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London Tech Week

Everything you need to know about Bitcoin investing in 2024

bitcoin-investing
Photo by Dmytro Demidko on Unsplash

Bitcoin is perhaps the most well-known cryptocurrency, and its popularity has steadily increased over the years. It’s the largest cryptocurrency by market capitalization and continues to be one of the digital currencies with the highest growth potential.

Since it’s decentralized (that is, no central authority controls it), Bitcoin offers a level of security and privacy that traditional currencies don’t. In today’s article, we’ll give you the rundown on what’s new for Bitcoin in 2024, how to invest in it, and what to expect.

How does Bitcoin work?

Bitcoin is a digital currency that operates on blockchain technology. This means transactions are recorded on a public ledger, and the details of those transactions are encrypted for security. With no central authority in charge, it relies on peer-to-peer networks to verify transactions through a process known as mining.

In practice, this equates to users being able to transfer funds without going through a middleman (such as a bank). Instead, Bitcoin holders can securely send funds directly to one another using a unique address and key.

Understanding Bitcoin halving

One key aspect of Bitcoin, which occurred on May 11, 2024, is the Bitcoin halving event, which happens roughly every four years (specifically, once every 210,000 blocks). During this event, the rewards for mining new blocks are reduced by half. This process is built into the Bitcoin protocol to control the inflation rate of the currency.

This has a direct impact on the supply of Bitcoin and can potentially affect its value. In previous halving events, we’ve seen an increase in demand for Bitcoin as the supply decreases from halving, which has led to an overall rise in its price.

Pros of investing in Bitcoin

As with any investment, there are pros and cons to consider before deciding whether or not to invest in Bitcoin. Here are some potential advantages:

  • High growth potential: Even after its meteoric rise over the last ten years, Bitcoin has a long way to go, with many experts predicting its value could reach $100,000 in the near future.
  • Decentralization and security: With no central authority controlling Bitcoin, it offers a level of security and privacy that traditional currencies don’t.
  • Diversification: If you have a higher risk tolerance, investing in Bitcoin is one of the best ways to diversify your portfolio. It’s considered a non-correlated asset, meaning its value is not tied directly to traditional markets (like stocks and bonds).
  • Ease of access: It’s incredibly easy to buy Bitcoin and sell it, with many platforms and exchanges allowing users to trade it for other currencies or goods and services.

Cons of investing in Bitcoin

As a new and largely unregulated asset class, there are some potential drawbacks to investing in any cryptocurrency, including Bitcoin.

  • Unpredictability: While macro trends have certainly solidified themselves, the lack of regulation and government backing (plus the rapid advancement of technology) make it difficult to know whether one Bitcoin will be worth millions in the next 10 years or next to nothing.
  • High volatility: As with everything else in the crypto world, Bitcoin’s price moves up and down dramatically over relatively short periods of time. This makes it less ‘safe’ compared to other investment classes.
  • Lack of regulation: Scams and fraud are somewhat common, since there is no bank or central authority backing it.
  • Technical barriers: It’s easy to invest in, but understanding the fundamentals of how Bitcoin works is still a major setback for beginners and anyone who wants to pursue crypto more seriously.

Endnote

It’s important to remember that Bitcoin is (and should always be) part of a diversified investment portfolio, rather than the sole focus. While it has significant growth potential, there are also risks involved. It’s essential to do your due diligence and only invest what you can afford to lose. By carefully assessing your risk tolerance and understanding the market trends and developments, you can make informed decisions about investing in Bitcoin in 2024.

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