What Might Happen if You Invest $100 in Bitcoin Today?
Have you ever considered investing in crypto? If so, then you have probably wondered about the different digital currencies available for trading and which one might be ideal for you. Would you like to know what might happen if you were to invest $100 in bitcoin today?
If you invest $100 in bitcoin today and its value appreciates, say up to $110, you stand to make a profit because bitcoin is a digital financial asset. But if its value dips to below $100, you will make a loss if you decide to sell. However, you will only profit or see a loss if you sell your asset.
To learn more about bitcoins and how you can invest in them, keep reading.
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If You Invest $100 in Bitcoin Today, What Happens?
The price of this crypto has been on an upward trend in 2021, so if you were to invest $100 in bitcoin today, you are likely to reap enormous gains in the future.
As it is, bitcoin’s value has increased dramatically, having quadrupled in 2020 to heights above $28,000. And this value is going to soar even higher, which translates to higher returns for investors, considering the high-profile support from multinationals like Tesla and Mastercard.
But that’s not all. The Bank of New York plans to offer custody services for digital assets like bitcoin owing to increasing client demand. According to the CEO of Galaxy Digital, a renowned cryptocurrency bull, bitcoin might rise to $55,000 or $60,000 by Dec 2021.
But you might wonder, can you really invest $100 In Bitcoin? Let's find out.
Can I Invest $100 in Bitcoin?
You can invest as little as $100 in bitcoin.
In fact, you can buy bitcoin fractions up to $100, which means you don’t have to buy a whole coin, which is currently retailing at $32,979 (1 July 2021). Bitcoin units referred to as Satoshi is divisible to eight decimal places, and a single bitcoin is equal to 100,000,000 satoshis.
You can also buy or sell one-thousandth of a bitcoin.
So what is bitcoin? Let's find out next.
What is Bitcoin?
Bitcoin, or BTC, is the most valuable cryptocurrency in the world.
Launched in January 2009, it had an initial value of $0 but has hit levels of up to $63,000 to date. Once you buy bitcoins or any other crypto, you store them in a digital wallet that you access using private keys.
The keys comprise a random set of 64 digits that allow you to own and use your bitcoins. Thus, it's essential to keep them secret or entrust them to the care of a wallet provider.
The creation, distribution, trading, and storage of this virtual currency uses blockchain, a decentralized ledger system, while payments occur through peer-to-peer technology. To maintain and update the blockchain, bitcoins rely on the processing power of vast unidentified private global computer networks.
The cryptocurrency also depends on private key encryption to verify account owners and register transactions, while other investors identify your digital wallet using public keys.
To illustrate how bitcoin works, anyone who bought the asset back then and held onto it through the ups and downs has made incredible returns today. What's more, depending on your initial investment, your returns could be millions or billions of dollars if you have held the asset for the entire period.
For instance, if you invested $100 when a bitcoin was going for 10 cents, you purchased 1,000 bitcoins. If you were still holding on to the 1,000 bitcoins, their value would have been more than $60 million in April 2021.
Related: Best Cryptocurrencies to Invest in
What Makes Bitcoin so Valuable?
Bitcoin holds no intrinsic value and no backing by a physical asset such as gold.
However, it's worth increases when more people buy it and it decreases when there are few buyers. Its value depends solely on market demand. Because it is a digital currency with no physical presence, it is not legal tender since no central bank or government issues or backs it.
Yet, it is the most noteworthy cryptocurrency, boasting a $1.15 trillion market capitalization. This is higher than that of the world's top three largest banks, namely J.P Morgan, Bank of America, and China's Industrial and Commercial Bank.
Many bitcoin proponents view digital currency as the future and believe that bitcoin facilitates a quicker, cost-effective payment system for global transactions. Although rocked by turbulence over the years, the cryptocurrency's value has risen due to increased demand by investors who perceive bitcoins as a store of value similar to gold.
It’s no wonder then that many refer to it as bitcoin gold.
How to Invest $100 in Bitcoins
The primary way to purchase bitcoins is through a bitcoin exchange, but you can also acquire them through a broker or mining operations.
You can also invest by buying the shares of a blockchain-related company. There's no minimum amount to invest in bitcoins apart from the one set by your preferred exchange platform, so it's possible to start investing with $100.
You need to set up an account with your crypto exchange, followed by linking your bank account with the exchange. To purchase your bitcoins, you will transfer $100 from your account to the exchange, then transfer your bitcoins to your digital wallet.
You can also retain your bitcoins in your exchange account.
Will Investing $100 in Bitcoin Make You a Millionaire?
It's possible to become a millionaire if you hold on to your investment for the long-term and bitcoin rises to more than $100,000 in value. Fortunately, bitcoin’s value continues to attain new heights, such as $40,000 in Jan and $50,000 in Feb 2021.
In fact, analysts predict it might hit $100,000 by 2022.
Bitcoin is also witnessing more adoption and is gradually becoming mainstream currency, with global financial institutions like Paypal and Visa offering crypto services.
Also, large institutional investors such as Tesla are considering using bitcoin as payment, while also using it as a hedge against financial crises. They are converting their cash reserves into bitcoins.
Finally, retail investors are increasingly purchasing bitcoins too.
Many people consider Bitcoin to be a high-risk investment with a potential for huge losses. But while this might be so, high volatility assets also have a high likelihood of delivering massive returns.
What to Consider When Investing $100 in Bitcoins
When investing $100 in bitcoins, you may want to consider the following:
- Know the actual costs. Find out what the exchange rate will be, how it was arrived at, whether it includes mark-ups or additional fees, and how long the transaction takes.
- Your risk tolerance. Bitcoin experiences massive price fluctuations, so you need to be prepared for such an eventuality, as witnessed in 2014 when the bitcoin price dropped by 80%.
- Virtual currencies are still under development. As such, there remain unresolved issues, such as the identified blockchain elements that could abuse their power of maintaining the ledger.
- Bitcoin transactions might not be fully anonymous. Interested parties can access the publicly shared information about each bitcoin transaction, link your transactions to your public keys, IP address and estimate how much bitcoin you own.
- Bitcoin ATMs are not regular ATMs. As such, they don't connect to your bank, and their transaction fees can be pretty high.
Some bitcoin investments could be scams. Conduct your due diligence before investing in any bitcoin investment opportunity, as there's a high likelihood that you could get lured into a scam.
Should You Invest in Bitcoin?
While it might have been better to have invested in bitcoin much earlier, it's not too late to invest now. The virtual currency could still experience some dips in value time and again, and an investment of $100 in bitcoin today could earn you enormous returns in the future.
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