Over the past few years, Bitcoin has gone from a small group of devout users to a global mainstream investment asset. Who would have ever thought that this digital software currency would one day be considered legal tender by governments around the world? Bitcoin has come a long way since its inception in 2009. From starting out at just a few cents per Bitcoin to reaching the all-time high in 2021 of over $65,000 USD. In 2023, Bitcoin currently sits at about $17,000 USD at the time of this writing. That’s quite a steep decline in price, which begs the question: is Bitcoin a good investment in 2023?

The answer will depend on your long-term outlook for digital currencies. As inflation runs rampant around the world the need for a deflationary and stable form of currency is more evident today than ever before. But is that currency Bitcoin? If you ask us here at SavvyCanadianFinance, Bitcoin is a good investment if you can stomach some risk. 

There might not be an asset that is as polarizing as Bitcoin. While some governments have embraced it, others have shunned it. This inconsistency in global policies is one roadblock Bitcoin will need to overcome. In this article, we will discuss Bitcoin’s history, what it actually is, and why we think Bitcoin is a good investment in 2023. 

Who is Satoshi Nakamoto?

Have you heard the name before? The mysterious aura that surrounds Satoshi Nakamoto is one of the alluring features of Bitcoin. As far as we know, Satoshi Nakamoto is a pseudonym for the person or group of people who founded Bitcoin. Nakamoto wrote the White Paper for Bitcoin in October 2008 after starting the code for the project in 2007. He also defined the genesis block of Bitcoin which started the Proof of Work consensus mechanism. The reward for the first block was 50 Bitcoin. 

The question of Nakamoto’s identity has never been answered. A number of individuals have been named by others as potential candidates including Tesla CEO Elon Musk. Each person who has been named has so far denied being Nakamoto. Will we ever find out about Nakamoto’s true identity? In a way, we hope not. There is something about Bitcoin’s founder being anonymous that is so appropriate. 

Nakamoto’s first name, Satoshi, has been adopted as the name for an individual denomination of Bitcoin. There are 100 million Satoshis in one Bitcoin. It is said that Bitcoin’s target value is $1 million USD, which would mean that each Satoshi would be worth $1.00 USD. 

What is Bitcoin?

A currency, a piece of software, or a way of life, for many Bitcoin is the answer to the world’s financial inequality. At its core, Bitcoin is a protocol that uses a public, digital ledger to record its transactions. Bitcoin is indeed a piece of software that follows a very specific ruleset. New Bitcoin is created through a mechanism called Proof of Work, but more on this later. Bitcoin is the largest cryptocurrency with a current market capitalization of about $326 billion. This makes it larger than most Fortune 500 companies.

The primary goal of Bitcoin is to decentralize the financial currency system. It aims to eliminate the need for centralized agencies like banks or governments. The network is a peer-to-peer transaction system which is recorded on the aforementioned digital ledger. Bitcoin being used as a digital currency is just one use. It has also been referred to as digital gold and is held by many as a store of wealth. 

Is Bitcoin Actual Money?

This answer likely boils down to who you ask. To some, Bitcoin is absolutely a digital currency that can be used to pay for goods and services. As of 2023, well over 15,000 businesses accept Bitcoin as a payment option. These include Fortune 500 companies like Tesla (NASDAQ: TSLA), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), PayPal (NASDAQ: PYPL), and Etsy (NASDAQ: ETSY).

The ease of Bitcoin transactions is one of the greater appeals for its use as a currency. There are no transaction fees and the Bitcoin is sent directly between the two parties without a third-party intermediary. In its current form, Bitcoin can be seen as a legitimate global currency and we can confidently say that Bitcoin is in fact a form of money. 

How Many Bitcoin Are There?

This is one of the best things about how Bitcoin was coded: there will only ever be 21 million Bitcoin in supply. This makes the currency deflationary rather than inflationary. Nobody in the world can print or make more Bitcoin which makes it a very fixed supply. This has been one reason why the price of Bitcoin continues to rise over time. As the demand for Bitcoin grows, the number of outstanding Bitcoin left grows scarcer. 

At this time, more than 19 million of the 21 million Bitcoin have already been mined. This means that there are less than 2 million Bitcoin left. It is anticipated that the final Bitcoin will be mined sometime around the year 2140. This means most of us likely will not be around by the time the full supply of Bitcoin has been released. 

How Can I Buy Bitcoin in Canada?

There are plenty of ways to obtain Bitcoin these days. The most common way to get or buy Bitcoin is to use a centralized exchange like Binance or Coinbase. Once you sign up for an account, you can add fiat funds to your balance and exchange them for Bitcoin or any other cryptocurrency. 

You can also mine Bitcoin, although please note that this can take a lot of power and incur high costs. You will need a powerful computer and a Bitcoin miner running 24/7. This can use a tremendous amount of electricity and in the end, your profit might not even be worth the effort. Mining is the process of a powerful computer solving mathematical equations in a race against other network validators to unlock the next block in the Bitcoin blockchain. The reward is an amount of Bitcoin for each block that is unlocked. 

What is the Best Way to Store Bitcoin?

The best way to store Bitcoin securely is to use a cold storage hardware wallet like Ledger or Trezor. Cold storage means that the storage wallet is not regularly connected to the internet. When your cryptos are online, there is the chance of your wallet or the centralized exchange itself getting hacked. 

Think of the cold storage wallet as a secure USB stick that holds your cryptocurrencies. You can plug it into your laptop securely when you want to access your cryptos, but always keep your passwords and security keys in a safe place! Otherwise, there is a chance you could lose your cryptos forever!

Is Bitcoin a Good Investment: The Bottom Line

At SavvyCanadianFinance, we firmly believe that Bitcoin can be an alternative asset in a well-diversified investment portfolio. We are not saying to go all in, but allocating a small percentage of your investments to Bitcoin and even Ethereum is certainly a nice way to diversify your assets. 

If you are going to make the leap into investing in Bitcoin, make sure you do it properly. Unfortunately, these days the easiest way to buy Bitcoin is to use a centralized exchange. Take our advice and store your cryptos offline in cold storage. The more you leave your Bitcoin online, the greater risk you run of having it stolen. Remember, always do your own research into these assets and make sure investing in them matches your risk tolerance and financial budget. This should not be taken as financial advice but rather as an introduction to investing in Bitcoin in 2023! Thanks for reading and stay savvy!

Bitcoin FAQs

Is Buying Bitcoin a Good Investment in 2023?

If you are a long-term investor that is into buying assets while the price is low, Bitcoin could be at a great point to buy. Bitcoin is trading at a significant discount from its all-time high price and there has been more global adoption in recent years. 

Will Bitcoin Go Up in 2023?

That’s something we have no insight into. A continued bear market in equities and a potential global recession aren’t particularly optimistic for the short-term price of Bitcoin and other risk-on assets. 

Is Bitcoin Better than Ethereum?

This is like comparing apples and oranges. Ethereum is a utility network that uses smart contracts to run decentralized apps. It can also be used for decentralized finance and even producing NFTs. Bitcoin or Ethereum: it is up to your personal preference! Why not own both?

Is Bitcoin a Safe Investment?

In terms of performance, Bitcoin is far less volatile than other cryptocurrencies. The ceiling for Bitcoin might be lower, but the floor is certainly higher. In terms of security, we recommend storing your Bitcoin offline in cold storage to protect your investment!

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *