Frequently Asked Questions About Bitcoin
What exactly is Bitcoin?
Bitcoin is the first and most popular cryptocurrency. It’s an asset that is often called “digital gold” because of its limited supply.
Cryptocurrencies have gained adoption in mainstream finance with large companies like PayPal and Fidelity making moves in the cryptocurrency space, investors such as Paul Tudor Jones and Stanley Druckenmiller publicly investing in Bitcoin, while the likes of Square and MicroStrategy have used their own balance sheets to buy Bitcoin.
How does Bitcoin compare to Gold?
Like gold, there is a limited supply of Bitcoin (21 million). They both have little or no correlation with other asset classes (like stock indices). Bitcoin is affected by supply and demand, and not monetary policies, or central banks and governments. This is why Bitcoin is often considered a hedge against inflation.
What’s a good entry level investment?
A common misconception is that you need to buy 1 Bitcoin, but you can actually just buy a fraction of it. You can invest as little as $100 or allocate a percentage of your wealth. Many people start by dollar cost averaging in (buying a set amount each day, week, or month).
How do I buy or sell Bitcoin?
The most common way is through an online exchange or brokerage that allows you to trade cryptocurrencies. At Netcoins.ca, you can deposit Canadian Dollars straight into your Netcoins account and convert that to Bitcoin. It’s similar to how you would exchange CAD for USD, but it’s all done online. You can also get amazing support from the Netcoins team via live chat, phone or email.
Isn’t Bitcoin risky?
Cryptocurrencies are known to be volatile and the price fluctuates quite a bit on a day to day basis. As with most investing, it’s important to zoom out and look at the bigger picture. For example, in 2010, 1 Bitcoin was worth less than $0.10. Fast forward 10 years, as of the end of 2020, 1 Bitcoin was worth over $30,000 CAD.
Is it too late to buy Bitcoin?
According to JPMorgan Chase & Co, Bitcoin has the potential to reach at least $146,000 in the long term as it competes with gold as an asset class. Meanwhile Bitcoin investors and entrepreneurs, the Winklevoss twins, expect Bitcoin to reach a price of $500,000. It doesn’t matter when you buy Bitcoin because time in the market beats timing the market.
What will happen to Bitcoin in 2021?
In the first week of 2021, the crypto market cap reached $1 trillion and Bitcoin’s price reached an all-time-high of $40,000 USD. We expect more institutional investments to continue investing in Bitcoin, publicly traded companies to use their balance sheets to buy bitcoin in an attempt to create value for their shareholders, and more retail investors to continue learning and investing in Bitcoin.
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