Top 5 Reasons to Invest in Bitcoin
Are you looking for the top 5 reasons to invest in Bitcoin for the long haul? Whether you’re learning yourself or are looking for a concise list to share with friends and family, you’re in the right place.
Want a quick punch list of the top 5 reasons to invest in Bitcoin?
- No CEO, management, or central authority to change it or mess it up. Free from human intervention.
- Proven track record of growth.
- Limited supply.
- Hedge against uncertainty.
- Mainstream adoption has been achieved.
Read more below for further details on each.
1. No CEO
Perhaps the most unique aspect of Bitcoin is the story of its creator, Satoshi Nakamoto. Satoshi has had no apparent gain from Bitcoin. No fame. No control. No financial gain. No selfishness.
It is hard to imagine creating something worth a trillion dollars and not benefiting from it. This simply goes against common human traits. Bitcoin is truly a unique tale of selflessness.
But stepping away is actually critical to Bitcoin’s value proposition. Bitcoin is effectively code that has been released in the wild.
- It runs on its own
- No CEO
- No management
- No central authority
What does this mean for investors?
Bitcoin is code. It’s programmatic and predictable. It does not need someone to run it. You won’t see selfish actions or foolish changes to how it works.
It’s not subject to quarterly profit targets, or most importantly, human intervention. More bitcoins can’t be printed to aid in case of a disaster.
You know what you’re buying. And what you’re buying will not change.
It simply exists. Like gold and other commodities.
If someone tries to change how it operates, that code will not work with the rest of the Bitcoin network. That change will instead become an entirely separate fork like Bitcoin Cash or many of countless others.
Nearly all other crypto and fintech projects stand in stark contrast. They have CEOs, investors, boards, and profit targets. It takes time and capital to get these ventures going. In return, these companies set aside a portion of the coins for themselves and maintain control of their own networks. Outside of Bitcoin, you tend to see much more traditional corporate factors at play.
- When you invest in Bitcoin, you’re investing in the concept and system.
- When you invest in altcoins, you’re investing in people and a company.
This is why the SEC has said Bitcoin is a commodity and other crypto projects are securities.
“Bitcoin’s design renders it immune from many criticisms of the broader industry and Gensler (Gary Gensler SEC Head) has claimed unequivocally that Bitcoin should be held to different standards. “SEC’s Gensler Warns Crypto Investors, but Differentiates Bitcoin (nasdaq.com)
See our full take Why Bitcoin Has Value and Is Unique Among Crypto.
2. Proven Long-Term Growth
Bitcoin has shown impressive long-term growth since its inception in 2009. Bitcoin has gone from being worth just a few cents to over $60,000 at its peak in 2021.
While the price has fluctuated over the years, its upward trajectory is undeniable. In fact, Bitcoin’s compound annual growth rate (CAGR) from 2010-2021 has been a whopping 196%.
3. Limited Supply: Scarcity Increases Value
One of the main reasons for Bitcoin’s value is its scarcity. There will only ever be 21 million bitcoins in existence, making it a deflationary currency.
Think about that number this way:
There are around 350 million people in the United States. That means only 6% could ever hold a single Bitcoin.
That’s just considering the United States. Expand out to the global population, and you’re down to around 0.2% can be “Whole Bitcoiners.”
That doesn’t account for lost bitcoins and large accounts that have thousands of bitcoins.
This built-in scarcity is designed to prevent inflation. This is different than traditional fiat currencies like the dollar and euro. Governments plan to inflate those currencies over time. For example, the US has a 2% annual inflation target.
That means over time, there will be many more dollars, yet a fixed amount of bitcoins. As a result, those bitcoins become scarcer (more valuable) compared to the dollar.
With a limited supply, Bitcoin’s value is likely to increase over time as demand grows, making it an attractive investment option.
See our post Stock-to-Flow: Predicting Bitcoin, Gold, and Other Commodities for more on scarcity.
4. Hedge Against Inflation and Market Uncertainty
Speaking of inflation, Bitcoin is increasingly being seen as a hedge against inflation and market uncertainty. As central banks around the world print more money in response to economic crises, inflation erodes the purchasing power of fiat currencies.
Bitcoin, on the other hand, has no central authority and cannot be manipulated in the same way.
Additionally, Bitcoin has shown a low correlation with traditional assets like stocks and bonds, making it a diversification tool for your investment portfolio.
5. Mainstream Adoption: It’s Here to Stay
Gone are the days when Bitcoin was just for tech-savvy enthusiasts.
Today, major companies like Tesla, Square, and PayPal have embraced Bitcoin, either by accepting it as payment or investing in it as an asset (source: CNBC).
Furthermore, financial institutions like Fidelity, Grayscale, and the New York Digital Investment Group offer Bitcoin investment products and services, signaling the cryptocurrency’s growing legitimacy and mainstream adoption (source: Business Insider).
We are also now seeing governments of countries adopt Bitcoin as legal tender, such as El Salvador in 2021 (source: Forbes).
All these developments make it clear that Bitcoin is here to stay.
Bonus: Financial Freedom and Control
Lastly, investing in Bitcoin gives you greater control over your finances. With Bitcoin, you can send and receive money without the need for an intermediary like a bank, meaning lower fees and faster transactions (source: Bitcoin.org).
Additionally, Bitcoin transactions are pseudonymous, providing a level of privacy that traditional banking systems can’t offer. By investing in Bitcoin, you’re taking charge of your financial future and embracing the cutting-edge technology that drives the digital currency revolution.
See our full post Crypto Investing 101: The Crypto-ML Approach for more.
Conclusion of Top 5 Reasons to Invest in Bitcoin
There you have it – the top 5 reasons to invest in Bitcoin! With no central authority, proven long-term growth, scarcity-driven value, ability to hedge against inflation, increasing mainstream adoption, and the financial freedom it offers, Bitcoin has a significant, unique value proposition.
Just remember, as with any investment, there are risks involved, and it’s essential to do your research and consult a financial advisor before making any decisions. Happy investing!
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