The year of 2021 is slowly showing itself to be the best year for cryptocurrencies. The past few months saw the cryptocurrency market growing more and more and achieving milestones left and right. This growth has enhanced the value of digital assets like never before. And in the world of cryptocurrencies, the one that has always stood out is Bitcoin.
Whatever the market trends may be, Bitcoin is the cryptocurrency that many investors look up to. It would be safe to say that the growing popularity of Bitcoin is one of the drivers for the increase in demand for other cryptocurrencies within the market.
Bitcoin is a favoured investment option among a huge chunk of investors because of its reliability in terms of a digital asset. Some experts would say that it always seems that the returns would be higher, sooner or later. And while this does sound very attractive, we still have to be vigilant when investing our hard-earned money. This fact becomes even more critical if you live in a country that imposes strict rules regarding cryptocurrency investments.
A lot of importance has been given to Bitcoin and investments in other digital currencies, and being informed ahead of time about certain aspects would be beneficial before investing your hard-earned money into this digital asset. This is not meant to be financial advice but hopefully, reading this prepares you to make smart and well-informed decisions.
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1. Expect Volatility
There is no doubt that Bitcoin has been a crowd favorite for quite some time now. It had been the best performing digital asset for years since its launch back in 2009. But despite its popularity, this digital currency, like traditional investments, can be subject to a lot of volatility.
A lot of people assume that only stocks and mutual bonds are volatile while being unaware that the cryptocurrency market can be more unstable. This sheds light on the fact that there are equal amounts of chances to make profits and incur losses when it comes to digital currencies.
It would be unwise to have the mindset that you will always be on the profit-making side because the reality is very different.
2. Big Players Can Tip The Scales
Now that we’ve talked about volatility, we should also talk about what causes it. You might have already heard of the name Elon Musk and how his declaration of “falling out of love” with Bitcoin had caused a huge price drop.
This shows that major buyers can affect cryptocurrency market trends with just a drop of a hat. With his strong social media presence, Elon Musk is one of those big players who can have a strong, if not direct, impact on prices moving rapidly within a very short time.
It’s important to take note that this currency can still be affected by people like Musk despite being decentralized.
3. It Uses Blockchain Technology
What is a blockchain, you say? A blockchain refers to the distributed digital ledgers used in digital currencies to store data of many different kinds. This database technology holds the power to record transactions followed by building a ledger. It can also be used for financial services and administering voting systems.
Another thing to note is that it distributes identical copies of a database across entire networks; blockchains make it difficult for a system to be hacked or cheated. Because of this innovation, blockchains are at the heart of nearly every cryptocurrency in the market.
Its use in digital transactions also makes companies more inclined to use this technology for debt issuance. These features are also starting to urge to build digital economies among various governments across the world.
Now that you’ve read about what you need to know before investing in Bitcoin, head on over here to start investing in this major digital currency now.