You can invest in Bitcoin through various ways: Bitcoin mining, buying on crypto exchanges or money transfer apps, Bitcoin ETFs and Bitcoin trusts.

By now, you’ve undoubtedly heard about Bitcoin and how it’s the next revolution in the world of money. Over the years, Bitcoin has been tried and tested, making it one of the 

Recently, there's been increased interest in Bitcoin, including on the part of institutional investors such as mutual fund issuers, major tech companies and financial firms incorporating this groundbreaking digital currency as part of their portfolios.

However, despite Bitcoin’s popularity, navigating the world of Bitcoin and other cryptocurrencies can be tricky and hectic, especially for a beginner. In this article, we bring you helpful tips on how to invest in Bitcoin, and where you can find the best Bitcoin investing strategies.

 (BTC) is the world’s most popular virtual currency. As the first cryptocurrency to successfully enter the market (in 2009), Bitcoin immediately stood apart, since it doesn’t operate under mainstream finance controls. 

Instead, it uses a distributed and immutable public ledger powered by 

 to manage and track all transactions. Bitcoin is used to facilitate fast and cheap peer-to-peer (P2P) payments across the globe. It has also risen as a store of value, with investors buying the asset to trade or hold for the future. 

. With an internet connection, you can securely buy and sell Bitcoin from anywhere in the world.

Bitcoin, like all cryptocurrencies, is a highly volatile asset — a high-risk, high-reward investment. Its price can fluctuate in minutes, leading to either big profits or huge losses. 

So, how much Bitcoin should a beginner invest?

 to keep your investment from turning into a minefield. Start by investing between 5% and 30% of your investment capital, with 5% as the safest and 30% on the riskier end. As you increase your risk tolerance, you may increase the investment range. However, a cardinal rule, as with any asset, is to invest only what you can afford to lose.

As we mentioned above, navigating the world of Bitcoin investing can be tricky and risky. Following are some tips you can apply to invest in Bitcoin strategically.

Following are seven of the best ways to invest in Bitcoin.

 is the process of creating new Bitcoins as a reward for completing the complex computational problems that validate Bitcoin transactions on its network. Put simply, individuals called miners compete to solve extremely complicated math problems to get a predetermined amount of Bitcoin, currently at 6.25 BTC per block. 

As a solo miner, you would require expensive computer hardware using copious amounts of electricity. Then you’ll have to contend with the ever-increasing mining difficulty, Bitcoin 

 and the low odds stacked against you — about 1 in 26 million. 

Even if you were successful at mining Bitcoin, there’s no guarantee it would be profitable in the end when you equate the reward to the costs you’ve incurred. This is especially true since Bitcoin mining rewards are reduced by half after approximately every four years in an event known as 

. The next Bitcoin halving, scheduled for April 2024, will bring the block reward down to 3.125 BTC.

For these reasons, Bitcoin mining has increasingly become less profitable, and may not be the best strategy for investing in Bitcoin. 

, however, is a viable way to reap rewards from Bitcoin without directly owning the asset.

Cryptocurrency exchanges provide the most straightforward way to buy Bitcoin. These platforms are popular because they’re cost-effective and easy to register with. They don’t charge hidden fees, and they offer a variety of extra security features, including online wallets to store your crypto.

Cryptocurrency exchanges are categorized into two types — centralized and decentralized. 

 (CEX) is the most common type that investors use to buy crypto. As a third-party platform, it helps you complete safe Bitcoin transactions, with stringent protocols in place to safeguard your holdings. A CEX’s simple and friendly interface allows you to use fiat currency to 

, making it a convenient and safe space for beginners.

 is one of the most popular and trustworthy centralized exchanges for Bitcoin transactions. The platform offers you the best prices in the market with triple-layer asset protection, advanced privacy and data protection. 

 (DEXs) cut out intermediaries to allow for peer-to-peer transactions. Users enjoy anonymity and more autonomy over their funds, less red tape and fewer regulations around transactions. These exchanges are less popular mostly because they are more complicated than CEXs. Users need to remember their account credentials and acquaint themselves with their platform’s operating style, or risk losing their holdings forever.

Bitcoin Trusts and Exchange-Traded Funds (ETFs)

Many investment companies are looking to meet their clients’ demands for cryptocurrency. One way they do so is through Bitcoin trusts, an easy way to get exposure to Bitcoin without directly owning it. 

Accredited investors who meet the set income and experience threshold can buy a limited number of private shares through brokerage or retirement accounts, but without the private key or other crypto exchange storage concerns. By buying through a trust, you rely on your brokerage to buy and manage your Bitcoin assets.

 is the most popular investment trust, with over $15 billion in assets under management as of September 2023. GBTC stores the actual Bitcoin, tracks the underlying price and trades its retail index on the open or over-the-counter market.

Another option that’s similar to a trust is an 

, or ETF. A Bitcoin ETF is a pool of investment funds that tracks Bitcoin’s price and can be bought or sold throughout the day. It offers beginners an easy, simple and cheaper way to add Bitcoin to their portfolios.

ETFs follow the price of Bitcoin, which means that when BTC fluctuates in value, they follow suit. However, they may deviate from the actual Bitcoin value due to various reasons such as market demand, trading volume and other market dynamics.

 that invest in futures are ProShares Bitcoin Strategy ETF (BITO), with over $1 billion in assets, and Evolve Bitcoin ETF (EBIT), with $76.17 million under management.

Whichever option you choose, you’ll find a safer and more convenient way to expand your portfolio with little to no effort.

For beginners who want to buy Bitcoin conveniently, money transfer apps like PayPal, MoneyGram and Cash App are great options. These platforms allow you to buy, sell and store Bitcoin. PayPal, for instance, lets you buy Bitcoin using your bank account, debit card or PayPal account balance.

 (or P2Ps) provide a venue where buyers and sellers can post their buy and sell orders. Many platforms may require you to create and verify your account before making a transaction.

You can initiate a trade once you choose your preferred offer and payment method. The seller sends the Bitcoin to the escrow account, and after receiving the fiat currency, the escrow account unlocks the Bitcoin and sends it to the buyer. Since P2P platforms connect buyers and sellers directly, you need to take 

For an even smoother Bitcoin trading experience, try out 

, which offers you more advertisers, third-party liquidity providers, competitive Bitcoin rates, and fast payment and release of your Bitcoin.

Traditional brokers have also ventured into the crypto space to offer their customers a way to buy and sell Bitcoin. They don't charge for Bitcoin trades, and only profit from a payment for order flow. 

Remember that when you choose a broker, they become the custodian of your assets, limiting your control over your investments.

For people living in areas with limited access to more conventional methods of buying Bitcoin, or if you're just looking for a simple way to complete a transaction, 

 can come in handy. All you need to do is insert cash or a credit or debit card in exchange for Bitcoin, which is then loaded into your crypto wallet. 

Most Bitcoin ATMs allow one-way transactions, either to buy or sell, while others support bidirectional functionality, which allows you to both buy and sell BTC. The charges to expect here are the fiat currency conversion and purchase fees. Make sure to compare the ATM's fee structures, as they tend to be high or low depending upon location. 

 from the Securities Investor Protection Corporation. Various crypto platforms may safeguard themselves against hacks and other financial losses, but that insurance does not protect you as their client from theft or any other kind of loss. As we’ve mentioned earlier, Bitcoin is a high-risk, high-reward investment.

As we’ve seen, there are numerous ways to buy Bitcoin. But as a beginner, you may still wonder where to start. Following is a simple four-step guide on how to invest in Bitcoin.

Before you make your purchase, you’ll need a 

 to store your digital assets. You can use two types of wallets to store your Bitcoin 

. They serve different purposes, and come with specific advantages and disadvantages. 

Hot wallets are online wallets that generate the private keys to your assets on interconnected devices, with the most popular being 

. Many exchanges offer a free hot wallet where your Bitcoin will automatically be stored upon purchase. However, some users prefer to transfer their assets to a third-party hot wallet provider. These versions are also largely free, easy-to-use downloadable wallets.

Hot wallets don’t provide the best security. If the exchange or third-party provider is hacked, which is a real risk, your information and assets are at risk. To keep hackers at bay, you need to adopt the bare minimum of two-factor authentication (2FA), strong passwords and enhanced safe browsing.

However, hot wallets are convenient for small transactions and when you need to access your assets on multiple trading platforms. 

A cold wallet usually is a small, portable hardware device that allows you to store your Bitcoin offline. It comes with software that lets you view your portfolio once connected to a computer. (Paper wallets also fall under the category.) Cold wallets are considered the safest storage option, since they aren’t vulnerable to malware or hacking attacks.

A hardware wallet is a USB-like device that keeps your keys safe in an offline environment. Some good examples of hardware wallets include 

 is simply a printout of your keys, considered obsolete since it’s easily damaged.

So, which one to choose — a hot wallet or a cold wallet?

Your choice depends upon your unique circumstances and crypto activity. If you're a beginner who requires a simple and convenient wallet, or if you’re an active trader, the hot wallet may be your best option. However, if you intend to become a long-term Bitcoin investor, you may require the cold wallet's extra security features to protect your assets. 

A cryptocurrency exchange is an online marketplace where you can buy Bitcoin. Its interface contains different types of trading opportunities and data that may initially be overwhelming. But once you find Bitcoin — and it's typically the first crypto on the list — the purchase process becomes easy to complete.

 is a trustworthy cryptocurrency exchange that offers a smooth trading experience at low fees. As a beginner, you need to find an exchange that allows you to buy Bitcoin with fiat currency. Bybit supports fiat deposits from either bank transfer or bank card, making it the best option to start your Bitcoin investing journey. 

Once you’ve selected your preferred exchange, you need to 

 on the platform. With many exchanges, including Bybit, you’re required to provide your 

 details to verify your identity. This may include providing your email address or mobile phone number to complete the verification process.

 into your account, via either bank card or wire transfer. Once your account is funded, you can use the fiat balance to purchase Bitcoin.

Once you have a balance in your funding account, you can purchase Bitcoin. The 

option on Bybit allows you to buy Bitcoin through the following methods:

. There are two payment methods you can go for. First, you can choose to link your credit or debit card to your account and use it to buy Bitcoin. Bybit currently supports Mastercard and Visa. Alternatively, use a third-party channel to process your Bitcoin purchase and credit your crypto into your Bybit account. Currently, Bybit’s 

 partners are Banxa, XanPool, MoonPay, Mercuryo and NeoFi.

You can also deposit your fiat cash into your Bybit account to fund it before buying crypto. Under the 

 option, select your preferred fiat currency to complete the transaction. Bybit currently supports over 172 fiat currencies. 

, you can find Bitcoin sale offers and make a trade with your preferred seller. P2P HotSwap is a new feature on P2P Trading that expands your options with more advertisers and third-party liquidity providers to make your desired trade.

This function is created specifically for long-term 

 who wish to grow their investments at a steady pace. It’s fully customizable, with a range of flexible plans to choose from. As a type of DCA strategy, it lowers your risk, since you don't make a lump sum investment.

Once you’ve purchased Bitcoin, we highly recommend that you transfer it to a cold wallet to guarantee safety. A cold wallet also gives you control over your assets, which may boost your sense of security and confidence as a Bitcoin novice.

Now that you own Bitcoin, what can you do with it? 

Here are some of the different ways you can earn more with your Bitcoin on Bybit

Here comes the million-dollar question: Is Bitcoin a good investment?

The answer is yes. Bitcoin is the world’s largest cryptocurrency, and has held its own since its inception 15 years ago. As of Sep 22, 2023, Bitcoin was trading at approximately $26,678 with a market cap of $520.03 billion. Experts are making highly optimistic predictions for the coming years. According to CoinCodex, Bitcoin’s price 

There’s always the potential to make big profits with Bitcoin. Remember, however, that it’s a highly volatile investment and could lose its value just as fast. In the end, it all comes down to your risk tolerance and financial goals. 

Are you looking to set up a source of passive income — or a long-term investment plan — and can Bitcoin help you achieve your goals? Once you answer these questions, you’ll know whether Bitcoin is the best option for you.

There’s no doubt that Bitcoin is the most popular cryptocurrency in the world. It may have undergone some turbulent times, but if experts’ predictions come true, it will dominate the market as the most valuable crypto for many years to come. 

Getting in on the action at this point may prove to be one of the best investment decisions you can make. And with all the Bitcoin knowledge you’ve acquired, why not start today?

Beginner

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How to Invest in Bitcoin (For Beginners)

Bitcoin mining stocks outperformed Bitcoin in terms of value for many reasons. Learn why are they so important. 

 occurred in 2016. Since then, Bitcoin mining stocks have gained interest. These stocks represent companies that operate large-scale facilities to mine Bitcoin, the top cryptocurrency by market capitalization. In 2023, Bitcoin mining stocks outperformed Bitcoin itself by a wide margin, generating impressive returns for investors. But what are the reasons behind this success? And how do Bitcoin mining stocks compare to Bitcoin as an investment option? This blog post will dive into these questions and more.

Understanding Bitcoin Mining and Bitcoin Mining Stocks

 is the process of validating transactions and creating new bitcoins using specialized hardware and software. Miners compete with each other to solve complex mathematical puzzles that require significant computing power. The first miner to solve the puzzle adds a new block of transactions to the Bitcoin 

, the distributed ledger that records all transactions. In addition, the miner receives a reward in the form of newly minted bitcoins and transaction fees.

The term “Bitcoin mining stocks” refers to shares of publicly traded companies that derive most of their revenue and profits from Bitcoin mining operations. These companies typically engage in activities such as creating and operating Bitcoin mining farms, producing and selling mining hardware and equipment, and providing related services for Bitcoin miners. Investing in these stocks can be a way to gain exposure to the crypto world without the associated risks of directly owning cryptocurrencies.

The Performance of Bitcoin Mining Stocks in 2023

Despite the volatility and uncertainty in the crypto market, Bitcoin mining stocks had a stellar performance in 2023. According to 

 Cointelegraph, the average year-to-date stock price gains in 2023 among the top nine public Bitcoin mining firms by 

 was 257.14%. This figure is almost three times higher than Bitcoin's price gain in the same period. 

Factors Behind the Success of Bitcoin Mining Stocks

Several factors contributed to the success of Bitcoin mining stocks in 2023. 

Buying Bitcoin mining stocks and purchasing Bitcoin are both ways to invest in crypto, but they have some key differences. 

Advantages of Investing in Bitcoin Mining Stocks

Investing in Bitcoin mining stocks can offer some advantages over investing in Bitcoin directly.

The best Bitcoin mining stocks in 2023 have shown strong performance, profitability, growth potential and innovation. Based on these criteria, here are seven top picks for 2023.

Riot Platforms, a Texas-based Bitcoin mining company, boasts an impressive hash rate capacity of 

 and operates a 700-megawatt (MW) facility, making it the single largest in North America. In Q2 of 2023, the company successfully 

, with a low production cost of $8,389 per Bitcoin. It reported 

 in the last quarter, and experienced a remarkable year-to-date price surge of 234.8%, closing at $11.35 on August 31.

Also based in the United States, Marathon Digital Holding 

 in the second quarter of 2023, boasting a hash rate 

. Marathon Digital has enjoyed an impressive 

 increase in share price this year, and reported a 

 in the second quarter. The company's primary objective is to become North America's largest and most environmentally conscious Bitcoin miner.

Based in Alberta and Ontario, Hut 8 Mining operates with a hash rate capacity of 2.6 EH/s. In the second quarter of 2023, they mined 399 BTC and reported a revenue of 

The company has experienced an impressive year-to-date increase in share price of 185.9%, closing at $2.43 as of August 31. Hut 8 is committed to expanding its mining capacity and diversifying its revenue streams through 

Hive Blockchain Technologies, another Canadian company, is dedicated to mining Bitcoin and Ethereum using sustainable energy sources like hydroelectricity and geothermal power. In the second quarter of 2023, the company 

Operating in Québec and Argentina, Bitfarms Ltd., a leading Bitcoin mining company, currently boasts a 

 During the second quarter of 2023, the company 

. Bitfarms has made significant strides in the stock market, experiencing a 

 in share price. The company is leveraging low-cost renewable energy sources to target mining capacity expansion to 

Based in the United Kingdom, Argo PLC is a Bitcoin mining company that operates in Texas and Québec. It has achieved a total hash rate 

, and in the first half of 2023, it successfully 

 in the first half of 2023. The company aims to become one of the biggest and most eco-friendly Bitcoin miners worldwide by implementing renewable energy sources and carbon offsetting programs.

CleanSpark, a leading provider of energy management and Bitcoin mining software solutions based in the United States, has reported impressive growth during the third quarter of fiscal year 2023. The company operates several mining facilities, and boasts a hash rate 

, mining a total of 4,729 BTC for CY 2023. CleanSpark generated a 

The company remains committed to improving its mining efficiency and sustainability by utilizing 

 technology and renewable energy sources. It has received full funding to expand its facilities to hit a target of 16 EH/s operational hash rate by the end of 2023.

Summary: The Dominance of Bitcoin Mining Stocks

Bitcoin mining stocks have emerged as a dominant force in the crypto space, outperforming Bitcoin by a wide margin in 2023. These stocks offer investors a way to gain exposure to the growing demand for Bitcoin under a regulated framework. Bitcoin mining stocks offer some advantages over Bitcoin, such as lower volatility, higher liquidity, regulatory compliance and exposure to other business segments. However, investing in Bitcoin mining stocks is not without risks. Therefore, when 

, consider operational issues, environmental concerns, competition and regulatory uncertainty. 

Intermediate

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Bitcoin Mining Stocks: Why They Outperformed Bitcoin in 2023

Seed phrase is the backbone for your crypto wallet security. But how do they work? Learn more. 

Cryptocurrency is a form of digital or virtual currency that's designed to use cryptography to effectively secure transactions. There is no central regulating authority for cryptocurrencies per se, which makes the systems they operate on more decentralized and secure than centralized networks.

When investors purchase crypto coins, the assets are often held in digital wallets. It's possible for wallets to become broken or lost over time. In this scenario, it would be nearly impossible for users to recover their coins without a seed phrase. Thus, a seed phrase allows investors to securely maintain their assets.

A seed phrase consists of 12 or 24 words that give you the data you need to recover your crypto wallet when you don’t have access to it. Designed to be used as a security measure for digital assets, popular wallets like Ledger, MetaMask and Exodus use these phrases.

Importance of Seed Phrases for Crypto Security

A seed phrase is highly important for crypto security because of its many applications. The phrase itself isn't needed whenever you wish to access your crypto wallet. Instead, it allows you to enable several different functionalities that make it easier for you to manage your crypto assets. The primary reason to use a seed phrase is to give your crypto wallet more security.

Crypto seed phrases have three applications::

If you need to switch your current crypto wallet to another application or device, you can use the phrase of your choice to access the wallet on a completely different device. Let's say you first installed your crypto wallet on your smartphone. The seed phrase allows you to enter the wallet on your desktop computer or tablet with relative ease.

It's also possible to generate a crypto wallet with your phrase. Whenever you're setting up a wallet, you'll be given the opportunity to create a phrase that consists of 12 or 24 words arranged in a specific order. Make sure you properly store this phrase to ensure no one else gains access to it.

If you lose your wallet or find that it's broken, you can claim your assets with your crypto seed phrase. There are many reasons why you might lose your wallet. For example, some owners accidentally delete a specific wallet application from their smartphone or desktop. There's also a chance that your hardware wallet or device will be stolen. Even if you lose your phone or computer, your crypto wallet can be restored on another device.

Among the most commonly used standards for these phrases is 

 (BIP39). Even though this standard was initially meant to be used with Bitcoin wallets, it has since become widely used across the entire crypto industry. When it comes to crypto wallets, BIP39 defines how wallets are supposed to generate their phrases. It also reinterprets every word for effective wallet recovery.

Before new private and public keys are made for a crypto investor, the wallet generates a phrase or asks the user to input one of their own. Once you've selected a phrase, the software will then convert the words into a binary seed consisting of a sequence of ones and zeros. This phrase is used to create a set of public address pairings and private keys.

While BIP39 is the most widely used standard, it's also possible to use 

 during this process. These standards are considered part of BIP39, and are designed to organize addresses in a tree structure. This allows for numerous key pairings and child pairings to be made. By utilizing this structure, you add an additional layer of security and privacy to your wallet when making transactions.

Once you've generated a wallet address, as well as additional private and public pairings, you won't need to use the recovery phrase to access your holdings. Instead, you'll be able to log in to your software or hardware wallet with a PIN or basic passcode when completing transactions. In this scenario, you're able to keep your private keys from being viewed by other people.

You can also benefit from the backup seed phrase if you happen to lose your device, which means that your phrase should be kept in a different location than your crypto wallet.

There are three separate techniques you can use to generate a crypto seed phrase, primarily with a crypto wallet. The majority of crypto wallets automatically generate seed phrases when you first set them u[. However, you don't have many options for customizing the phrases. If you're fine with never changing the phrase, this option is perfect for you.

It's also possible to generate a phrase with an app. Certain apps let you generate a phrase, as well as an encrypted vault that will hold your phrase and digital assets for extra security.

If you'd like to generate a phrase offline, you can do so with a calculator. The calculator will need to come with "random" functionality in order to create a phrase that has a random selection of characters. Keep in mind that calculators have some security issues, since multiple devices are needed for the phrase generation process. Along with a calculator, you must use an air-gapped computer, one that 

 with other network devices. This solution allows you to keep your data secure.

The seed phrase you generate for your wallet grants you access to your crypto assets. To avoid 

 your phrases. While it's possible to store your phrase digitally, you should avoid doing so. Even if the phrase is password protected, it could be exposed to criminals and hackers if your device goes online.

You could choose to memorize the phrase. However, most people don't have perfect recall, which is why the best option is to use a more traditional security method. Write down the phrase in its correct order before placing the paper in a secure location. Since a fire or flood could damage this piece of paper, store it in a personal safe. Most models offer ample water and fire protection. Another option is to buy a 

, which offers similar protection and is much smaller than a safe.

There's always a risk of losing or exposing the phrases you've generated for your crypto wallets. You can, however, mitigate these risks with the right approach. While you can obtain a 

 to gain full control over your private keys, you'll be solely responsible for making sure your seed phrase is protected. In the event that you lose access to your primary wallet as well as your recovery phrase, it will be almost impossible to recover your funds.

There have been cases of crypto holders entering their seed phrases into phony websites impersonating those of actual online wallets, such as MetaMask. Always make sure that you’re on a crypto wallet’s authentic site before entering your seed phrase, because scammers who induce you to enter your seed phrase on a copycat site can drain your crypto wallet, rendering your assets unrecoverable.

Steps to Recover Crypto Assets Using Seed Phrases

Recovering your crypto assets is relatively easy if you have a crypto seed phrase. Below is a step-by-step guide to recovering assets from a 

There are two buttons on the Ledger Nano X, one of which is right beside the USB-C port. Hold down this button until the logo appears. You'll then be given instructions on how to perform different tasks. Use the left and right buttons to move between options before landing on the 

 option. From here, press both buttons at the same time to confirm your choice.

You'll be tasked with creating a PIN before you can access your device. This PIN can be anywhere from four to eight numbers. Press both of the buttons down at the same time when you've set your PIN.

Once your PIN is set up, add your phrase. With Ledger, begin by adding the first two letters of each word. From here, click both buttons to bring up a series of words. You can then click on the correct word before moving onto the next one. Once you've entered the entire phrase, click both buttons again to gain access to your assets.

After you gain control of your wallet, install your crypto apps once again before adding your account to the Ledger Live app.

There are several myths about crypto seed phrases that should be cleared up. While many crypto investors believe that these phrases are the same as private keys, they are two different things. The phrase is a readable version of a private key.

You'll also notice that numerous companies advertise online storage methods for crypto seed phrases. In fact, many investors choose this option. The issue with storing your phrase online is that it can be hacked. Your phrase needs to be stored offline and in a safe location.

Crypto seed phrases are the perfect security feature for crypto assets. As long as you keep your phrase safe and secure, you should never need to worry about permanently losing the assets you've spent time collecting. Once you've generated a seed phrase, you'll have everything you need to begin making investments in crypto.

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Demystifying Seed Phrases: Your Essential Tool for Crypto Security

A Bitcoin ETF contains a variety of Bitcoin-related digital assets. Learn more about the differences between a Bitcoin spot ETF and a Bitcoin futures ETF here.

bitcoin spot etf vs bitcoin futures etf featured image

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Bitcoin Spot ETF vs. Bitcoin Futures ETF: What's the Difference?

Bitcoin has been a lucrative investment for many, but its volatility makes it prudent to delve into comprehensive research and employ risk management strategies when investing in it.

 launched in January 2009, it’s turned many people into millionaires and has even created a handful of billionaires through their well-timed buy and sell transactions. More than that, Bitcoin has gained prominence as the future of 

 (DeFi) and has been adopted by many as a functional currency. Based on its astounding 

, Bitcoin is by far the most prominent cryptocurrency today and is often the focus of investors' interests.

Nevertheless, as is true with all digital currencies, Bitcoin is highly volatile, presenting investors with the chance for extraordinary profits as well as the significant risk of substantial loss. Bitcoin's price dropped by over 10% in August 2023 to $26,000, making it the worst month for the year. Additionally, Bitcoin's price plummeted to $16,000 in 2022, 75% below its all-time high of over $69,000.

With these factors in mind, we’ll explore whether Bitcoin is a good investment in 2023.

Bitcoin is the world's first successful cryptocurrency, created by a pseudonymous individual(s), 

, in January 2009. Developed as an alternative to fiat money, its decentralized nature empowers users with control over their wealth without relying on centralized institutions such as banks.

Bitcoin achieves decentralized consensus through its use of the 

 (PoW) consensus mechanism, which involves competing miners using the power of computers to solve complex mathematical puzzles to validate and confirm transactions and add them to the blockchain. This PoW mechanism ensures the integrity and security of the network.

Bitcoin is distinct from traditional investment options that you may be more familiar with, such as stocks and commodities. Unlike corporate stocks, which represent ownership in a centralized business entity that generates revenue from its products or services, Bitcoin isn’t a tangible, raw material. Instead, its core function is as a decentralized digital currency.

From a utility perspective, Bitcoin presents a transformative potential in the financial world by leveraging decentralized 

 to validate and secure its transactions. For example, Bitcoin transactions occur directly between users, without needing a third-party intermediary such as banks, which helps facilitate smoother, faster cross-border transactions. In addition, transactions recorded on the blockchain are immutable, which means they cannot be altered or reversed. These characteristics offer a high level of payment security and help to prevent fraud.

Yet, while Bitcoin is increasingly employed as a medium for purchasing goods and services, its adoption for such real-world transactions remains in its early stages. Some individuals may use Bitcoin for real-world transactions or as a potentially lucrative investment, but those in the broader crypto community mainly invest in Bitcoin to support the evolution of the crypto industry and the wider adoption of digital currencies.

There’s a fixed supply of Bitcoin’s native token, BTC. Specifically, the maximum supply is locked at 

. Currently, 19.48 million BTC are in circulation. Because of the limited supply of BTC tokens, Bitcoin’s value is solidly rooted in the fundamental economic principle of supply and demand. As demand for BTC increases, upward pressure raises the price. However, when demand decreases, the price of BTC correspondingly decreases.

Fiat currencies, which are widely used around the world, are also subject to price fluctuations based on supply and demand. However, banking systems can create more money, such as by extending credit to borrowers. In addition, governments can print more money. Both of these activities play a role in the value of fiat currencies, but these factors aren’t at play in determining Bitcoin’s value.

As a digital currency, Bitcoin has a few key characteristics.

With a fixed supply of BTC and with most of those tokens already in circulation, the scarcity of BTC plays a direct role in the value of this digital asset. In addition, Bitcoin has a halving event approximately every four years, after which the reward received by the network's miners is halved. After the 

, the payout to miners will be cut from the current 6.25 BTC to 3.125 BTC.

Halving plays a key role in contracting supply, and has historically had a profound impact on Bitcoin’s price. For example, the 2012 event took BTC’s price from $12.35 to $12 just five months after the halving. In 2016, the price went from $650.53 to $758.81, and in 2020, Bitcoin's price rose from $8,821.42 to $10,943.

Some strategy advisors suggest purchasing BTC roughly six months before a halving event and holding it for at least six months afterward. However, while BTC’s price has historically increased after halving events, it’s crucial to understand that all crypto investments are risky. There is no guarantee that the next halving event will yield the same impact on price as the previous ones.

 that entails solving complex mathematical equations to verify transactions, thereby consuming a substantial amount of electricity. This results in high operating costs because electricity drives the equipment necessary to mine Bitcoin — and to mitigate the heat that the mining machines produce. The combination of immense energy consumption and resultant high costs of Bitcoin mining creates a steep entry barrier to newcomers, ultimately driving up the price of Bitcoin.

As of Sep 12, 2023, Bitcoin remains the largest cryptocurrency based on 

, the second largest cryptocurrency, boasts a market cap of $189.95 billion. While Ethereum hasn’t yet surpassed Bitcoin's market cap, some crypto enthusiasts believe that the so-called 

Ethereum's recent transition from PoW to 

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