7 things to know before investing in bitcoin

In the past three years, Bitcoin has become a household name in the financial world.

Cryptocurrency has gone from being a mysterious alien in the tech world to a popular investment and a topic of discussion on Wall Street. Some investors even consider bitcoin a safe haven asset, similar to gold. Here are seven things you should know before investing.

1. The origins of Bitcoin are unclear

Bitcoin was founded in 2008 by one or more people using the pseudonym Satoshi Nakamoto. Nakamoto reportedly released a proof of concept for Bitcoin to a cryptocurrency mailing list before leaving the project to other developers.

The crypto community has several theories as to who Nakamoto is, however, they have remained unconfirmed so far.

2. Anonymous pseudo-Bitcoin

One of the reasons Bitcoin is so popular: Users can send and receive cash without using personally identifiable information.

However, every Bitcoin transaction is recorded with an address associated with that transaction forever. If users use the same address for multiple transactions, all transactions are linked.

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If a person’s connection to this address is leaked or discovered, all their transactions will be exposed.

3. Bitcoin is decentralized

Unlike fiat currencies such as the US dollar and Chinese yuan, bitcoin is decentralized, which means that it is not controlled by a central government or any other entity.

Among the advantages of a decentralized system is the idea that cryptocurrencies cannot be confiscated or devalued by a central authority.

The disadvantages of decentralization include the fact that no government or other entity guarantees the value of the currency – and nothing restricts access to or use of cryptocurrency.

This lack of access, combined with the pseudo-anonymous nature of bitcoin, has led to an increase in criminal activity.

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4. Bitcoin is a real currency

Despite its decentralized nature, Bitcoin is a real currency in the sense that users can use it to easily purchase goods and services. Companies such as Microsoft Corporation (NASDAQ: MSFT) and Expedia Group, Inc. (NASDAQ: EXPE) and Newegg are among the companies that accept direct bitcoin payments.

5. Bitcoin Investors Have Limited Choices

Unfortunately, the Securities and Exchange Commission and other financial regulators around the world are very cautious when it comes to investing in cryptocurrencies.

The Securities and Exchange Commission (SEC) has repeatedly rejected and delayed applications for a bitcoin exchange-traded fund, citing concerns about investor safety and a lack of liquidity in the market.

Today, bitcoin investors need to get creative, either trading bitcoin futures directly from a cryptocurrency exchange like Coinbase, or a broker like Robinhood, or buying bitcoin from other sources like crypto ATMs.

subordinate Grayscale Bitcoin Box(OTC: GBTC) is also an option, but it is not SEC approved and is not traded on any major US exchange.

6. Bitcoin is extremely volatile

Bitcoin investors often compare the cryptocurrency to gold as a safe haven asset and a hedge against fiat currency inflation.

In fact, Bitcoin and other cryptocurrencies are very volatile and unpredictable in the near future. The 30-day leveraged volatility ratio for the GBTC fund is 125.2%, compared to 16.7% for the SPDR Gold Trust (NYSE: GLD) and just 7.6% for the SPDR S&P 500 ETF Trust (NYSE: SPY).

7. Bitcoin has some strong critics

Investors buying bitcoin are acting against the advice of some very influential voices on Wall Street. Warren Buffett described Bitcoin as a “mirage” and a “rat poison box.”

Janet Yellen, the former chair of the Federal Reserve, said that bitcoin is a “highly speculative asset” and “not a stable store of value.”

President Donald Trump recently said he is “not a fan” of bitcoin, and said its value is “based in a vacuum.”

Bitcoin is trading at $10,096 at press time on Thursday.

Should Bitcoin Investors Sell Immediately? Or is it worth starting?

How will bitcoin evolve now? Is the entry worthwhile, or should investors sell instead? Find out the answers to these questions and why you need to act now on your current Bitcoin analysis.

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