Should I Buy Bitcoin?
Source: @crypto-guides
There is a section in the "What is Bitcoin (BTC)? - Bitcoin Guide" titled "Should I buy Bitcoin?"; with this post I hope to contribute an item or two we don't usually hear about from both legacy media and even cryptocurrency-oriented media. Feel free to adjust as needed for Guide purposes.
In 2009, Bitcoin cryptocurrency was a curiosity limited to hard-core academics and people with too much free time on their hands.
In 2013, Bitcoin was one of a handful of cryptocurrencies looking for use cases beyond peer-to-peer payment.
In 2017, Bitcoin led the charge in the famous bull run of that year.
In 2021, Bitcoin is the undisputed King of Cryptos. With this path forged by Bitcoin, the answer to the question "Should I buy Bitcoin?" is a resounding yes.
Regardless of the ups and downs in its fiat paper pricing, there are several reasons for not only for buying Bitcoin but also for feeling good about buying Bitcoin:
- Impact;
- BYOB-- Be Your Own Bank
- More than a feeling (or fad);
- Crypto beyond the currency;
- Proven and Perceived Value;
- Performance.
Impact
After all, Bitcoin is a technology which has had perhaps the greatest impact on society since the dawn of the personal computer era. By being a decentralized trustless and permissionless peer-to-peer digital currency protected by cryptography, Bitcoin has redefined money in ways even precious metals could not.
BYOB-- Be Your Own Bank
Once you acquire Bitcoin, you own it (unlike a home or a car). If you want to acquire more Bitcoin, all you need is to find a seller-- no permission, no applications, no qualifications. If you want to sell your Bitcoin, you just find a buyer for it (or let buyers find you).
If you want something that does the equivalent of a Certificate of Deposit or a Savings Bond, there are ways Bitcoin can be used to farm interest. As with Hive cryptocurrency, Bitcoin can be staked so that it can work for you and earn income.
Unlike with legacy banks where fiat currency is stored, there are no capital controls on the Bitcoin you own. While many banks limit how much you can withdraw from an ATM within 24 hours (say, USD 1,000 in the United States), the maximum amount of Bitcoin you can withdraw is... the maximum amount of Bitcoin you have.
Bitcoin offers is owners freedom in many forms, while legacy banking offers its account holders debts. For some people, that's reason enough to buy Bitcoin.
More than a Feeling (or Fad)
If Bitcoin was just a fad or flash in the pan, it would not have spawned thousands of altcoins during the last decade (including the Godfather of Meme Coins, Dogecoin). For people whose knowledge of cryptocurrencies comes from Twitter and Tesla, consider this detail: there could be no Dogecoin without Bitcoin.
Crypto beyond the Currency
Even the technology which makes Bitcoin possible, blockchain, has spawned numerous applications unrelated to payments. Look no further than DeFi powered by smart contracts first popularized by Ethereum and social media in the form of LeoFinance, Hive.Blog, and its predecessor.
Proven and Perceived Value
Given the impact cryptocurrencies have had on many aspects of society, there is no doubt that both BTC and its Bitcoin technology has proven itself to be valuable. With the fact that only 21 million units of BTC will ver be mined, people instinctively know how this pre-defined scarcity adds to its value. Because of that scarcity in BTC, Bitcoin has become known as the gold of cryptocurrencies.
Performance
Cryptocurrencies are infamous for their volatility. When they go up, they shoot to the moon. When they go down, they hit the Earth like meteorites. Both behaviors are just exaggerated versions of what happens to all assets in bull markets and bear markets. What people need to realize is that even after a brutal drop in price, the gains which followed were magnitudes greater than earlier gains: Source: Investing.com
As with any other asset, hold it long enough and it will go though both drops and rises in price. Not exactly financial advice, but still true.
How Much Bitcoin Should I Buy?
Short answer: As much as you can afford when you decide to buy.
According to Coinmill.com, one BTC on 22 June 2021 was worth USD 33,118.63. That's not exactly pocket change.
While USD prices go to 2 decimal places, BTC prices are measured to 8 decimal places. This divisibility makes it possible to buy and sell minute quantities of BTC. These fractional values are called Satoshis (named after the creator or Bitcoin, Nakamoto Satoshi). 1 Satoshi equals 0.00000001 BTC, and 10,000,000 Satoshis equal 1 BTC.
Any quantity BTC can be purchased, right down to the 8th decimal place. Below is a table showing prices for certain values of BTC and USD:
| BTC | USD | USD | BTC | |
|---|---|---|---|---|
| 0.00002 | 0.66 | 0.5 | 0.00002 | |
| 0.00005 | 1.66 | 1 | 0.00003 | |
| 0.0001 | 3.31 | 2 | 0.00006 | |
| 0.0002 | 6.62 | 5 | 0.00015 | |
| 0.0005 | 16.56 | 10 | 0.00030 | |
| 0.001 | 33.12 | 20 | 0.00060 | |
| 0.002 | 66.24 | 50 | 0.00151 | |
| 0.005 | 165.59 | 100 | 0.00302 | |
| 0.01 | 331.19 | 200 | 0.00604 | |
| 0.02 | 662.37 | 500 | 0.01510 | |
| 0.05 | 1,655.93 | 1,000 | 0.03019 | |
| 0.1 | 3,311.86 | 2,000 | 0.06039 | |
| 0.2 | 6,623.73 | 5,000 | 0.15097 | |
| 0.5 | 16,559.32 | 10,000 | 0.30194 | |
| 1 | 33,118.63 | 20,000 | 0.60389 | |
| 2 | 66,237.27 | 50,000 | 1.50972 | |
| 5 | 165,593.16 | 100,000 | 3.01945 | |
| BTC rate | June 22, 2021 | USD rate | June 22, 2021 | |
| Source for table: BTC & USD prices from Coinmill.com |
Who Can Buy Bitcoin?
There will always be people who buy insane quantities of Bitcoin regardless of price in local fiat currency. Some of these purchases are one-time buys. Some purchases are infrequent. Some are frequent.
Most people, on the other hand, will purchase Satoshi, the fractional Bitcoin. These purchases tend to occur more frequently.
Slow and Steady
An example of the slow and steady approach is this article by @khaleelkazi, "$10 a Day Keeps the Central Bankers Away". This plan takes advantage of dollar-cost averaging, DCA.
The amount of local currency is fixed, but the price of BTC will vary at any given moment. Some days are better than others, but the purchases are consistent. By the end of an investment period, there may be more accumulated BTC than if a one-time purchase was made for the same amount of total local currency.
This works with stocks, precious metals, and especially with cryptocurrencies.
With DCA, the time to buy Bitcoin is always now. Buying Bitcoin when prices are low is better than when it's near an all-time high, but with DCA the time factor is reduced to minimize impact.
If you can afford to buy equivalent BTC at USD 20 every day, great! Even if you can only manage USD 5 every day, that's a better use of USD than a cup or two of overpriced coffee.
Who should by Bitcoin? Everyone.
Posted Using LeoFinance Beta
