There’s been a lot of hubbub in the news lately about a controversial form of digital currency known as bitcoin.
What used to be small, obscure hobby for the most Internet-savvy has become a worldwide phenomenon, grabbing headlines from big-time media companies.
Bitcoin’s coverage in national media has been a confusing mix of positive and negative, so you may be wondering if it something you should get involved with at all.
Is it the way of the future or is it a bubble that will inevitably burst? Should you buy bitcoin now, later, or never?
Regardless of what the mainstream press says, I think bitcoin is a worthy investment for anyone that has the income to do so.
Before I get into the reasons why you should buy bitcoin, let’s start with some basic knowledge about bitcoin.
What The Heck Is A Bitcoin, Anyway?
If you already know about bitcoin and its inner-workings, you can skip ahead.
If you’re a novice, though, you’ll want to stick around.
Bitcoin was created in 2008 by an anonymous hacker that goes by the name Satoshi Nakamoto.
It was a currency designed to allow anonymous monetary transactions without the authority or oversight of a central bank or government.
Anyone can buy, send, or receive bitcoins without ever having to deal with things like ATM fees, hidden bank charges, or the government snooping in on your business.
But like the best-laid plans of mice and men, Satoshi’s vision for bitcoin has been led astray.
Bitcoin is still a currency, but these days, it is thought more of as a stock or an asset, like gold.
Either way, though, thanks to Satoshi’s innovation, any transaction used with bitcoin gets added to a virtual “bank statement” where a record every transaction is stored.
This virtual ledger, which is colloquially known as the “blockchain,” is encrypted and humanly impossible to tamper with.
Okay, But Where Do Bitcoins Come From? What Are They?
Good question.
Computers (called “bitcoin miners”) package recent bitcoin transactions into “blocks” to be added to the blockchain.
This process verifies and encrypts the transactions, and when the block is made, the miner is rewarded with a certain amount of bitcoins!
It’s a self-sustaining process: someone buys something with bitcoin, the miner encrypts that transaction (and others), and is rewarded with more bitcoins.
This encryption process is incredibly strenuous, even for computers, so you can’t just mine them with your laptop.
The mining process requires warehouses full of computers to function, so unless you have a ton of space or money it’s out of the question.
This is good news, though, because it keeps bitcoins scarce and their values high!
If you want to learn more about bitcoin and cryptocurrencies in general, I recommend taking a look at cryptoexplain.com.
Now, we’re back to the essential question: Should you buy bitcoin?
The answer is an unequivocal yes.
Allow me to provide you with 6 reasons why you should buy bitcoin today.
6. You Don’t Mind Volatility
Part of the reason bitcoin sometimes gets bad press is because it’s so volatile.
And it’s true, it is a volatile currency, but it shouldn’t be a knock against it.
It is currently only volatile because its value is hard to pin down at the moment, so it’s more vulnerable to changes in the market.
But this shouldn’t be a knock against it. Bitcoin is a brand new currency. Yes, it was created in 2008, but it only soared in popularity within the last year or so.
Most people don’t understand what it is yet, forget about its value.
So in the meantime, as the bitcoin market matures, just take into consideration that bitcoins value will take some sharp twists and turns.
Besides, there has also been periods of time where bitcoin has been more stable than gold, which is a good sign.
5. More People Are Using Bitcoin Everyday
You may have missed the first wave of bitcoin mania, but the sky is the limit for how popular this asset can get.
Bitcoin, at its inception, almost no one was using bitcoin and it was worth less than 10 U.S. cents. Now its value has exploded to over 8,000 U.S. dollars.
This is partly thanks to the amount of people that now see value in bitcoin.
Currently, there are more than 28.5 million bitcoin wallets in the world, and if this overall trend continues, bitcoin will only become more and more valuable.
Buy bitcoin now, before the next wave of cryptocurrency adopters hop on the bandwagon.
4. Bitcoin Mining Technology is Improving
The bitcoin community is staring in the face of some pretty stark limitations of our current computing power.
Bitcoin has exploded in popularity so much in the last few years and there have been so many more transactions that bitcoin miners are having trouble packaging them all in the blockchain.
This should only be temporary though, as technological improvements are on the horizon.
Segregated Witness, a bitcoin software upgrade has already boosted the price of bitcoin by allowing miners to package more transactions in a single block.
On top of that, something called a lightning network is being overlaid on top of bitcoin’s existing network, that will allow a bitcoin miner’s transaction processing capacity to increase.
For now, these technological limitations are a good thing because…
3. Bitcoins Are Being Created at a Slower Pace
The current market cap on bitcoins is 21 million. That is all that can be created. Unlike the U.S. dollar, bitcoins can’t actually be printed out of thin air.
Currently, there are 16.7 million bitcoins in circulation. This means that there are roughly 4.5 million bitcoins left to be mined.
To slow this process down, bitcoins goes through a process called “halving.”
After a certain number of bitcoins have been mined, the reward a miner gets for packaging block in the blockchain gets cut in half.
So if a miner used to get 10 bitcoins for encrypting a block, he would only now get 5.
It’s a form of artificial scarcity, akin to the U.S. mint to decide to stop printing money at such a rapid rate.
This halving means that bitcoins will only grow more scarce in the future, so buy bitcoin now!
2. It Outperforms The Competition
This reason is simple. While bitcoin can be more volatile than the stock market, it performed astronomically better in 2017 than all of the top global stock markets combined.
In 2017, the Zimbabwe Industrial Index grew by 117.67%. It over doubled in value in a year. It’s an incredible achievement by any metric.
But it pales in comparison to Ripple, a top cryptocurrency, which grew by a whopping 28,963%.
Bitcoin itself, grew 1390%, and it was only the sixth best performing cryptocurrency that year.
There are risks involved when buying bitcoin, but the results can be outrageous.
1. Money Is Digitizing at a Growing Rate
With each passing day, paper money feels more and more archaic, a holdover from an ancient time.
In an average person’s day-to-day, chances are they are already making the majority of their purchases digitally, either through credit and debit cards or programs like Apple and Samsung Pay.
Canada got rid of the penny in 2012, and U.S. citizens are wondering why the U.S. government doesn’t do the same.
Some countries have even considered going cashless altogether.
I believe that this trend will only continue going forward, and when the paper-dollar finally dies, people will turn to digital currencies like bitcoin.
If you buy bitcoin now, you’ll be able to watch its value, and your profits, skyrocket.
If I Do Want to Buy Bitcoin, How Do I Do It?
There are plenty of bitcoin marketplaces to choose from, but Coinbase is a fan-favorite.
You can download it as a mobile app on your phone, and it has a bright, friendly user-interface that walks you through the steps of buying your first bitcoin.
All you have to do is connect your bank account to the app, buy bitcoin, and your money gets saved a virtual wallet in the cloud that only you can access.
Not only can you buy bitcoin there, you can also track the market trend of tons of different cryptocurrencies.
Final Thoughts
It’s important to remember the limits of your personal financial situation when deciding to invest in anything, much less an unknown quantity like cryptocurrencies.
I wouldn’t want to guide someone to their economic immiseration if they don’t have the money to stick it out in the crypto market so I feel it necessary to add this disclaimer.
The general rule is to always invest with money that you wouldn’t mind parting with should the market take a nosedive. No one should be risking their rent money on bitcoin, or any investment for that matter.
But if you do have a money to risk on investments, I think bitcoin is the soundest decision you can make.
Happy buying, and may the market swing in your favor!
If bitcoin isn’t your thing, or you want more financial tips, check out our business blog.