Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources , and more. Learn More. The first Bitcoin BTC 0. For the first three years, it was worth less than a penny. But in , it crossed a major milestone when it achieved parity with the U.
At the time, many people scoffed at Bitcoin and argued it could never be used as a mainstream currency or a long-term investment. When Bitcoin was created, the idea of using computer chips to mine a digital currency seemed outlandish and absurd.
But in practice, it wasn't all that different from using industrial machinery to mine precious metals. Just like gold, Bitcoin is a finite resource. As more Bitcoins are mined, it becomes increasingly difficult and less cost effective to mine new Bitcoins. But today, Bitcoin can't be effectively mined with regular GPUs due to the time and energy required to mine a single Bitcoin. Instead, expensive devices known as application specific integrated circuits ASICs are now required to mine a steady supply of Bitcoins.
Still, the same economic logical applies to Bitcoin and precious metals: Miners can only make money if the costs of the machinery and labor don't outweigh the metal's market value. Moreover, Bitcoin's algorithm limits its lifetime production to 21 million Bitcoins. It's commonly estimated that the last Bitcoin will be mined by As more people grasped these concepts, they started to value Bitcoin as an asset alongside gold and other precious metals.
Moreover, the anonymity and security of Bitcoin transactions, which is enabled by a distributed ledger technology called blockchain , also made it an appealing alternative to fiat currencies for financial transactions. A growing number of investors also started touting Bitcoin as a potential hedge against inflation.
After Bitcoin achieved parity with the U. Bitcoin evangelists like Jack Dorsey and Mark Cuban drummed up even more enthusiasm from mainstream investors, while a growing number of retailers started to accept Bitcoin as a payment option. El Salvador even became the first country to officially accept Bitcoin as a legal tender last year.
Bitcoin's future might seem rosy, but there are still a lot of challenges to overcome. Government regulators across the world have been rolling out bans, restrictions, and taxes for Bitcoin and other cryptocurrencies. Countries could also develop their own digital currencies pinned to their own fiat currencies as a viable alternative to cryptocurrencies.
The environmental cost of mining Bitcoin, which caused Elon Musk to turn against the cryptocurrency last year, also raises red flags. Meanwhile, the volatility of Bitcoin could prevent it from ever being used for everyday transactions. If fewer retailers adopt Bitcoin as a payment option, it could fail as a currency and continue to be used as a speculative investment.
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FOMO drives many people to make rash decisions, such as investing in a shitcoin that can crash right after they purchase it. However, Bitcoin is not as risky as your average run-of-the-mill coins and tokens — it is a lot more stable and has companies and institutional investors backing it up. The size of your profit or loss will depend not only on the unpredictable crypto market and BTC price but also on your capabilities as an investor. First of all, make sure you understand what Bitcoin is and what determines its value.
This is essential for being able to anticipate its price movements. Your answers to these questions should help you to understand whether you should invest in Bitcoin or not. Additionally, we would advise against investing in Bitcoin or crypto in general if you are prone to falling for gambling traps.
The crypto market is highly speculative, and its high-risk, high-reward nature can easily suck in people who are vulnerable to a gambling addiction, causing them to lose all of their Bitcoin investments in just a few hours. Please remember to be careful.
Wanna see more content like this? Bitcoin promises its users a wide range of different benefits, such as anonymity, low transaction fees, genuine cross-border payments that are not reliant on politics, and so on. It revolutionized the financial world and spearheaded the creation and development of the crypto industry and the crypto market. As more organizations start to accept Bitcoin officially and average users learn more about it, there is a chance BTC will become a mainstream currency.
Unlike fiat currencies, Bitcoin is not given value by governments, and it is not widely used in retail at least, not yet. However, it does have its use cases, and its underlying technology, blockchain, is currently revolutionizing a wide range of various industries. Like any other currency, Bitcoin can be used as a medium of exchange and a store of value, but currently, these are not its primary use cases.
As a result, it can be quite hard to predict its price, and Bitcoin ends up depending a lot on the general attitude of the market. It is always better to invest in an asset when its value is going down; however, it can be hard to find the best entry point.
But if your goal is simply to get some profit or to jump onto the Bitcoin train, then it is more than sufficient. There are many ways in which you can lose money by trading or investing in Bitcoin. Firstly, you may sell it at an inopportune moment and lose your initial investment. Secondly, your wallet may be stolen, or you might lose access to it. Thirdly, you may run into a scam… And the list goes on.
We give a few general tips on how to not lose your money while exchanging crypto in our article on refunds. There are tons of great services that offer user-friendly and hassle-free ways of purchasing Bitcoin and other digital currencies.
You can check out our guide on how to buy Bitcoin here. If you want to make huge immediate profits, then trading might be a better fit for you. Unlike US dollars, whose buying power the Fed can dilute by printing more greenbacks, there simply won't be more bitcoin available in the future. That has worried some skeptics, as it means a hack could be catastrophic in wiping out people's bitcoin wallets, with less hope for reimbursement. Which could render bitcoin price irrelevant. Historically, the currency has been extremely volatile.
As the total number creeps toward the 21 million mark, many suspect the profits miners once made creating new blocks will become so low they'll become negligible. But with more bitcoins in circulation, people also expect transaction fees to rise, possibly making up the difference. One of the biggest moments for Bitcoin came in August When the digital currency officially forked and split in two: bitcoin cash and bitcoin.
Miners were able to seek out bitcoin cash beginning Tuesday August 1st , and the cryptocurrency-focused news website CoinDesk said the first bitcoin cash was mined at about p. Supporters of the newly formed bitcoin cash believe the currency will "breath new life into" the nearly year-old bitcoin by addressing some of the issues facing bitcoin of late, such as slow transaction speeds.
Bitcoin power brokers have been squabbling over the rules that should guide the cryptocurrency's blockchain network. On one side are the so-called core developers. They are in favor of smaller bitcoin blocks, which they say are less vulnerable to hacking.
On the other side are the miners, who want to increase the size of blocks to make the network faster and more scalable. Until just before the decision, the solution known as Segwit2x, which would double the size of bitcoin blocks to 2 megabytes, seemed to have universal support. Then bitcoin cash came along. The solution is a fork of the bitcoin system. The new software has all the history of the old platform; however, bitcoin cash blocks have a capacity 8 megabytes.
Bitcoin cash came out of left field, according to Charles Morris, a chief investment officer of NextBlock Global, an investment firm with digital assets. To be sure, only a minority of bitcoin miners and bitcoin exchanges have said they will support the new currency. Investors who have their bitcoin on exchanges or wallets that support the new currency will soon see their holdings double, with one unit in bitcoin cash added for every bitcoin. But that doesn't mean the value of investors' holdings will double.
Because bitcoin cash initially drew its value from bitcoin's market cap, it caused bitcoin's value to drop by an amount proportional to its adoption on launch. No one truly knows. Search markets. News The word News. My Watchlist My Watchlist. Bitcoin News Business Insider 20h. Business Insider 21h. Business Insider 2d. Download Reset. Bitcoin Analysis.
VIDEO Here's why investors should avoid investing in Bitcoin during the coronavirus. Invest in You: Ready. Millions in gains Say you got into the game when a bitcoin was 10 cents, around October Zoom In Icon Arrows pointing outwards. What's driving those returns Most recently, the price of bitcoin has been driven by high-profile support. Cramer on bitcoin: 'Musk is driving so much of this market'. Squawk on the Street.
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Table of Contents. Barry Silbert. Micheal Saylor. Tyler and Cameron Winklevoss. Elon Musk. Michael Novogratz. Bitcoin Investors FAQs. Cryptocurrency Bitcoin. Cameron and Tyler Winklevoss are believed to be the first bitcoin billionaires, reportedly holding about , coins. Michael Novogratz founded Galaxy Digital Holdings, a broker-dealer and cryptocurrency and digital asset management firm. How Do Beginners Buy Bitcoins?
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Ultimately, it's up to you whether investing $ in Bitcoin is worth it or not. If it's a one-time investment and you just want to try crypto. If you invest $ in bitcoin today and its value appreciates, say up to $, you stand to make a profit because bitcoin is a digital financial asset. At the time, many people scoffed at Bitcoin and argued it could never be used as a mainstream currency or a long-term investment. But if you had.