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Is It Smart To Invest In Bitcoin? – Pros and Cons

Is it smart to invest in Bitcoin? Most mainstream financial advisers will tell you that it is not smart to invest in Bitcoin. Bitcoin is.

Posted June 11, 2019

Bitcoin BTC NZ logo with digital blue back ground
Bitcoin BTC NZ logo with digital blue back ground

Is it smart to invest in Bitcoin? Most mainstream financial advisers will tell you that it is not smart to invest in Bitcoin. Bitcoin is not backed by anything tangible. Neither is Bitcoin recognised by most banks as a legitimate form of currency. However, if Bitcoin is on your investment radar, this is likely because you know that if you invested a few years ago, you would likely be a millionaire by now.

Gold nugget sitting next to Bitcoin physical coin NZ with black back ground

Is it Smart to Invest in Bitcoin?

People who want to know if it is smart to invest in Bitcoin all have one thing in common. They want to know if it is possible that Bitcoin is guaranteed to perform as well over the next 10-years as it has between 2009 and 2020.

Sadly, there is no straight answer to this question.

Bitcoin is not a magical investment asset which will see anyone make guaranteed returns after investing. It is entirely possible that the value of Bitcoin will go to zero tomorrow. However, there are several reasons why many consider 2020 a good time to invest in BTC.

Bitcoin BTC split in half to represent Bitcoin halving 2020

The 2020 Bitcoin Halving and Why This Will Matter to You

First and foremost on most investors reasons to invest in Bitcoin in 2020, is the ‘Bitcoin halving‘.

In May 2020, the number of new Bitcoin entering circulation is scheduled to be reduced by half. This will make Bitcoin more scarce than gold. At present, there are 18,000,000 Bitcoin in circulation, out of a total supply of 21,000,000.

The last Bitcoin is scheduled to be minted in 2140. Bitcoin is, therefore, already scarce, but about to become much scarcer. Looking at historical Bitcoin price data, it is also possible to see that Bitcoin prices have more than doubled in anticipation of past halving events.

Gold bars stacked with morphing graphical effect

Bitcoin is Digital Gold

Because of the algorithmic way Bitcoin is designed to increase in scarcity, many people already appreciate Bitcoin as digital gold. Bitcoin is also the oldest cryptocurrency currently on the market. BTC is, therefore, the preferred choice of cryptocurrency among major mainstream investors like Fundstrat Global Advisors and Grayscale.

Related: Gold vs Bitcoin.

Btcoin NZ Adopton curve with chasm

Bitcoin and Cryptocurrency Adoption is Increasing

It is strange to think that Bitcoin is only 10-years old. However, the first time Bitcoin was ever used in a real-world transaction, was on 22 May 2010. Then, Laszlo Hanyecz in Jacksonville, Florida, paid 10,000 BTC for two pizzas.

Today, Bitcoin is supported by several major online and offline retailers. These include Shopify, Starbucks, and Whole Foods. Many people believe that Bitcoin adoption is destined to increase even further. If and when it does, Bitcoin prices will rise also.

Bitcoin best performing asset of the 2010;s info graph

Bitcoin is one of the Best Performing Asset Classes of the Last 10-Years

Despite naysayers in the mainstream media, Bitcoin is one of the best performing asset classes of the past 10-years. Over the past 11-years, Bitcoin has outperformed the S&P, DOW, and NASDAQ. No one can predict if this success will continue. However, performance over the past 11-years is something to consider when considering investing in BTC now in 2020.

Will Bitcoin crash BTC image pixilated

How to Invest in Bitcoin in New Zealand

Is Bitcoin Just as Likely to go to Zero?

Some believe that Bitcoin is destined to remain a top-performing asset for the foreseeable future. However, others aren’t so sure.
Bitcoin is possibly about to be banned in India. If that happens, other bans may follow. It is also worth noting that altcoins like DASH are already used to facilitate more real-world retail transactions than Bitcoin in places like South America.

DASH coin, of course, can’t compete against Bitcoin in terms of brand recognition or the level of investor trust which Bitcoin has established over the past ten years. All that potential Kiwi BTC investors need to remember, is never to invest more in BTC than they can realistically afford to lose.

To learn how to invest in Bitcoin in NZ, see our guide here. ⚡

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Last updated November 24, 2021

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