Why Invest in Bitcoins for a Diversified Investment Portfolio

Investing in bitcoins can provide a safe-haven asset for your portfolio, as it has historically performed well during times of economic uncertainty, such as the 2008 financial crisis.

Bitcoin's decentralized nature and limited supply make it less susceptible to inflation and market manipulation.

Including bitcoins in your investment portfolio can help spread risk and increase potential returns, as it has shown a relatively low correlation with traditional assets like stocks and bonds.

A well-diversified portfolio that includes bitcoins can help you achieve your long-term financial goals, such as retirement or a down payment on a house.

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Bitcoin is a digital or virtual currency that uses cryptography for security and is decentralized, meaning it's not controlled by any government or financial institution. It was created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto.

Bitcoin operates on a peer-to-peer network, allowing users to send and receive payments directly without the need for intermediaries like banks. This network is maintained by a network of computers around the world that work together to validate and record transactions.

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Each bitcoin is divisible into smaller units, known as satoshis, and the total supply of bitcoins is capped at 21 million. This limited supply helps to maintain the value of each bitcoin.

Bitcoin transactions are recorded on a public ledger called the blockchain, which serves as a permanent and unalterable record of all transactions made with the currency. The blockchain is maintained by a network of computers that work together to validate and record transactions.

Investing in Bitcoin has become a highly popular strategy due to its exponential growth since its launch in 2009.

The value of Bitcoin has skyrocketed, making it a profitable addition to any portfolio.

A reliable store of value is another draw, as the supply of Bitcoin is limited and not controlled by any central bank or government.

This independence from central authorities means they can't simply print more Bitcoin to devalue it.

Bitcoin's liquidity is also a major advantage, with low exchange rates making it easy to swap for cash or other commodities.

You can buy and exchange Bitcoin yourself with a digital wallet, eliminating the need for a broker.

All you need to get started is your bank account information and an internet connection.

To start investing in Bitcoin, you'll need to visit a cryptocurrency exchange, such as Coinbase Global or Kraken, where you can buy or sell cryptocurrencies from other users at the current market price.

It's a good idea to secure your network with a VPN prior to performing any Bitcoin transactions to keep your information safe.

You'll also need a crypto wallet, either a software-based or "hot" wallet, or a "cold" wallet, which is a specialized piece of hardware specifically designed to store cryptocurrency.

Connecting your wallet or exchange account to your bank account is not strictly necessary, but it can make transactions easier.

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The first step in purchasing Bitcoin is to join an exchange, and it's recommended to choose a reputable one like Coinbase Global.

If you're an advanced trader outside the US, you might consider Bitfinex or other exchanges like Kraken and Bybit.

To play it a little safer, follow a guide like the 5-Step Guide to Bitcoin Investing, which can provide tips on how to get started.

You can also invest in Bitcoin through your brokerage, such as Robinhood, which allows users to invest in bitcoin and other cryptocurrencies.

There are also crypto ETFs that provide exposure to the crypto asset class without requiring the investors to maintain their own wallets, such as Bitcoin futures ETF shares.

The cryptocurrency market can be unpredictable, but many people have benefitted from it.

Decentralized finance applications can be a good way to earn interest on your crypto, but it's not a guaranteed way to make money.

It's also possible to stake a compatible cryptocurrency on a blockchain or at certain exchanges for rewards, which can be a relatively low-risk way to earn some extra money.

Holding onto your cryptocurrency and hoping its market value increases is another option, but it's essential to remember that none of these methods are guaranteed to make money.

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Crypto can be considered real money because it's generally accepted as a medium of exchange. This means people use it to buy and sell goods and services.

One definition of money is something that is generally accepted as a medium of exchange, a measure or store of value, and a unit of account. By this definition, cryptocurrency is indeed considered real money.

The fact that crypto can be used to buy and sell goods and services makes it a viable form of payment.

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The supply of Bitcoin is capped at 21 million, and it's unlikely to reach this limit before 2140.

Only a certain number of Bitcoins are released each year, with the rate decreasing every four years by halving the mining reward.

The last halving occurred in April 2024, and the next one is due in 2028, which could lead to a significant increase in demand.

Bitcoin demand is also growing in countries experiencing currency devaluation and high inflation, as people turn to Bitcoin as a safe-haven asset.

The halving event in 2028 may drive up demand, largely due to media coverage and investor interest.

Regulations play a significant role in shaping the cryptocurrency market. China's 2021 ban on Bitcoin caused a sharp price drop, but the market quickly rallied in the following months.

Government legislation can have a devastating impact on Bitcoin's overall value, as a ban in major regions like the US or the European Union could significantly affect its price.

The US made progress in establishing crypto legislation in 2024, with the House passing the Financial Innovation and Technology for the 21st Century (FIT21) Act in a bipartisan vote on May 22, 279 to 136.

A ban in either region could be particularly concerning for Bitcoin investors, highlighting the importance of staying informed about regulatory changes.

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Investing in Bitcoin can be a profitable strategy in your portfolio, especially when the price spikes.

The supply of Bitcoin is limited, making it a reliable store of value.

You can buy and exchange Bitcoin yourself with a digital wallet, making transactions immediate and convenient.

Long-term investment strategies often involve considering the potential for growth over several years. Bitcoin's fixed supply, capped at fewer than 21 million coins, is a key factor in its potential for long-term value appreciation.

Veteran analyst Peter Brandt believes that if Bitcoin can break past its previous high, it could easily reach a new record of $200,000 by September 2025. Some experts estimate Bitcoin's price could reach $75,000 to $150,000 in the next 12 to 18 months.

Crypto industry specialists surveyed by UK fintech firm Finder pointed to prices above $100,000 in the near future, with some predicting it could rise to $122,688 by 2025. Others, like ARK Invest CEO Cathie Wood, are even more optimistic, predicting a market cap of $75 trillion by 2030.

Pav Hundal, lead market analyst at Swyftx, has expressed concerns about Bitcoin's future, citing geopolitical upheaval and economic uncertainty. Billionaire investor Warren Buffet has also expressed his skepticism, calling Bitcoin "rat poison" and stating it has no unique value.

Despite the differing opinions, it's clear that Bitcoin has some prominent backers, including business analytics platform MicroStrategy, which holds 386,700 Bitcoin. The US, China, and the UK are among the top countries with the most Bitcoin holdings, with 208,000, 190,000, and 61,000 Bitcoin respectively.

Bitcoin's market share has declined significantly over the years, from over 80 percent in 2017 to just over 56 percent currently.

The rise of alternative cryptocurrencies, known as altcoins, has led to increased competition in the market.

Ethereum is the second largest cryptocurrency, accounting for roughly 14 percent of the market, and has maintained its position despite the growth of other altcoins.

There are now scores of Bitcoin alternatives, and Ethereum is the most significant of these, with some experts suggesting it may even overtake Bitcoin in the future.

However, others don't see this as a possibility in the near future, highlighting the uncertainty of the market.

Indirect investing can be a great way to get into the crypto space without directly owning individual coins.

Bitcoin's volatility can be intimidating, but you don't have to invest directly. You can indirectly invest through mutual funds, stocks, and ETFs.

ETFs are a popular and flexible portfolio choice that allows you to benefit from a sector's performance without directly owning individual stocks or assets.

They're especially appealing in the cryptocurrency market, as the technical aspects of purchasing and holding coins can be confusing and intimidating.

Bitcoin futures ETFs provide exposure to the cryptocurrency's price moves using Bitcoin futures contracts.

Spot Bitcoin ETFs aim to track the price of Bitcoin by holding the asset, and they've been offered to Canadians since 2021.

Spot Bitcoin ETFs began trading in the US on January 11, 2024.

It's a good idea to do some research and touch base with your stockbroker or financial advisor before investing indirectly.

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Choosing an investment tracker is crucial for getting a comprehensive view of your entire portfolio. Digital wallets can be great for monitoring cryptocurrency trading with one coin, but they don't provide a complete picture of your investments.

A comprehensive accounting of your entire portfolio is essential for making informed investment decisions. Most conventional tools for managing your portfolio don't support newer kinds of digital assets, like Bitcoin.

One all-inclusive option is available for tracking crypto and traditional investments together. This friendly option is suitable for both new and experienced investors.

Having an all-in-one wealth tracker can provide a more accurate view of your investments. By monitoring all of your investments together in one place, you can get a clearer picture of how they're performing.