Should I Invest in Bitcoin?

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Should I Invest in Bitcoin?

Should I invest in bitcoin? this is the most popular question I get from investors these days. I am always in favor of diversifying the portfolio within and even outside of the stock market with alternative investments. But, before we answer the question of investing in bitcoin, let’s take a look at what bitcoin is, how to buy bitcoin, how bitcoin as investment compares against popular stocks such as Tesla, Amazon, Apple, Netflix etc. Bonus: We will also discuss how to earn Bitcoin for FREE.

What is Bitcoin and Who Created it?

Bitcoin is an innovative payment network and a new kind of money. It was created in the year 2009 by a person (or entity) named Satoshi Nakamoto. No one knows much about Satoshi and whether such a person even exists or it was just a pseudonym created to put forth the idea of bitcoin.

Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing the transactions and the issuing of bitcoins is carried out collectively by the network. The network itself is the ‘ledger’ rather than the bank or central authority, hence there is no ‘middle man’ involved, cutting down the expenses of transactions.

Bitcoin is open-source – it’s design is transparent and available to public hence there is no single owner who controls bitcoin. Bitcoin can be used at many places such as Home Depot and Overstock for buying products and services.

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Advantages of Bitcoin – Why does Bitcoin matter?

how to invest in bitcoin

Bitcoin offers many advantages for transactions.

  • Speed: Bitcoin offers faster payments.
  • Reach: Bitcoin offers easy cross-border payments.
  • Cost: Bitcoin has low processing fees.
  • Security: Bitcoin transactions are secured by military grade cryptography.
  • Availability: Bitcoin has an ‘always-on’ network – Bitcoin always works no matter what day or time it is.
  • Liability: For businesses, it is easier to accept bitcoin payments as it eliminates card processing costs (credit card fees can be very high, more than 3% of transaction value) and it does not require responsibilities associated with processing credit card information.
  • Governance: The multi signature feature can enable the business to set up a governance structure that only allows an expenditure if a designated group of people authorize the transaction. It offers an expense control mechanism for businesses.
  • Transparency: The blockchain can verify the transactions and balances, offering unmatched accounting transparency.

Understanding Bitcoin and Blockchain

Blockchain is a decentralized ledger for all transactions on a peer-to-peer network. So, instead of a middle man or bank or any central authority that maintains the ledger for transactions, the users on the network act as the ledger and confirm transactions.

Bitcoin is a cryptocurrency that leverages this blockchain technology. Blockchain, the underlying technology, can have many more potential applications than cryptocurrencies.

What is a Bitcoin Worth?

This is not an easy question to answer. The opinions on ‘true value’ of bitcoin varies from $0 to more than a million dollars. In 2020 itself, we have seen the price of bitcoin fluctuate from about $5,000 to $24,000 per bitcoin within a matter of months. The price of bitcoin changes every second, 24 hours a day, 7 days a week.

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Bitcoin Price Today

Crypto CurrencyPrice
BTC
47,128.47
ETH
3,393.50
LTC
179.40

what is bitcoin worth?

[bitcoin price chart screenshot taken on Dec 24, 2020, yahoo finance]

bitcoin price in last 1 year

[bitcoin price chart screenshot taken on April 14, 2021, google finance]

The Bitcoin Pizza Story

On May 22, 2010 Laszlo Hanyecz used 10,000 bitcoins to buy 2 pizzas. At current market prices of $23,500 (December 2020) per bitcoin, those 10,000 bitcoins would be worth $235,000,000. Yes, $235 MILLION. Back then, while ordering the pizzas, they were worth $41 only.

bitcoin pizza

How to Buy Bitcoin

Bitcoin can be purchased at a number of locations- from bitcoin ATMs to online investing apps such as Robinhood, Webull, Coinbase, eToro etc. Here is a list of 5 easy online ways to buy Bitcoin. Keep in mind cryptocurrency prices can be very volatile. Trading cryptocurrencies may not be suitable for investors with a low risk appetite.

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Buy Bitcoin on Binance

Binance is the largest cryptocurrency exchange in the world.

Binance allows users to buy and trade multiple cryptocurrencies including the popular ones such as Bitcoin, Ethereum, Litecoin, Cardano etc. Binance also allows trading cryptocurrency ‘futures’ and leveraged tokens for advanced users. There are tutorials available on the app itself to make the users aware of the trade types and risks involved.

Binance also has the options for Staking and Savings accounts, using which, users can earn some passive cryptocurrencies while they hold them.

Buy Bitcoin on Robinhood

The popular investing app, Robinhood, allows investors to buy bitcoin, commission-free, for as little as $1.

buy Bitcoin on Robinhood

Buy Bitcoin on WeBull

WeBull started allowing bitcoin purchase in November 2020. You can buy Bitcoin, Ethereum, Bitcoin Cash and Litecoin on WeBull with $1 minimum, commission-free.

buy bitcoin on WeBull

Buy Bitcoin on Coinbase

Digital Currency Exchange that allows investors to buy bitcoin, ethereum, litecoin etc. However, unlike Robinhood and WeBull, buying and selling bitcoin on Coinbase is NOT commission-free. The fees are around 4% for buying bitcoins via debit cards. Read pricing and fee structure at Coinbase for details.

buy bitcoin on coinbase

Buy Bitcoin on eToro

eToro provides tools for technical analysis for more than 40 cryptocurrency pairs. With quick order executions and no cap on daily withdrawal amounts, eToro might be the perfect fit for your cryptocurrency trading strategy. eToro also offers a virtual portfolio where you can trade without risking any money. It’s good to test the waters for new investors.

Buy Bitcoin on Paypal

buy bitcoin cryptocurrency on paypal

Bitcoin can also be purchased on Paypal for as little as $1. Paypal ran a promotion for buying and selling bitcoin commission free in 2020, but transaction fees were introduced in Jan 2021. Keep an eye on Paypal, they might re-run the promotion in future as well!

There are many other cryptocurrency exchanges also where you can buy and sell bitcoin and other cryptocurrencies.

How to Get Bitcoin for FREE

Lolli is a website that gives ‘cashback’ to users shopping at stores (when you click and browse via Lolli) in the form of bitcoins. For example, you can go to booking.com via Lolli.com and get your vacation booked, and earn some bitcoin as ‘cashback’.

get free bitcoin

Sign up at Lolli using the link to below to get FREE $10 worth of Bitcoin (for new users).

So, Should I Invest in Bitcoin?

We have talked about the advantages of bitcoin in an earlier section, but the investors speculate on the dollar-value of bitcoin. Currently trading at well over $23,000 per bitcoin, does bitcoin have more room to grow? The answer to that varies on a BROAD spectrum. From some experts suggesting the intrinsic value of a bitcoin is $1M+ to other experts saying it is worthless, there is no easy prediction on the bitcoin price movement in future.

With Paypal allowing bitcoin as a payment method to its users, many believe bitcoin can become mainstream in the coming months. Institutional investors have also acquired stake in bitcoin in the recent past and given a further boost to the theory of the HODL team who believe in buying bitcoin and Holding On for Dear Life. HODL initially a typo (for HOLD) on Reddit, and has since then become a celebrated term for bitcoin believers!

Whether you decide to follow one school of thought (bitcoin is worth $1M) or another (bitcoin is worthless), please be cognizant of the risk of losing capital before investing in bitcoin, and invest only what you can afford to lose.

Don’t want to risk hard-earned money on bitcoin? get bitcoin FREE by signing up here.


Should I invest in Bitcoin or S&P 500?

Bitcoin vs S&P 500 – 1 year horizon

S&P 500 has given investors a return on about 12% over the last 1 year (Christmas 2019 to Christmas 2020), whereas Bitcoin has risen 211% in the same period.

bitcoin vs s&p 500 comparison 1 year

Bitcoin vs S&P 500 – 2 year horizon

S&P 500 has given investors a return on about 52% over the last 2 years, whereas Bitcoin has risen 483% in the same period.

bitcoin vs s&p500 comparison 2 year

Bitcoin vs S&P 500 – 5 year horizon

S&P 500 has given investors a return on about 79% over the last 5 years, whereas Bitcoin has risen an incredible 5,511% in the same period.

bitcoin vs s&p500 comparison 5 year

Should I invest in Bitcoin or Shopify?

Bitcoin vs Shopify – 1 year horizon

In the last 1 year, Shopify (SHOP) stock has risen 211%, showing approximately the same growth as bitcoin.

bitcoin vs stocks comparison shopify 1 year

Bitcoin vs Shopify – 2 year horizon

In the last 2 years, Shopify (SHOP) stock has risen 943%, beating Bitcoin’s growth of 482% in the same period, by almost a factor of 2!

bitcoin vs stocks comparison shopify 2 year

Bitcoin vs Shopify – 5 year horizon

In the last 5 years, Shopify (SHOP) stock has risen 4,939%, falling just short of Bitcoin’s growth of 5,502% in the same period!

bitcoin vs stocks comparison shopify 5 year

Should I invest in Bitcoin or Tesla?

Bitcoin vs Tesla – 1 year horizon

Tesla stock (TSLA) beat Bitcoin (BTC-USD) in the 1 year investment horizon. While Tesla stock grew by almost 650%, Bitcoin price grew only about 211% between Christmas 2019 and Christmas 2020.

bitcoin vs tesla 1 year

Bitcoin vs Tesla – 2 year horizon

bitcoin vs tesla 2 year

Bitcoin vs Tesla – 5 year horizon

In the last 5 years, Bitcoin has seen a huge surge in its price. Bitcoin (BTC-USD) handsomely beat Tesla stock (TSLA) in the 5 year investment horizon. While Tesla stock grew by an impressive 1,288%, Bitcoin price rose by 5,511%!

bitcoin vs tesla 5 year

Bitcoin vs MFAANG Stocks

Bitcoin vs Apple vs Netflix

Apple and Netflix are two of the favorite stocks of tech investors. Bitcoin has beaten the returns of Apple and Netflix over the 1, 2, and 5 year horizons.

bitcoin vs apple vs netflix 1 year
bitcoin vs apple vs netflix 2 year
bitcoin vs apple vs netflix 5 year

Bitcoin vs Amazon

Amazon’s stock price growth story is very impressive in itself. However, Bitcoin has beaten the Amazon stock (AMZN) over the 1, 2, and 5-year horizons.

bitcoin vs stock amazon 1 year
bitcoin vs stock amazon 2 year
bitcoin vs stock amazon 5 year

Should I invest in Bitcoin or Nio?

Bitcoin vs Nio – 1 year horizon

Nio has often been termed China’s Tesla. In the last 1 year, Nio stock (NIO) has risen 1,645%, while Bitcoin rose 211%. Nio has beaten Bitcoin significantly.

bitcoin vs stock nio 1 year

Bitcoin vs Nio – 2 year horizon

In the last 2 years, Nio stock (NIO) has risen 683%, while Bitcoin rose 482%. Nio has managed to beat Bitcoin over the two year period as well.

bitcoin vs stock nio 2 year

Since Nio had its IPO and got listed on the stock market in September 2018, we do not have Bitcoin vs Nio comparison available for the 5 year horizon.

Bitcoin vs Ethereum: Showdown of The Two Most Popular Cryptocurrencies.

Bitcoin vs Ethereum – 1 year horizon

Ethereum (ETH) gained 379% in price in the last year, compared to Bitcoin (BTC) that gained 203%

bitcoin vs ethereum comparison 1 year

Bitcoin vs Ethereum – 2 year horizon

Ethereum rose 427% in the last 2 years, falling just short of Bitcoin’s 486% growth over the same period.

bitcoin vs ethereum comparison 2 year

Bitcoin vs Ethereum – 5 year horizon

Over the last 5 years Ethereum has significantly exceeded the returns of Bitcoin. Ethereum rose an astounding 71,969% to beat Bitcoin’s already impressive 5,541% growth.

bitcoin vs ethereum comparison 5 year

IMPORTANT: Understand the Risks Before Investing in Bitcoin

While the recent momentum in the price of bitcoin has generated a lot of excitement, past performance does not guarantee future results. Investors must do due diligence and understand the risk of high volatility and losing capital before investing.

A safe way to play the bitcoin game is to earn it for FREE! Join Lolli and earn FREE bitcoin when you make purchases at your regular merchants such as Booking.com, Sam’s Club, Harry’s, 1800-Flowers and many more! New users can also get $10 worth of Bitcoin for signing up and making their first purchase!

Disclosure: We have investments in BTC, ETH, LTC, S&P500 (SPY, VOO), AAPL, AMZN, NFLX, TSLA, SHOP, NIO mentioned in the article.


Updated: May 21, 2021 by FinPins