What are the advantages of investing in Bitcoin?
Bitcoin has attracted interest around the globe as it provides an additional alternative to the traditional banking system. It allows people to send and receive money easily and with much lower commission fees.
Bitcoin is also a solid addition to an investment portfolio, providing diversity with the inclusion of this new digital asset class. Investment advantages include:
- Bitcoin is financially inclusive: Bitcoin can be used by people worldwide who may not have access to any traditional banking infrastructure.
- Bitcoin is fully accessible: Bitcoin is borderless and operates 24/7 all around the globe.
- Limited Supply: Bitcoin has a fixed supply cap of 21 million coins, which can potentially lead to scarcity and increase in value over time.
- Portfolio diversification: Several studies using historical performance data have shown that even a small allocation to bitcoin would be a significantly positive addition to a diverse portfolio from a risk / reward perspective. Some investors also view Bitcoin as a hedge against traditional currency devaluation and inflation due to its deflationary nature.
- Emerging Asset Class: As a relatively new asset class, Bitcoin has the potential for high growth, attracting investors seeking diversification.
- Institutional Interest: Growing interest from institutional investors and financial firms indicates a broader acceptance of Bitcoin’s legitimacy.
- Technological Innovation: Bitcoin’s underlying blockchain technology has the potential to revolutionize various industries beyond just currency.
- Bitcoin can be a long-term investment: A finite amount of coins can ever be created or mined. Similar to gold, the more Bitcoin there is in circulation, the scarcer the asset, which influences the price.