Cyptocurrency has been headlining the news for the past few weeks with some good and some bad. I have just recently invested in Bitcoin and will share with you why amidst all of the hype and news I finally did so; and why you should consider investing in it now as part of your overall investment portfolio and how you can easily do it too in this article.
Supply and Demand
In my previous article on financial scams I talked about the challenges we face in investments and touched on the problems of our current monetary system. One of the key problems with the current monetary system is that the central banks have (almost) unlimited authority to print money. Basic economics dictate that if supply is more than demand, the value of money will be worth less. This is one of the reasons why we see inflation, and how one of the functions of money – maintaining wealth – is being eroded. However, on the opposite end of the spectrum we have Bitcoin and similar Cryptocurrencies which has a limit on how much can be “mined” – Bitcoin has a limited supply of only 21 million units – this is ensured through a technology called the blockchain. The blockchain technology has gained confidence of investors and entrepreneurs all over the world including Sir Richard Branson of the Virgin Group who recently invested in a company developing and improving upon the blockchain technology. This technology allows to maintain the integrity of Bitcoin by having a public ledger of all of the Bitcoin ever mined so far in circulation, a record of every single Bitcoin transaction, at the same time maintaining the anonymity of parties conducting the transfers.
Recognition and Trust
Bitcoin has been around since 2009 and over the years it has since then grown an active community who actively transact in the cryptocurrency. One of the most important aspects is for a currency in general to be widely accepted and recognised, because the worst thing to have is a currency that people do not recognise and accept it, thus making it worthless. Imagine a world one day when people stop accepting your country’s currency, what would happen to your wealth? Given the growth Bitcoin has gone through since 2009, the acceptance overall has only grown more and more, and at the time of this writing, it looks like it’s the tipping point or at the very least the beginning towards global acceptance.
Liquidity
One of the key considerations for investments is liquidity – the ease in buying and selling the asset in exchange for cash. It is great if we have something that is extremely valuable, but the problem is if it’s hard for us to find ready buyers, the consequences are that we will find it hard to cash-in on our investment, or we would have to accept a substantial discount to liquidate the asset. Bitcoin is one of the most liquid investments available right now with numerous established exchanges accessible all around the world. You can buy Bitcoin now and cash out immediately if you wish, the only thing that would slow you down from getting the money into your hands is the time it takes to transfer the funds from your trading account to your bank.
How To Invest In Bitcoin
There are 3 main things you need to easily start investing in Bitcoin:
- A Bitcoin wallet to accept Bitcoins
- A platform to buy and sell your Bitcoins
- A bank account to link up to the platform
The good news is I have found a platform that integrates all 3 of these key things seamlessly. The platform is called Luno, where they will help you create a Bitcoin wallet and have a platform for you to buy and sell Bitcoins. As for the integration of bank accounts, especially for someone like me who is from Malaysia, it can be challenging to find an international platform that links up with our local bank accounts, and is still trustworthy at the same time. What I found is that Luno easily links up with the major banks here in and around the region, and the process to deposit funds into the account is pretty straightforward. Key in the amount which you would like to deposit, they will give you all of their local bank-in details along with your unique reference code. Deposit the cash with the provided details, and within 2 working days you will see the funds in your Luno trading account.
Here is a link with a referral code if you would like to sign up with Luno and receive a bonus from them when you make your first minimum purchase of Bitcoins.
When To Buy Bitcoin
At the time of this writing, Bitcoin has just pulled back from its recent lows, this signals people buying and bargain hunting at low prices and is keeping Bitcoin afloat. Also, the Bitcoin community has just agreed to a major way forward in what they called the “scaling debate” which has boosted confidence in the cryptocurrency further. If you are looking to invest for the long term i.e. at least to hold for one year or more, then the short-term fluctuations should not hinder you from entering, just look out for opportunities when prices pull back or drop to enter. You can also learn technical analysis methods if you want to be a more active trader and understand the fundamentals that drives the price of Bitcoin.
How Much Should I Invest?
As with any investment in currencies in general, the fluctuations can be very severe. So what I advice is to invest what you are comfortable to lose. An amount which won’t make you lose sleep at night if you were to lose it all. It is definitely not advisable to put in your entire life savings, be a prudent investor and know your own risk tolerance.
I hope that this article has been useful, and do share your insights in the comments section below if you’re new to Bitcoin or have been actively trading.
Disclaimer: The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Where quoted, past performance is not indicative of future performance.
Ching Yu Tan disclaims all and any guarantees, undertakings and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on the information or advice on this article. The user must accept sole responsibility associated with the use of the material on this article, irrespective of the purpose for which such use or results are applied. The information on this website is no substitute for financial advice.