What would your profit be today if you invested in Bitcoin years or a few months ago?
Bitcoin is on the rise right now, and many investors and venture capital firms are betting that it is here to stay. It's the first cryptocurrency that became the leading player in the crypto market.
A bitcoin investment is any investment carried out to make more bitcoin or more funds in return. You can learn more about investing for developers through my newsletters (+bonus: Top-15 Cash-Freeing Tips Cheat Sheet).
Bitcoin is a system for securely buying, storing, and using money digitally as a general concept. Once you have Bitcoins stored in a Bitcoin wallet, you can use them as currency or an asset like gold.
Bitcoin investment comes in various forms:
‣ Trading: buying at low prices and selling cryptos at higher prices. It involves learning skills like trading in forex, which helps inform you of bitcoin's next rising or falling moves.
‣ Buying and Holding. It's a famous approach with the bull run in 2017. It means buying Bitcoin for keeps and waiting to sell after an estimated time when the price must have gone above the region at which you purchased it.
‣ Mining. It's a method that deviates away from the traditional purchasing norm. Basically, it's solving mathematical transactional problems on the blockchain and getting paid in return for these services. You just need to provide a CPU or GPU to run these programs.
If you wonder how much amount of profit you would have made if you have invested in Bitcoins earlier, here is a calculator for that:
It works on a quite simple formula:
const price = btcPrices[month];
if (!price) {
invalidMonthRange();
return;
}
const lastPrice = btcPrices.lastMonth;
console.log(`Price for month ${month} was ${price}`);
console.log(`While the price for the last month was: ${lastPrice}`);
const roi = (lastPrice - price) / price;
const grossProfit = roi * amount;
console.log(`Gross profit now would be: ${grossProfit}`);
console.log(`ROI: ${roi}`);
setGrossProfit(grossProfit);
setROI(roi);
In the example of the future returns, you see the hypothetical growth of Bitcoin during 2021 and how your initial investment would be growing at the average growth percent per year based on the historic value of Bitcoin.
The Bitcoin annual growth is the highest form of speculation and may not be suitable for all. So, you should be careful and not bet a significant amount on such activities.
Bitcoin is a currency. Currencies store value. Bitcoin's stability as a currency is a whole other topic.
If you are up to trade Bitcoin, you can hedge or speculate on getting more returns. Such as was popular with gold or oil back then.
I have nothing against Bitcoin speculating or hedging if you are profitable in the end. That's why forex exists.
The problem today to consider Bitcoin as a valuable investment is that unlike stocks, there are no tied/tangible assets to it; Bitcoin doesn't pay dividends out. Yet, in 2021 there are no government or financial institutions behind it—no FDIC insurance.
On the other hand, in some stock markets, you can trade-in "short-positions" and vice versa "long-positions." It means to sell first at a premium and then to buy at a lower price. This approach is mainly used in commodity trading (gold, oil, diamonds) on futures markets. Relating to the rising price of Bitcoin, now it's also possible to trade in the long term in the weeks to months, months to years. For example, buying at a bargain price for several prices and sell after the price increases.
In fact, its exchange rate against the dollar attracts potential investors and traders interested in cryptocurrency plays. Many investors believe that digital currency is the future. Those who endorse it think it facilitates a much faster, no-fee payment system for transactions worldwide.
Final Thoughts
Investing in Bitcoin is highly risky! Investors need to be aware of it before purchasing it. You can find more extensive information on the original cryptocurrency all over the web today.
It takes time and effort to understand how bitcoin works. Bitcoins are limited, and as time goes on, they become harder to mine. Anyone can send bitcoin from anywhere in the world. No bank can block or close your accounts and payments yet. That's why Bitcoin may be a great financial tool for "money" washing, that's illegal!
If you are interested in Bitcoin investing, the prudent approach is to do your research and discover whether you are willing to enter an emerging digital asset market with no precedent.
Making small investments is a great way to start and learn how to interact with bitcoin-wallets without overexposing yourself and your money to the market's volatility.
The general narrative around Bitcoin that has been molded over the years is that of digital gold. Its insurance rate is controlled by its mining difficulty and decentralized network, which gives advantages over fiat currencies, so your investments supposedly won't be diluted through inflation or devaluation.
Disclaimer: Author’s opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by IlonaCodes constitutes an investment recommendation, nor should any data or content published by IlonaCodes be relied upon for any investment activities.