Should you invest in Bitcoin? Exploring what Bitcoin is, if you should invest, and how to hedge your portfolio with 1% to speculate. Please note that investing money in Bitcoin is extremely high risk. I am not a licensed investment advisor. This post is not a recommendation to purchase Bitcoin. This post contains ads by Monumetric and may contain affiliate links.
Bitcoin (BTC) has been an increasingly popular topic over the last year for good reason.
At the time I’m writing this article, the price of one Bitcoin is $46,487,00 CAD. It’s up over 300% over the last year.
Furthermore, the blockchain technology behind Bitcoin has the power to completely eliminate the need for banks and transform the world and Internet forever.
Considering the incredible return over the past year, because Bitcoin has the potential to become a digital version of Gold, and because of the tremendous potential of the blockchain technology behind Bitcoin, I believe it’s worth looking into.
If you’re an investor that’s been pondering if you should participate in the kooky crypto market, this article will look at if you should invest in Bitcoin, what Bitcoin is, and how to buy it to hedge your portfolio.
Let’s start with an overview of what Bitcoin actually is.
What is Bitcoin?
Bitcoin is the world’s first cryptocurrency.
It is stored and exchanged securely on the internet through a digital ledger known as a blockchain.
At the core, Bitcoin is peer-to-peer digital cash. It allows individuals to become their own bank, so to speak, because there is no middle man to collect fees on transactions. The blockchain allows Bitcoin holders to store, transfer, or exchange Bitcoins without any interference by banks or regulators.
On the other hand, Bitcoin is still too volatile to be considered a legitimate currency.
But that doesn’t mean it isn’t a store of value. Bitcoin (BTC) has increased by over 300% in the last year.
In a way, it has become digital gold.
Similar to how the price of Gold reacts to an increase in the money supply, Bitcoin seemingly reacts the same way.
Ultimately, you value Bitcoin for one of the following reasons:
- It’s a peer-to-peer digital cash
- Digital Gold
- Revolutionary blockchain technology
For a more detailed overview of Bitcoin and cryptocurrencies, I would recommend checking out this documentary on Amazon Prime: Cryptopia: Bitcoin, Blockchains, and the Future of the Internet
Bitcoin is a High Risk Speculative Bet, Not an Investment
Now that I’ve mentioned the upsides, it should be noted that Bitcoin is purely speculation.
I want to clarify that putting money into Bitcoin is not investing, it is speculating.
Buying Bitcoin or any cryptocurrencies is extremely risky. It should not be viewed as a potential income stream to reach financial independence.
If you put money in Bitcoin, you should view it as a speculative bet.
Bitcoin is not a solid investment that you can count on like dividend stocks, ETFs, or even cash.
Before you invest in Bitcoin, I would recommend checking out this video from This Online World. In the video, you will learn the 5 questions you should ask yourself before investing in Bitcoin.
Should You Invest in Bitcoin? – Yes, But Limit Your Position to 1% of Your Portfolio
If you already have a solid investment portfolio, no debt, an emergency fund, if you understand the risk, and if you use money you can afford to lose, the answer is yes—you should buy Bitcoin.
Why not speculate a small percentage of your portfolio on a revolutionary technology?
In my personal opinion, you should speculate 1% of your portfolio’s value on Bitcoin.
I wouldn’t invest more.
Frankly, you will likely lose money if you put money in Bitcoin. You probably won’t be able to handle the volatility, so you will sell it at a loss.
Don’t hate me, that’s just the truth.
So, if you do put money in Bitcoin, you should consider it gone.
It should be money you can afford to lose.
If you have a portfolio worth 20k, you should only speculate with $200 or less on Bitcoin.
How to Buy Bitcoin in Canada with An Exchange
If you’re just here to find the link to open your account to buy Bitcoin, look no further.
You can open an account to buy Bitcoin through WealthSimple by clicking here.
That is my direct referral link from my personal account with WealthSimple. It is not an affiliate, but I will receive cash if you open the account and so will you. Visit here to find out how to get $10 for trading.
Once you visit WealthSimple and follow the steps to open your account, you will need to connect a bank account to fund it. You can connect your bank account directly through the app, just follow the steps.
The funding process takes 5 to 7 business days.
To buy Bitcoin, search for “Bitcoin” or “BTC” and the quote will populate in front of you.
At this point, you are probably wondering how you will afford Bitcoin at its current price.
Fortunately, Bitcoin can be divided into 8 decimal places. Each fraction of a Bitcoin is referred to as a “Satoshi”. In total, there are 100,000,000 million Satoshis in 1 Bitcoin.
This benefits investors because it means you can buy Bitcoin with as little as $1 CAD.
For more ways to buy Bitcoin, check out this article by Investopedia about How to Buy Bitcoin.
Should You Invest in Bitcoin — Final Thoughts
As a dividend investor, I normally try to avoid speculative bets.
But the revolutionary blockchain technology behind Bitcoin mixed with its potential to become digital Gold makes it worth speculating on.
Social Capital’s Chamath Palihapitiya refers to it as “schmuck insurance” because he believes “it’s the single best hedge against the traditional financial infrastructure”. –CNBC
And after doing some moderate research, I agree with him.
So should you invest in Bitcoin?
The answer is yes if you have an emergency fund, no debt, an established investment portfolio, and if it’s money you can afford to lose, you should invest in Bitcoin.
Personally, I think you should put 1% of your portfolio in it and forget about it for 10 years.
Prepare to lose it and hope your schmuck insurance isn’t necessary.
Related Content
Bitcoin ETF: How To Gain Exposure To Bitcoin With An ETF
I am not a licensed investment or tax adviser. All opinions are my own. This post may contain advertisements by Monumetric. This post may also contain internal links, affiliate links to BizBudding, Amazon, Bluehost, and Questrade, links to trusted external sites, and links to RTC social media accounts.
Connect with RTC
Twitter: @Reversethecrush
Pinterest: @reversethecrushblog
Instagram: @reversethecrush_
Facebook: @reversethecrushblog
Email: graham@reversethecrush.com
Disadvantages of Early Retirement – Why Early Retirement is a Bad Idea and What to Pursue Instead
