Since its arrival in the financial world in the late 2000s, Bitcoin has continued to climb and increase its popularity. In the years that followed, many other digital coins powered by blockchain systems have emerged. And while there have been estimations that one of them will one day surpass Bitcoin, this hasn’t yet come to pass.
Over the years, Bitcoin has maintained its unchallenged supremacy in the digital asset environment, with its highs and lows influencing the other crypto coins as well.
Exchanges such as Binance provide traders looking to buy Bitcoin with the latest information regarding price fluctuations so that they can make informed trading choices. While BTC is typically a little less volatile than altcoins, there are still significant fluctuations in its price points that can vary quite a lot between one day and the next, making newer investors apprehensive about giving it a try.
Nevertheless, Bitcoin continues to be a popular asset to add to your portfolio. How can that be the case when the high volatility means that you’re constantly at risk of losing substantial amounts of capital? What are the advantages of cryptocurrencies that can provide a hedge for this risk and make investors willing to give digital money a shit anyways?
One of the most common characteristics touted by proponents of cryptocurrency investments is the safety provided by blockchain transactions. Because the system is decentralized, there are no third parties responsible for the security of the system, meaning that it’s less likely an employee with inadequate levels of training can cause a data breach due to human error.
Because every single one of the users has access to identical copies of the blockchain, it is nearly impossible for hackers to cause the whole system to crash.
However, crypto storage tools, known as digital wallets, are one of the favorite targets of cyber criminals. This is due to the fact that once cryptocurrency has been extracted from an account, there’s no getting it back unless the person who took it decides to return it. Because of the technical complexity of using the blockchain and its adjacent tools, storing crypto and keeping it safe can be difficult for new users.
The fact that crypto is largely unregulated and whether or not it should remain that way has long been a topic of debate. While governments and financial institutions have sought to regulate Bitcoin as a currency, security asset or both, the movement has stagnated due to several factors.
One of them is the likely reticence of users, as since its incipient days, Bitcoin has been defined by its features as a fully decentralized asset immune to censorship. Changing its fundamental status is unlikely to be met warmly by most investors.
There’s also the potential problem of a regulatory crackdown making the process of selling crypto particularly cumbersome, which could lead to a market-wide drop in prices.
While many believe Bitcoin is fundamentally unsafe because of these factors, the truth is that its challenges are not vastly different from those of other assets and their markets. A lot of the responsibility also falls with you, the investor. You are responsible for the safety of your wallet, and it’s your prerogative to keep it away from the reach of hackers.
Because the blockchain system operates as a decentralized network outside the realm of third parties that would control its processes, the crypto environment is fundamentally different from traditional trading ventures. For starters, there’s a reduced incidence of human error sneaking its way into transactions, as there’s no need for intermediaries to act within the blockchain. Money transfers are also typically much faster compared to standard transactions.
In this regard, Bitcoin is different compared to altcoins. While transactions within the BTC blockchain are much faster than bank-powered transfers, they are usually significantly lengthier than those employed by altcoins. This is because Bitcoin has a stricter safety policy. So, while the transaction may not take just a few seconds to complete, you can rest assured that your funds are safer.
A new paradigm
One of the most interesting and exciting aspects of cryptocurrencies is that they represent an entirely new shift in the financial world. The system eliminates the probability of a single point of failure, as a single large bank doesn’t govern it. This is an advantage for investors worried about the safety of their funds and the possibility of losing capital due to financial crises or institutional failures.
While the blockchain is still primarily associated with only crypto, analysts estimate that this will change in the upcoming years as industries begin to recognize the possibilities of the blockchain. However, since these changes are currently purely hypothetical, it is difficult to determine exactly what a world in which the blockchain is mainstream would look like.
It’s rather unlikely that the financial system will change overnight and more probable that the result will be a mixture of the current system and the blockchain. They could each help the other become more efficient, and a solution that enables the formation of a middle-ground system will also be more popular with the general public.
Investing in Bitcoin helps you be prepared for this change. Moreover, given the way in which businesses and corporations are beginning to incorporate cryptocurrencies into their financial plans and even allowing customer transactions in crypto, it’s clear that change is underway.
Profits and remittance
While the high volatility levels of cryptocurrencies are traditionally associated with profit loss, they can also create substantial revenues and gains. The Bitcoin market has skyrocketed since its first years, and while 2022 has been challenging, the current year has shown signs of being more fruitful for traders. As of January 2023, BTC has a value of over $450 billion in crypto markets.
The remittance economy is also one of the best testing grounds for Bitcoin. Digital money can be used as an intermediate to streamline transfers across borders, making the conversion to the destination fiat currency cheaper.
Although Bitcoin has seen better days, it continues to remain one of the most popular assets for investors. So if you’ve been considering starting a career as a trader, it’s not too late to start.