Is Bitcoin Money? Is Bitcoin A Safe Investment or A Good Investment?

Several important banks and financial institutions, particularly in the United States, are preparing to allow their customers to buy, hold or trade bitcoin. The growing interest of customers in bitcoin is prompting them to take this course because, in the absence of it, they will be heading elsewhere to invest in bitcoin.

Debit card rewards paid in bitcoin and new kinds of bank accounts that might pay interest in the cryptocurrency are two examples of the fintech services that banks are introducing for Bitcoin. In order to fully own and control our money with Bitcoin, we must be prepared to take personal responsibility for learning what Bitcoin is, what it is intended for, and what it promises. Although certain ideas can be difficult to understand at first, persevering with it will pay off in the end. Bitcoin not only has the ability to improve a person's financial situation, but it also has the power to actually change the world and make it a better and more just place.

You'll see why it's seen to be the next natural step in the evolution of money—a step that really retakes control of money from governments. Because of this, both the media and the government propagate a lot of misinformation about Bitcoin, but we Huddlers also think it offers a lot of hope for the future of humanity.

IS BITCOIN A SAFE INVESTMENT?

Positives

• The main reason why Bitcoin is regarded as a secure investment is because of its extremely secure SHA-256 algorithm, which was created by the U.S. National Security Agency (NSA). No other cryptocurrency can match Bitcoin's level of security; the blockchain has never been breached, and as new blocks are added over time, it gets harder and harder to attack.
• Predictability is a key aspect of Bitcoin, as the protocol controls its issuance and supply. Therefore, as long as supply and demand economics remain true, the effects of scarcity should be dominant.
• Bitcoin is also distinctive and safe as private property because, if you own it and store it correctly, it cannot be stolen from you. It is ensured by the inherent motivations of people taking part in the network, not by a local authority or legal system. Investors in bitcoin should also take into account the fact that their bitcoin is safer in their bitcoin wallet than their cash is at a bank where it gets rehypothecated.
• According to the Lindy effect, which states that a technology's life expectancy is proportionate to its age, Bitcoin has at least another 12 years left in it. Furthermore, Bitcoin seems to be here to stay, and we may anticipate it to live a far longer life than it has in the past, despite being proclaimed dead hundreds of times.
• If they did not feel Bitcoin was here to stay, well-known individuals, powerful investors, and businesspeople would not have gone so far as to endorse it. Along with having the item in their own portfolios, notable figures like Jack Dorsey, Elon Musk and Tesla, Michael Saylor, Ray Dalio, and others have replaced gold and cash reserves with Bitcoin in their firms' reserve assets.

Negatives

• Many may argue that price volatility is actually a benefit and not a bug, despite the fact that it is frequently regarded as a big problem by prospective bitcoin investors. First of all, as it is still a new asset, bitcoin is subject to significant price fluctuations. As bitcoin ages, the price volatility should continue to decline as it has in the past. Furthermore, the price of bitcoin tends to rise over the long run rather than fluctuate, especially if we look at a multi-year chart where the uptrend is visible.
• The learning curve for Bitcoin can be intimidating for beginners, as is common with new technologies. But as time passes and as a result of businesses' efforts to improve usability, utilizing wallets, keys, applications, and other accessories becomes simpler.

How does bitcoin make money?

The Bitcoin network satisfies thoughtful incentives that guarantee miners are paid with bitcoin in order to maintain it.

Similar to how Satoshi mined the initial blocks, early Bitcoin was mined by normal node operators who only used their computer's CPU power to discover the next block. Node operators were compensated with bitcoin for adding new blocks to the longest chain, which served as an incentive for them to spend their power to grow the network.

This procedure, known as proof of work, is the fundamental consensus technique that forms the foundation of the Bitcoin network and ensures the maximum level of security for it.

The network's normal CPU power was no longer sufficient as more nodes joined and began to compete for block rewards. To compete with other miners and locate the next block more quickly, over the course of ten years, miners had to migrate from graphic processing units (GPUs) to the modern application-specific integrated circuits (ASICs) mining equipment.

This is basically how Bitcoin generates income through a system of incentives. How much does a single bitcoin cost to produce? The cost of power, the mining difficulty (an automated adjustment required to maintain the block production time at around 10 minutes), and the block reward must all be taken into account when determining whether mining is economical.

The cost to manufacture 1 BTC is projected to be around $35,500 with a block reward of 6.25 BTC, difficulty of 27.5 trillion hashes, $0.15 per kilowatt hour (kWh), and energy efficiency of 45 joules.

Question, Is Bitcoin money?

Money has long been seen as a tool that enables value exchanges between members of an economy, starting with the usage of commodities like grain and progressing to precious metals like gold and then government-controlled fiat currencies.

With the exception of stability at this time, the definition of money has evolved over time to include a few key characteristics such fungibility, durability, mobility, divisibility, and stability.

Bitcoin is almost the most ideal form of money ever produced if we include scarcity and other features like censorship-resistance, programmability, and decentralization.

However, until 1971, when U.S. President Richard Nixon opted to forego the U.S. dollar's ability to be converted into gold, this was not the case. Despite what we have been made to think, only fiat currencies are considered to be money.

These days, money is created digitally, and what we see in our bank account, for instance, is just a straightforward entry on the bank ledger. Even if there is genuine money kept on the opposite side of the ledger, we are unsure of it.

Bitcoin, which lacks a physical component, is the purest form of money. Although it is also a record in a ledger, if we use a non-custodial wallet (one that is run by us), we have control over the private key and no one can take our money away from us. Because of this, when the local fiat money is blocked by a nation state that has unchecked power to seize assets, Bitcoin enables people to flee wars and totalitarian regimes.

IS BITCOIN A GOOD INVESTMENT? 

Such a question is inevitable with a commodity appreciating as quickly as bitcoin. It's obvious from the price evolution of bitcoin that there have been a number of dramatic bubble stages, followed by significant price decreases.

Can Bitcoin be converted to cash?

Although investors should be aware that converting bitcoin to cash may result in a taxable event and may prove to be a regrettable choice in the long run, there are surely a number of ways to do so.

• The most common method for getting bitcoin out of a wallet and into cash is by using cryptocurrency exchanges, which act as third-party brokers. Before you can even link a bank account to transfer the required fiat currency acquired from the sale of bitcoin, the procedure necessitates a few KYC steps to confirm your identity and comply with money laundering legislation.
• There are around 38,000 Bitcoin Teller Machines (BTMs), also known as Bitcoin Automated Teller Machines (ATMs), available globally. To exchange your bitcoin for cash, all you have to do is scan a QR code from your Bitcoin wallet over the device. However, fees at BTMs are substantially higher than they are almost everywhere else.
• Banks have lately thought about selling bitcoin. Several significant financial institutions, particularly in the US, are poised to let their clients purchase, keep, or trade bitcoin. Customers' growing interest in bitcoin pushes them to take this course since, absent it, they would turn elsewhere to invest in bitcoin.
• Debit card rewards paid in bitcoin and new kinds of bank accounts that might pay interest in the cryptocurrency are two examples of the fintech services that banks are introducing for Bitcoin.

How much should I invest?

How much to invest in bitcoin depends solely on the individual's availability and preferences, keeping in mind that it's never a good idea to risk more than you can afford to lose. Even the safest investments come with some risk, and bitcoin is no different.

Building confidence in Bitcoin would benefit from education, and getting started with tiny purchases might help you get a feel for the currency.

Small retail investors who have learnt to conserve money by avoiding pointless purchases and instead using it to purchase bitcoin find it to be one of their favorite investments. Making regular purchases might help people get over their fear of excessive volatility and manage better with its price changes. Always remember to save some cash for unexpected expenses.

When is the best time to buy?

The optimum time to purchase bitcoin is when you have money ready to invest because it is difficult to timing the market accurately.

The price may be determined by looking at fundamentals and technical analysis; for example, when bitcoin achieves an ATH too rapidly, it will probably retrace. The inverse is also true, making it a smart idea to acquire bitcoin when it declines if you plan to hold it for a long time and are aware that the price may drop.

Dollar-cost averaging (DCA), in which you devote manageable money daily, weekly, or monthly, is the greatest and most popular method among Bitcoiners. In this manner, price fluctuations won't matter and the difference won't even be seen with little purchases. Nevertheless, the approach enables you to amass a respectable sum of bitcoin over time without experiencing any strain.