Maybe you’ve heard people describe Bitcoin as a unique asset and wondered why. Here’s why Bitcoin is a fantastic asset and a worthy investment.
Bitcoin’s value has risen significantly since its introduction in 2008. Today, more investors take this virtual currency more seriously as an asset. That’s because some people and institutions have made a good return on their investments in this crypto asset. But Bitcoin has idiosyncratic risks since it’s going through the adoption phase and is relatively new.
Some experts note that Bitcoin doesn’t behave the way most investors would intuitively expect when comparing it with other assets, mainly because of its digital gold analogy. So far, Bitcoin has exhibited the traits of risk-on assets. Nevertheless, most investors treat Bitcoin as a new asset.
Several platforms, like the Immediate Bitcoin, facilitate the purchase and sale of this digital asset. Some individuals and enterprises register with such platforms to buy Bitcoins with fiat money and hold them in their crypto wallets. Eventually, they sell their digital coins to make profits from their investments. But, Bitcoin is different from conventional assets in several ways. Here are some of them.
Bitcoin’s price or value varies significantly due to the absence of regulations. Different jurisdictions have varying rules governing Bitcoin and other digital currencies. For instance, the taxman treats Bitcoin as a property in some jurisdictions. Consequently, individuals and organizations pay taxes when selling Bitcoin for profits. In other places, Bitcoin is a currency that people use to pay for products and services. For instance, El Salvadorians can use Bitcoin alongside the US dollar to pay for services and items.
This inconsistency in regulations makes Bitcoin a unique asset. Ideally, you can hold Bitcoins and sell them as assets or spend your coins when paying for items or services. And that’s not the case for other assets like land, property, and company stocks.
Bitcoin is a financial asset with true decentralization. In most places, the governments control real estate and stocks at varying levels. Satoshi Nakamoto designed Bitcoin’s network to eliminate interference by central authorities like governments. Instead, the network’s algorithm determines Bitcoin’s supply and distribution.
Consequently, Bitcoin doesn’t have gatekeepers. Anyone requires a computer or smartphone and internet access to join the network and purchase Bitcoins to add to their investment portfolio. And this sets Bitcoin apart from the other assets.
The government can confiscate most traditional assets. For instance, government agencies can seize your property. However, Bitcoin’s decentralization makes it resistant to control, manipulation, and censorship by a central authority. And this is among the primary traits that make Bitcoin a unique asset.
Bitcoin’s digital existence and decentralization mean accessing its network is unrestricted. And this democratizes this crypto asset while allowing individuals to use it as wealth storage. Perhaps, this explains Bitcoin’s rising popularity as an investment. Many people and institutions have converted their cash treasures into Bitcoin since they know the government can’t seize this crypto asset.
Satoshi Nakamoto created this virtual currency with a hard cap for its supply. Essentially, the world won’t have more than 21 million BTCs. Consequently, more people and institutions want to own Bitcoin before miners produce 21 million tokens. Bitcoin is a unique asset because it’s the first digital product with a limited supply. Additionally, the halving process that occurs every four years reduces Bitcoin supply gradually. And this increases Bitcoin’s value as miners near the total possible pool.
More institutional bankers, family offices, and hedge funds have added Bitcoin to their investment portfolios. That’s because they recognize Bitcoin as a unique asset with the potential to generate substantial returns. The above factors explain this virtual currency’s uniqueness. Nevertheless, understand how it functions before investing to avoid losing your money.