Can I invest $100 in Bitcoin: FAQ About Bitcoin
If you’ve picked up a newspaper recently then you’ve likely heard of the term Bitcoin. Bitcoin is one of the most popular cryptocurrencies that was launched in 2009. Satoshi Nakamoto was the founder of Bitcoin and started the decentralized digitalized currency after publishing a nine-page document outlining the need for cryptocurrency. Since its inception, Bitcoin investment has been on the rise as many have taken stake in its value. In this article, we will answer many commonly asked questions about Bitcoin investments and whether it’s worth it to invest $100 into Bitcoin.
Is Bitcoin Real Money ?
With a name like “Bitcoin”, you may have wondered is Bitcoin real money? Bitcoin is a cryptocurrency, which has a large value, making it worth a lot of “real money.” Traditional money that we are accustomed to is centralized because it is regulated by banks, and the transactions are held within a single location (i.e., the bank). In contrast, cryptocurrency is decentralized, meaning there is no single location or controlling authority for the currency. Moreover, it is governed by its users as anyone is able to keep track of transactions causing many to believe cryptocurrency is more reliable. Cryptocurrency, such as Bitcoin, has greatly increased in value since its inception in 2009. As of mid-2022, one Bitcoin is worth $23,270.90.
Can Bitcoin get you rich?
Some people who have traded cryptocurrency have become millionaires, so it is no doubt that cryptocurrency like Bitcoin has the ability to make someone rich. However, investing in Bitcoin comes with a great deal of risk. Looking at a graph of Bitcoin’s value over the past five years shows just how volatile cryptocurrency can be. The graph below shows that Bitcoin remained relatively stagnant between 2018 and 2021. However, at the beginning of 2021, Bitcoin’s value drastically increased, hitting a value of $60,000, which was its peak. Unfortunately, the graph also shows just how volatile Bitcoin’s value can be as the steep inclines and declines in value have pervaded since the beginning of 2021, and now we are seeing the largest recession in Bitcoin’s value ever. Thus, yes, Bitcoin can certainly make you rich, but the market is extremely unpredictable and investing money a huge gamble with a 50/50 outcome.
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What is the minimum amount to invest in Bitcoin?
As we’ve noted, investing in Bitcoin, though risky, can have a massive payout if the value rises after you’ve purchased a share. Many people wonder what is the minimum amount to invest in Bitcoin, and there is no minimum amount required. You do not need to purchase an entire Bitcoin at $23,145.10 to get into the market; you can buy a fraction of a Bitcoin.
Some have started with as little as two dollars. Despite there being no minimum requirement for investing, some recommend investing an initial $100 to dip your toes and get into the cryptocurrency market. Truly, the amount you should invest will depend on your risk tolerance and your available investment capital. If you have more capital that you can afford to lose (if things do not go as planned), then investing more may be a better choice. Remember, gaining wealth through any investment, cryptocurrency, or stock depends on how much you put into them. The more you put into them, the more you will get out of them if they rise in value.
Who gets the money when you buy Bitcoin?
A Bitcoin transaction are analogous to any other transaction you encounter in life. A buyer and seller agree on a price and the trade is executed over that exchange. Therefore, an investor (i.e., you) purchases a Bitcoin and the seller receives your money in exchange for the Bitcoin. Buying and selling of Bitcoin is a constant process and there are people all over who are willing to part with their Bitcoin for a price while others are hoping to enter into the Bitcoin world for a price. People who are willing to pay above the agreed upon value of Bitcoin cause the value of Bitcoin to increase.
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How long does it take to make money on Bitcoin?
Research conducted in 2021 found that it takes on average 1,335 days or three years and eight months for individuals to make money off of Bitcoin. Many believe Bitcoin investments can result in a fast and easy profit, this is not the case. It takes up to three years to make a profit because the market it volatile, but the study found that users had a 75% chance of making a profit if they held their Bitcoin for just 317 and the chance of profit rose as people held onto the Bitcoin longer. We encourage investors to keep track of Bitcoin’s values, but overall many strategist recommend holding onto Bitcoin long-term. Some financial experts even recommend that investors hold onto Bitcoin for five to ten years. Think of Bitcoin as a long-term investment that will likely grow with age.
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When should I sell my bitcoin for profit?
In addition to considering the length of time to hold onto Bitcoin, you should also consider its value compared to your purchase price. Financial investors typically recommend selling Bitcoin if the value has rose 30% or more since you purchased it. Thus, the logic is as follows: if the value of Bitcoin has substantially rose, then sell your Bitcoin for a profit.
Additionally, you can sell and still keep some Bitcoin to continue holding onto it for the long term investment. However, some people feel tempted to sell their Bitcoin if the price plummets with no rise in sight. Price should not be the only factor determining whether you sell your Bitcoin. For example you may want to consider the following if you sell your Bitcoin:
- The tax implications of selling Bitcoin.
- Whether you have a better investment opportunity lined up to supplement the loss.
- Are there signs the value of Bitcoin will rise again in the future?
Considering these factors in addition to the Bitcoin value will help you make the best decision.
Is it worth investing in Bitcoin?
Bitcoin is a relatively good investment opportunity, but it’s risky as we’ve seen in the graph above. Many believe cryptocurrency will replace national currencies in the future. Moreover, Bitcoin specifically is the greatest performing assets in the world as it increased 302% in just one year. However, as we’ve seen it can decrease just as quickly.
If you want to try out cryptocurrency investment, we recommend starting with $100 to see how it goes. As always, we never recommend relying on a single investment option, but rather we recommend diversifying your investment profile so that if one investment doesn’t work out, there are others to fall back on. The natural ebb and flow of the trading realm will balance out any loss that may occur from a single investment. As always, happy trading, friends!
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