It is a question that many people are asking right now — is Bitcoin safe to invest in? As the value of Bitcoin has risen exponentially in recent months, more and more people are considering investing in cryptocurrency. But is it a wise decision?
This blog will answer that question by examining what makes up Bitcoin—explaining Bitcoin’s advantages, risks, and what sort of investment you can make.
What is Bitcoin?
Bitcoin is a cryptocurrency. A form of digital money stored in the form of a digital ledger, or ‘blockchain.’ It was invented by an anonymous individual known only as Satoshi Nakamoto in 2009.
Typically, the currency is stored on computers that run software programs called ‘wallets.’ These wallets contain a considerable amount of information about each Bitcoin account. They are also used to help determine which coins have been mined and therefore deserve to be considered ‘spent.’ The former means they have already been put in circulation and thus cannot be redeemed for more Bitcoins. In contrast, the latter means they have already been used up.
Bitcoins are stored at a digital address, using a private key associated with the address. Bitcoins are stored in a decentralized fashion, rather than an individual entity responsible for their safe-keeping.
It is used to buy and sell products just like any other currency (for example, online vendors such as Overstock allow you to pay with Bitcoin). It can be used internationally and is accepted by many merchants worldwide.
Like any other currency, Bitcoins can be transferred from one person to another. However, you need some third-party service to ensure that your Bitcoins are insured. This is where transaction fees for wallets play their role.
In most cases, the wallet will include a small fee when you send Bitcoins from your wallet to another person’s Bitcoin address (or vice versa). There are many ways of doing this, namely ‘bitcoin mining’ and ‘bitcoin exchanges.
Why has Bitcoin plummeted?
Bitcoin price and other giant names in the cryptocurrency world suffered a dip last December 2021. So far, crypto prices have been on a downward trajectory ever since. Hence, investors are not ready to invest in digital currency. There is a strong correlation between its price and its market value.
The whole geopolitical conflict between Ukraine and Russia led to the devaluation of RUR (Russian Ruble). Also, it garnered a lot of negative international media attention.
To make things worse, China moved to curb capital outflows, resulting in restricted access to cryptocurrency exchanges. As a result, it brought down its trading value and resulted in a major fiasco in cryptocurrency.
But this must not be the end of the story. If one is going to invest in cryptocurrencies, then one should have a picture of where it will go. For example, the current price decline may very well be a reflection of a long-term uptrend. Such being the case, we might see a strong rally in the near future.
But for now, it’s better to stay away from this investment opportunity due to its volatile nature.