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Cryptocurrency has been shaking up the financial sector for a few years now. Is it a right choice for retirement planning?

Is Bitcoin a Good Investment for Retirement?

Cryptocurrency has been shaking up the financial sector for a few years now, far longer than most analysts predicted after the Bitcoin crash in 2011 which saw the pioneer cryptocurrency take a 93% drop. However, despite some teething issues, including a drop in value of over 80% over the course of 2018, Bitcoin is still going strong with experts in cryptocurrency even going so far as to refer to the cryptocurrency as the “greatest investment opportunity of our generation”. While we cannot say for sure that that is true, we can make an educated guess as to the future of cryptocurrency, and so far, the news is good.

However, before a person goes out and invests in Bitcoin for their retirement, there are some things they will need to know in order to decide if it is the right investment for them.

What is Bitcoin?

Starting with the basics, Bitcoin is a cryptocurrency that was created to be a “peer-to-peer electronic cash system” by a person going under the pseudonym Satoshi Nakamoto. Nakamoto designed the currency to be completely digital and decentralized, meaning that it was free from oversight by governments and financial institutions alike. Due to transactions taking place directly between Bitcoin holders, they are low in cost and instant regardless of where in the world the two users are based.

Bitcoins do not exist as physical currency, and Bitcoins can thus only be stored using digital means. A Bitcoin wallet, or BTC wallet, is a software program that allows for the storage of Bitcoins. There are four different types of Bitcoin wallets, each with its own pros and cons, and unique set of features. If you are planning to invest in Bitcoin, it is imperative that you get a BTC wallet from a reputable online source such as Paxful, a company that offers their customers over 350 secure ways to buy and sell Bitcoin.

How Is Bitcoin Different From Other Assets?

The reason that Bitcoin is different from traditional assets is that Bitcoin cannot ever be hyperinflated because there are a limited number of Bitcoins that can be created. Bitcoins are thus referred to as a store of value asset as it can be counted on to maintain its relative value over time, making it a similar investment to gold or other precious metal commodities.

So, Is Bitcoin a Good Investment?

While Bitcoin is considered to be extremely volatile, that doesn’t mean it isn’t a good investment. Bitcoin investments are great for the diversification of financial portfolios and the currency can also be easily traded for cash and other assets with very few transaction fees. This means that it has great short-term liquidity as well as long-term investment value. And, as more and more big organizations and institutions start to accept Bitcoin as a form of payment, the value of the digital currency is only expected to rise, making now the perfect time to invest in the Bitcoin market.

All investments come with some risks, and Bitcoin is no different. Where Bitcoin does differ from traditional investments is that investing in Bitcoin is an investment in the future of the financial sector.

If Bitcoin is adopted as a currency by enough users, huge disruptions are expected in the financial sector, which will have a knockdown effect on all investors. From lower transaction fees, to faster transactions, more secure payments, and better transparency, Bitcoin hopes to bring about a new way of handling money. For people who are able to accurately weigh up the risk-to-reward profile of such a game-changer, Bitcoin could prove an invaluable asset.