Investing in a Digital Asset Called Bitcoin

In the era of technology 5.0 which is growing rapidly, there have been a lot of adoptions of Blockchain-based technology development. Bitcoin is a crypto asset that is very interesting to talk about and is a major sector in Cryptocurrency regarding digital assets that need attention.

The total supply of Bitcoin becomes limited

The total supply of Bitcoins is limited by the Bitcoin protocol code to 21,000,000 BTC. Therefore, many investors buy and store Bitcoin in the long term because they believe that Bitcoin will eventually become a rare digital asset such as non-digital gold.
As explained in the article Learn to Know Cryptocurrency and Blockchain? Bitcoin miners who help process transactions are rewarded with new Bitcoins. Starting from October 2020, miners are now receiving 6.25 BTC for every block mined by the miner. That is, a new 6.25 BTC is coming into circulation every 10 minutes.

Halving

However, every 4 years, the Bitcoin protocol or Bitcoin code will reduce the reward called Halving. In 2024, miners will only receive 3.125 BTC per block, and in 2028, miners will only receive 1.56 BTC per block (and so on). Currently, around 18,500,000 BTC has been mined, leaving around 2,500,000 BTC remaining. Due to the continuous halving, a new supply of BTC will become less and less scarce every 4 years, and the last Bitcoin will be mined in 2140.

Bitcoin Can Be a Better Store of Value Than Gold

Many Bitcoin investors believe that although the price of Bitcoin is very volatile today like stocks, in the long term (4+ years) Bitcoin can be a better store of value than gold. Several properties make Bitcoin a potentially better store of value as a digital asset than gold:

Divisibility (Ability to be broken down into small amounts)

If you have 1 gold bar but want to buy an item for 0.5 gold bar, it is very difficult to divide the gold into small pieces to make transactions. However, if you have 1 BTC, you can send/transport amounts as small as 0.00000001 BTC. So, you can transact with numbers that are as accurate as you want (such as 0.4981537 BTC) in determining the amount that corresponds to the total payment transaction.

Ease of Transaction

The Gold Form is quite physically heavy so it is difficult to carry around, it is very dangerous and risky to carry in large quantities. Unlike Bitcoin which is not physically heavy – as long as there is an internet connection, you can access your Bitcoin storage wallet to send Bitcoins to anyone in the world in any amount within 10 minutes of block confirmation on the Bitcoin blockchain network.

Security of Storage

Physical gold is very easy to steal and to safely store large amounts of gold, you’ll need to put in place substantial security measures (such as storage vaults, security cameras, etc.). However, you can store any amount of Bitcoin in a trusted crypto app wallet (like Trust Wallet, SafePal, and others) or a Hardware wallet as small as a USB stick, like Ledger or Trezor.

Network Effect & Price Appreciation

Gold is an outdated or physical asset class, and room for price growth is limited. While Bitcoin is a relatively younger digital asset class, and because it lives on the internet. Bitcoin benefits from its network effect (Blockchain): the more people use Bitcoin in their daily life payment transactions, the faster the value and price of Bitcoin will rise.

Buy Bitcoin as a Long-Term Investment And Protection Against Printing Money

Since the 2008 financial crisis, developed country central banks such as the Federal Reserve (America) and the European Central Bank (Europe) have been printing money through the “Quantitative Easing” program. This is done to help stimulate the economies of their respective countries. For example, it is estimated that the US Federal Reserve (“The Fed”, the US central bank) printed USD 1.2 trillion in 2008, and USD 3 trillion in 2020 The Fed prints money digitally, as Fed Chair Jerome Powell noted. Some investors are afraid that printing money will devalue their currency, so they want to save rare assets that cannot be mass-produced, such as Gold and Bitcoin.

Traders Trade Bitcoin For Quick Profit

While long-term investors choose to buy and hold bitcoins, short-term traders often buy and sell bitcoins in a matter of weeks, days, hours, or even minutes. Because Bitcoin prices are volatile and the market is open 24/7, experienced traders can enter and exit bitcoin investments in the short term. Traders use advanced techniques such as technical analysis, market sentiment analysis, and other tools to generate profits in the short term or timeframes that the traders define with predetermined profit targets.