The high liquidity associated with bitcoin makes cryptocurrency a good investment if you want to gain direct exposure to demand for digital currency. A safer but potentially less lucrative alternative is to buy shares in companies with exposure to cryptocurrencies. What is Bitcoin? Bitcoin is one of several digital cryptocurrencies built on a technology called blockchain. Should I invest in cryptocurrency or Bitcoin? Every situation is different.
While we don't offer a way to hold or buy cryptocurrency, you should talk to your local Edward Jones financial advisor about the risks involved and your financial strategy. Cryptocurrency is a relatively risky investment, no matter how you divide it. In general terms, high-risk investments should represent a small part of your overall portfolio; a common guideline is no more than 10%. You may first want to shore up your retirement savings, pay off debt, or invest in less volatile funds made up of stocks and bonds.
While Bitcoin can be seen as digital gold, Ethereum is building a global computing platform that supports many other cryptocurrencies and a massive ecosystem of decentralized applications (DApps). Bitcoin may be the future of currency exchange, but it's equally important that you know the concerns surrounding investing in cryptocurrencies. This is a simple way to convert your bitcoins into cash, but you should remember that the price of a bitcoin changes all the time. There are currently only 18 to 19 million bitcoins in circulation, and minting will stop at 21 million.
Owning a cryptocurrency can increase the diversification of your portfolio, as cryptocurrencies such as Bitcoin have historically shown little price correlations with the U. Bitcoin's overwhelming performance as a currency and investment has attracted traditional and institutional investors alike. For context, the current limit of transactions per second on the bitcoin blockchain is approximately seven, while the Visa network can process 1,700 transactions per second. Ark Invest CEO Cathie Wood describes Bitcoin as a rules-based monetary system, since Bitcoin's monetary policy is set by code parameters.
Since Bitcoin is not controlled by a central entity, its monetary policy is much stronger than that of any government. Bitcoin's price is extremely difficult to predict and even more susceptible to market factors than more established asset classes. So, while the standard advice for investors in any asset is to keep their money where it is for at least five years to overcome market declines and benefit from the good times, as some bitcoin investors have done, to buy smaller coins and keep them as a long-term investment. Bitcoin is the original cryptocurrency and has a high long-term value because it has never been hacked and has maintained 100% uptime since its launch.
Bitcoin investors believe that cryptocurrency will gain value in the long term because the supply is fixed, unlike the supply of fiat currencies such as the U. Just as the Internet was once a speculative investment, Bitcoin has received similar criticism. What they don't understand is that the underlying technologies behind bitcoin and ethereum are revolutionary. One of the main factors driving bitcoin's price increase is the rate at which new consumers buy and explore cryptocurrencies, Waltman says.