Bitcoin: A Thing of the Past and Scope of the Future

Over 668 million is the number of bitcoin transactions conducted since its launch! This one fact is enough to state bitcoin’s boom across the globe, and 2021 has undoubtedly been the hottest year for it. But, what’s on the cards for bitcoin next? 

All this while, people’s curiosity for bitcoin has been skyrocketing, but this year it reached the zenith, and major credits for this goes to the multibillionaire Elon Musk. From popular cultures and global investors to kids in school, bitcoin has been in vogue for all.  

But what led to this breakthrough of bitcoin? And is it something that you are missing, or should you plan on giving it a shot? Well, this dubiety will be put to an end with this article that has all and more for you. 

However, did you know that Bitcoin with a ‘B’ and bitcoin with a ‘b’ are two different things? Bitcoin is the ledger utilised for storing transactional information, and bitcoin is the cryptocurrency that we will be talking about here. Have a read!

The Reason Backing the Uniqueness of bitcoin

The biggest USP of bitcoin is its appearance in the market as the first unique cryptocurrency. Its concept? Enabling people to conduct any monetary transaction across the world without the involvement of intermediaries like financial institutions or banks.

The present cryptocurrency market worth over $2 trillion revolves around this same concept presented by bitcoin. Now that it has been over a decade of bitcoin’s existence, it’s the evolving nature of this cryptocurrency that keeps a hold of its market reputation. 

Recently, bitcoin’s dominance was slightly hampered, but it continued to be the largest cryptocurrency in the industry with an estimated market cap of over $1 trillion in 2021 after hitting its all-time high of $64,863.10 on 14th April 2021.

How does bitcoin Generate Money?

The law of supply and demand backs the working of bitcoin, and since both supply and demand are susceptible to waxing and waning, there is high volatility in the price of bitcoin. Apart from bitcoin mining which needs some technical expertise and high-performing computers, people buy bitcoins around the speculation that its price will witness a hike in the future. But then that in itself is only a prediction. Hence, the predictability and speculations, along with price hike and drop, influences the money you can acquire from bitcoin.

What Led to the Price Drop of bitcoin?

In the initial days of December 2021, bitcoin and other cryptocurrencies witnessed a huge drop in their prices. It hit $45,000 after extracting almost $10,000 from the price, which is colossal owing to its $69,000 value in November 2021. This turmoil has been a result of inflation in the UK and US, the uncertainty brought by the new Covid variant, and modified regulations of investing in cryptocurrencies.

On the Contrary, is Amazon Next to Accept bitcoin as a Mode of Payment?

If speculations and rumours stand to be true, Amazon could soon be accepting bitcoin as a form of payment which will undoubtedly lead to an upsurge in the value of the cryptocurrency.

But the tech giant may also be working around developing its own cryptocurrency. This became evident after the company posted a job requirement for hiring a digital currency strategy expert. And it’s not only Amazon, but the talks are also about Apple investing a large sum of their cash reserves in bitcoin. 

With these rumours in the air, you should consider investing in bitcoin but fully understand how it is carried out first. So, let’s dive a little deep and know all about investing in bitcoin. 

How to Invest and Make Money in bitcoin?

Investing in bitcoin is like other investments: the profits and losses depend on the value at which you sell or buy the asset. Selling a bitcoin at a value higher than the purchased value will bag profits for you, whereas selling a bitcoin at a value lower than the purchased value will incur a loss.

For instance, if you invested in bitcoin around the beginning of 2020 and sold it in December same year, you would have experienced a phenomenal gain of 300%. But instead, if a similar bitcoin transaction happened in  2018, you would have experienced a loss of 73%

The value of bitcoin is vulnerable to market trends. Hence, when its value is inevitably downscaling, the key is not to panic and get clear on your losses by selling it as soon as possible.

Means to Invest in bitcoin

Here are six different ways you can invest in bitcoin.

• Invest in cryptocurrency exchanges or buy shares of a company that accepts bitcoin as payment.
• An exchange-traded fund or bitcoin ETF could be an excellent investment option as it replicates the value of bitcoin, which enables you to purchase funds without any direct bitcoin trading.
• Investment in an evolving blockchain network could be one of the fastest ways of earning money through bitcoin.
• Multiple companies are launching their bitcoin funds, and this can be a good investment as selling the asset and recovering your money could be easy. But remember that the price volatility remains.
• Shares and bonds are also an investment option as they are exposed to both traditional assets and bitcoin.
• You can also invest in a bitcoin option. With the bitcoin option, if your prediction of its rising value in the future stands correct, you earn a profit that is formulated over the increase in value and the strike rate of a bitcoin option.

What’s Hot and Cold in bitcoin?

It’s the wallet! bitcoins have legal wallets for storage which are either hot wallets or cold wallets. Let’s get to know what they are.

• Hot Wallet: Also known as a virtual currency wallet, a hot wallet enables you to conduct secured cryptocurrency transactions on the cloud. Its online program comes with a set of inbuilt keys, which are then used to store and access cryptocurrencies like bitcoin.
• Cold Wallet: This is an encrypted device, like a thumb drive, that allows you to store and carry your purchased bitcoins.

While the hot wallet is associated with the internet and online transactions, the cold wallet is free of it, but here’s the catch! You will require a hot wallet for downloading your bitcoins in a cold wallet.

Few Points to Consider before Investing in bitcoin

Similar to other investments, bitcoin comes with its set of rewards and risks, but in comparison to traditional investments, the risk factor associated with bitcoin is high. So, here are some pointers to be aware of before investing in bitcoin or any other cryptocurrency.

• Do not put all your life savings on cryptocurrency investment.
• Only invest a small portion of your disposable income, which you would not mind losing if the value of bitcoin falls.
• Never go for a short run. Invest only the amount you can use for bitcoin investments and not more than you can afford.
• If you are unable to spare some extra buck by the end of the month, it’s better to focus on saving rather than investing in bitcoin.

Cryptocurrencies are cosmopolitan in nature. Their value remains the same in every country, with no exchange rates implied. But owing to its volatility, bitcoin is vulnerable to market crashes and bull runs, making it a risky investment.

News that Led to the Rise and Fall of bitcoin in 2021

bitcoin has been the talk of the world in 2021. With more renowned global investors ready to dive into cryptocurrency transactions, it can be said that this trend is here to stay. However, bitcoin’s journey to this year-end delight hasn’t been easy. Here’s some of the top bitcoin news of 2021 that takes us through all its highs and lows.   

FCA Cautions Against Crypto Investments Stating Inevitable Losses

The UK FCA stated that people who have invested their money in bitcoin should be ready to lose it all. The FCA Chief Mr Bailey remarked that it is unsure that cryptocurrencies will continue existing in their present form. The US Treasury Secretary Janet Yellen also mentioned working closely with security regulations. These comments hinted at tough conditions for the cryptocurrency market. 

Backed by Tesla in February 2021

Elon Musk took to Twitter and mentioned Tesla, which skyrocketed the price of bitcoin by 11% in a day. He also mentioned the $1.5 billion purchase of bitcoin, which led to the bitcoin price going over $48,000. 

Coinbase Listing in April

bitcoin reached its zenith with a $63,000 market price a day prior to the Coinbase listing in the US. Its listing on Nasdaq was a huge win for crypto advocates, and it was a silver lining for cryptocurrencies, including bitcoin and Ethereum. 

China’s bitcoin Mining Ban in May 2021

The Cabinet of China, mitigating the financial risks associated with cryptocurrencies, decided to ban bitcoin mining in the country. And in the coming weeks of May, the bitcoin price was reduced from $58,000 to $32,000. 

The ESG Narrative that took bitcoin Prices Below $30,000

bitcoin’s price hit below $30,000 in July 2021, and it was the ESG narratives that led to its downfall of the market. This began affecting the global industry of cryptocurrency.

Complete Cryptocurrency Ban in China in September 2021

Though the trading of virtual currencies was banned in China, it continued through foreign exchanges. But in September 2021, China announced a complete ban on the trading of virtual currencies, which caused the bitcoin price to drop by over $4,000.

El Salvador’s Remark on bitcoin in December 2021

El Salvador President remarked that the world has witnessed the adoption of cryptocurrency for the better and that it still needs to calculate whether or not bitcoin will be able to boost the country’s economy. He added that if it works well, it might put an end to the use of fiat currency. 

What Does the Future of Bitcoin Look Like?

2021 has been nothing less than a rollercoaster ride for the bitcoin market price. From November, which marked bitcoin’s all-time high at $68,000 to a drop at $30,000 in July along with the high ends at $60,000 in April and October, its volatility remained elevated. 

Experts suggest that bitcoin should only be 5% of your investment portfolio initially. And looking back at the spikes and pullbacks for bitcoin from 2011, all you can expect is long-term growth and short-term fluctuations and losses.

At the present moment, cryptocurrency has over 120 million global investors. Following its trends, it can be easily predicted that this number will only surge in the coming five years. But the unstable nature of bitcoin should be considered before investing. So, the present day for a bitcoin investment may still be too soon, but tomorrow could be the day to buy, retain, and grab the profits from bitcoin.