inability to write off those losses is another challenge that investors have to navigate given no regulations are surrounding it.
Bitcoin is ultimately one of the fastest-rising investments in the world. Even 15 years later, it continues to climb upward. What the next year (and the years after) holds remains to be seen, but Bitcoin will be there.
