Is It Worth Buying Bitcoin Now?

After watching Bitcoin’s astronomical rise from $997.69 at the start of 2017 to the current value of $15,429.68, as of January 2nd, 2018, it is safe to say that many people have suddenly taken notice of cryptocurrency and are eager to buy Bitcoin for future gains.

Bitcoin has made many headlines in 2017. What’s the buzz?

It is highly unusual for any commodity, let alone a currency, to appreciate by 1,410 percent year-on-year. The average market gain for all stocks is around 7 percent, so it is no wonder that a great deal of discussion has centered around the cryptocurrency.

Bitcoin was invented on January 3rd, 2009 by the mysterious Satoshi Nakamoto whose identity is still unknown. Speculation abounds as to who Nakamoto is, and many also believe that Nakamoto is a single alias used by a whole group of programmers.

The purpose of Bitcoin was to be a currency that did not rely on banks or intermediaries to be owned, but could instead be transferred by peer-to-peer networks – this is what is meant by a decentralized currency. Bitcoins are created through the encoding of private and public cryptographic keys, a process that requires supercomputers to crunch through a bewilderingly high number of calculations every second. This is what secures the Blockchain network – the fact that it would take immense processing power to defraud the network – more processing power than any individual has. Only 21-million Bitcoins will ever be created.

Initially, not many people took notice of Bitcoin, as its technical nature made some people reluctant to understand it, and its lack of a central issuing authority, such as a bank, made others hesitant to invest in it or use it as a currency.  However, a rise of 1,410 percent in a given year is hard to ignore, especially when new millionaires are being created practically overnight. This is why 2017 has been a year for Bitcoin to break into the public consciousness.

By how much has Bitcoin’s value appreciated and depreciated historically and in 2017?

According to World Coin Index, Bitcoin is prone to sharp rises and sharp, sudden falls. Initially, Bitcoin’s value was insignificant. On March 17th, 2010, BitcoinMarket.com listed a sale price of $0.003 per Bitcoin or 333 BTC for $1. Over a year later, on April 22, 2011, Bitcoin reached the value of 1 USD. The first major ‘bubble’ price it reached was $31 and then dropped to $2. The second major bubble was $266, then it fell to $70. The third bubble took it as high as $1,242 on November 29th, 2013. After this crash, it rarely returned to the $1,000 mark, reaching as low as $200 in March 2015 but usually staying in between $500 and $800.

This trend held true right through to the end of 2016, breaking the $1,000 mark again only on January 1st, 2017. By November 28th, 2017, Bitcoin was at $10,000 and rising.

Will this year bring Bitcoin’s fourth price bubble?

What are some threats to Bitcoin?

As you can see from the price fluctuations, Bitcoin is a very volatile currency. No one knows what its value will even be tomorrow, let alone a week from now.  This makes Bitcoin very unsuitable as a currency. This is similar to national currencies where there is hyperinflation, which is what happened in Zimbabwe in 2009. Eventually, after printing notes worth one hundred trillion Zimbabwe dollars, Zimbabwe’s Reserve Bank stopped printing its national currency as it was completely inappropriate for people to bring wheelbarrow-loads of money into stores to do their grocery shopping.  What this means for users is that investing in Bitcoin right now is very like gambling – highly speculative.

Another threat that has recently emerged is the processing fees of Bitcoin. At the moment, the Bitcoin network can only process four transactions per second. At the start of the year 2017, some exchanges charged 19 US cents to get your transaction confirmed within an hour. At the time of writing, it costs almost $17 to process within an hour, or just under $29 to have it processed within ten minutes. The graph of transaction costs closely resembles the graph of the value of Bitcoin itself.

Currently, according to The Motley Fool, Bitcoin is illegal in six countries – Bolivia, Ecuador, Kyrgyzstan, Bangladesh, Nepal, and most recently, Morocco. Furthermore, Russia’s finance ministry suggested in September 2017 that they may soon ban payments in Cryptocurrency, too. Each country that makes Bitcoin illegal is a risk to the value of Bitcoin because it decreases investors’ confidence.

Other possible threats to the price of Bitcoin include loss of appeal. Big businesses no longer accepting Bitcoin, hackers targeting large Bitcoin exchanges in order to illegally steal Bitcoin, and the fact that many investors are individuals rather than firms mean that any bad news about Bitcoin is likely to have a snowball effect – just as the good news throughout 2017 has arguably done.

Who thinks investing in Bitcoin is a good idea, and why?

According to ARS Technica, Bitcoin may well not be a classical investor bubble. Bitcoin has so far recovered from all of its shocks, each time becoming higher. This consistent recovery of Bitcoin over the years, along with the durability of the global Internet, suggests that the network won’t be shut down, nor will confidence suddenly plummet to zero. Finally, it is actually possible to print your own keys on paper, so non-digital storage is possible, too.

So, should you buy Bitcoins now?

Some believe the safest option for individuals without specialist trading knowledge is the ‘buying and holding’ method with which you should never invest more than 1 percent of your net worth, use your own hardware or paper ‘wallet’, and, instead of buying all your Bitcoins in one transaction, rather buy a fixed number every day, week or month until you reach your intended amount.

To buy Bitcoins easily you can turn to cryptocurrency exchanges like CEX.IO that offer a variety of trading options and operate in most countries. CEX.IO stands out for its useful feature of buying cryptocurrency with a payment card, be it VISA or MasterCard. By linking one or several cards to the account, CEX.IO users are able to carry out purchasing operations faster and with no risk as the exchange possesses the PCI DSS certificate (Level 2), which indicates safe processing of the cardholder data. Apart from the credit card payment option, CEX.IO also supports wire transfers and CryptoCapital transactions to provide the comfort of use and improve customer experience on the platform.

In the end, it is up to you to decide whether it is worth spending your hard-earned money and buying Bitcoin now. The only advice that should be running in your mind – Never invest more than you can afford to lose.

 

Source:newsbtc
Image:newsbtc
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