Everything You Should Know About Investing in The Bitcoin Network
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Bitcoin and the blockchain technology are one of the most amazing and exciting investment opportunities of the last decade in the finance industry. Hundreds of people, individual investors, traders and huge financial institutions like banks or venture funds, are choosing Bitcoin. There are many ways to invest money into this new, significant and fast growing industry. Today, we’re going to disclose two of them.
Reasons to Invest
When we say that Bitcoin is one of the most amazing and exciting opportunities to use money, we are not kidding; it’s true. The Bitcoin network has shaped the whole industry of cryptocurrencies and today there are many alternative coins or simply altcoins as Litecoin, Darkcoin and so forth. Bitcoin’s influence in the IT world has been underestimated but even so, we can see it is significant.
Big financial institutions, the old and reliable like UBS, have already announced their interest in blockchain technologies as one of the most promising inventions of the last decade. Traditional banks and funds can save more than $20 billion on transactional costs per year. Nowadays, Citigroup is developing its own blockchain technology with its own cryptocurrency called Citicoin. It’s only a prototype in order to understand the opportunities of the blockchain technology but still the intention is clear. The finance world has been interested in Bitcoin and blockchain so there’s always going to be a good chance to invest money.
Risks That Exist
First, we’re going to talk about risks. In fact, when there’s a conversation about investment, the most important thing is the risk level. All professionals know there is no good profit without risk. Let’s discover what risks related to Bitcoin exist.
The first and the most obvious is the cryptocurrency price fluctuation. Nobody can say for sure how much Bitcoin will cost tomorrow or the day after, a week, month or even in a year. We can estimate that the peak of the cryptocurrency fluctuation has already passed in 2013 when it cost about $1,000 per coin. It seemed to be a consequence of Bitcoin’s growth. It is unlikely that such a significant growth will happen in the near future, but there are still risks. Of course, an investment in the cryptocurrency does not mean only buying and selling Bitcoins. Investment in startups, hi-tech companies, venture funds and others which work in the Bitcoin network, providing services related to blockchain, Bitcoin online wallets, exchanges, online shops and so forth; all these companies can be endangered by a price fluctuation. The losses will not be as large as in the case of buying the cryptocurrency itself but it still can damage a portfolio.
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Option One: Trading
We have already discussed that price fluctuation can be dangerous to an investor’s pocket so we don’t recommend this as your main option. It should account for 20-30% of your portfolio. In the Bitcoin network, there are enough online exchanges where almost anyone can buy or sell the cryptocurrency.
The most popular western exchanges are, , and . Though they are well-known, the most popular in the world is a Chinese company. The biggest transaction exchange by volume is . They are exchanging more than 187 thousand Bitcoins. So, if you live in Asia, especially in China or Hong Kong, this is a good option for you to start with an extremely liquid currency such as Bitcoin.
Option Two: Startups
If the money you have at your disposal is more than the average that people usually spend on investments, you may may be interested in something more promising and reliable then just trading with currency. Big corporations like Goldman Sachs and Citigroup have already invested their money into promising startups. For example, Goldman Sachs has invested $50 million into a startup called Circle Internet Financial which works in the Bitcoin industry. So, if such a huge corporation believes in Bitcoin, you can believe and look for an opportunity to invest your money.
This really young and developing industry is waiting for new funds by investors who are interested in the Bitcoin network and believe in the future of the cryptocurrency. These promising companies can lose everything in a few years, it’s a risk, but on the other hand, the potential profits can highly reward your investments.
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