10 Reasons to Invest in Bitcoin

There is a neverending list of reasons an investor would be interested in gaining exposure to an asset like Bitcoin (BTC).  This, in and of itself, is part of the assets appeal – there is something for everyone to like.  Below, we take a closer look at a few of these, highlighting 10 of the most popular reasons people invest in Bitcoin (BTC).

10 Reasons to Invest in Bitcoin (BTC)

Before diving in, note that a few of these examples are excerpts from another of our articles, highlighting how the fundamentals of Bitcoin (BTC) will allow it to endure nearly any crisis, as these fundamentals often act as a reason to invest.  Make sure also to peruse that article if you are looking to gain an understanding of the unique origin and structuring behind the world's most popular digital asset.

1. Emissions Schedule & Fixed Supply

The first and most obvious reason that investors are attracted to invest in Bitcoin (BTC) is its fixed supply, with there being 21 million BTC – no more, no less.  In an age when FIAT currencies are continually devalued through unchecked government printing and poor monetary policies, the idea of an asset that is finite provides a level of security and consistency that can not be replicated elsewhere.  Its fixed supply is also a similar reason why gold has remained a popular hedge over time, as it also boasts a supply that is difficult to inflate.  Bitcoin, however, takes this up a level through a ‘hard-cap', rather than simply being anti-inflationary.

Looking beyond its ability to reject inflationary measures, the mechanics of supply and demand further enhance Bitcoin's appeal; with a fixed supply or hard-cap, any increase in demand naturally pressures prices to rise, underpinning its potential for long-term value appreciation.

So if Bitcoin (BTC) has a fixed supply and isn't inflationary, what is it?  To incentivize network security and growth, the Bitcoin network relies on a disinflationary emission schedule.  Bitcoin's emission schedule, referring to preset parameters that determine the amount of BTC consistently being released into its circulating supply, is programmed to reduce the rate at which new coins are created by half approximately every four years, in events known as ‘halvings.'  This mechanism ensures a gradual approach to the 21 million BTC limit, making Bitcoin's supply inflation predictable and decreasing over time.  Each halving event reduces the reward given to miners for validating transactions, thus slowing down the rate of new Bitcoin creation.  This diminishing issuance rate is also appealing to investors as it theoretically supports price appreciation over time due to reduced supply pressure.

2. Distribution

From the moment the Bitcoin network went live, the full 21M BTC was on tap for anyone looking to become a miner and bring a portion into circulation.  There was no pre-mine, with network developers keeping a portion of BTC for themselves.  In addition to this, miners were given months' notice by Satoshi Nakamoto of when the network would go live.

It is important to recognize that digital assets were essentially unknown at the time.  With this being the case, no one was rushing to buy BTC.  No one was struck with a case of ‘FOMO'.  This meant that Bitcoin grew slowly and naturally – something that allowed it to attain high levels of decentralization, as very few were accumulating an asset in large quantities that was not worth much at the time.  It was only over the course of years, and through the use of incentives like ‘faucets,' that Bitcoin eventually established a foundation of users large enough to ensure network security, use cases, and continued organic growth.

In the present day, hype and interest in the sector do not allow for the launch of Bitcoin to be recreated.  Even if someone were to attempt replicating it, which can easily be done with its open-source code, what would incentivize users to use it?  The new network would not be decentralized, it would not be secure, and it would not be able to grow naturally while fortifying its foundation, making the initial distribution of BTC an irrepeatable occurrence.

3. Security

Speaking of security, this is one of the main fundamentals that makes the Bitcoin network so resilient and, as a result, appealing for investment.  By leveraging decentralization and blockchain technology, Bitcoin removes the need for trust and reliance on third parties to facilitate transactions—the fewer parties involved in a transaction, the less chance of something going wrong.

It also means that transactions are simultaneously broadcast to nodes around the globe, only to be recorded on the network ledger for all to see.  If one node were to go down, scores of others just keep on working.

Due to how expansive Bitcoin has now become, for a bad actor to try and manipulate the network, only a massive coordinated attack costing billions has a chance of working.  This means accumulating enough hash-power to account for at least 51% of the network – something which may sound simple, but would be insanely cost-prohibitive and unlikely to have any lasting effect.

4. Accessibility

As corrupt, inefficient, and predatory as modern banking services can be at times, they are still a luxury that many do not have access to.  Bitcoin, however, functions on a global scale and is accessible to anyone, anywhere.  With increasing global connectivity, this means that Bitcoin can offer a level of financial inclusion not seen before.

Its accessibility goes beyond who can leverage the network and expands to when they can.  Since its inception, the Bitcoin network has remained fully operational for 99.99% of the time.  It does not shut down for the weekend or limit its services after 5 pm.  If a user needs to make a transaction on the network, Bitcoin remains functional anywhere and at any time for users to rely upon.

5. Institutional and Retail Adoption

For nearly 15 years since its inception, the growth of the Bitcoin network can predominantly be attributed to adoption among retail investors.  This is rapidly changing, though, with the approvals of various spot-BTC ETPs in early 2024.  These approvals were quickly met with billions of inflows from institutional investors long interested in gaining exposure to the network, that were not previously able to.  Interestingly, Bitcoin (BTC) is somewhat unique when considering this, as it is very rare that retail investors have the opportunity to front-run their institutional counterparts on Wall Street.

Now, influential individuals, like Blackrock's Larry Fink, are quickly sharing a new an positive perspective of the network, calling its adoption among investors a ‘flight to quality', while other like Edward Snowden have called it the ‘most significant monetary advance since the creation of coinage'.

6. Immutability & Transparency

While not unique to Bitcoin (BTC), the fact that it is based on blockchain technology grants it a few appealing attributes nonetheless – immutability and transparency.

Immutability ensures that once a transaction is recorded on the blockchain, it cannot be altered or deleted, offering a level of security and trustworthiness that is unparalleled in traditional financial systems.  This characteristic protects against fraud and unauthorized tampering, instilling confidence among investors in the integrity of their investments.

Transparency, on the other hand, allows every transaction to be publicly verified, providing a clear audit trail and ensuring that the supply and movement of Bitcoin are open to scrutiny by anyone.  This level of openness and verifiability fosters trust in the system, as it eliminates the need for intermediaries and reduces the potential for hidden manipulation or errors.

Together, these features not only enhance the appeal of Bitcoin as a secure and reliable investment but also underscore its revolutionary potential to democratize financial systems by making them more accessible, efficient, and equitable.

7. Diversification

Another compelling reason for an investor to gain exposure to Bitcoin is its role in portfolio diversification.  Bitcoin's price movements have shown a low correlation to traditional asset classes such as stocks, bonds, and commodities over various periods.  This characteristic means that including Bitcoin in a diversified investment portfolio could actually reduce overall portfolio volatility and potentially enhance returns.

Basically, Bitcoin's unique market dynamics, driven by factors distinct from those affecting traditional financial markets, offer investors an opportunity to hedge against systemic risks and achieve a more robust asset allocation.  By adding an asset with a different risk-return profile, investors can achieve a more balanced and resilient investment strategy, capable of navigating a wide range of economic scenarios.

8. Decentralization and Autonomy

Bitcoin's decentralization and autonomy from any controlling body underpin the network as a revolutionary shift in how financial assets are perceived and managed.

Decentralization means that Bitcoin operates on a peer-to-peer network, devoid of central authority, making it resistant to censorship and immune to control by any single entity, government, or organization.  This aspect ensures that transactions and the creation of new bitcoins are governed by consensus among network participants, rather than by decisions of a central body that could be influenced by political or economic pressures.

The autonomy of Bitcoin from traditional financial institutions and systems provides investors with an alternative asset class not directly affected by conventional economic policies, bank failures, or geopolitical tensions.  This independence offers a hedge against systemic risks and financial instability, highlighting Bitcoin's potential as a diversification tool in investment portfolios.

Together, the decentralized and autonomous nature of Bitcoin are yet another way the network appeals to investors seeking not just financial returns but also a stake in the future of a more open, equitable, and resilient monetary system.

9. Versatility

The Bitcoin network is quite versatile, as it is able to serve as the following, each broadening its appeal to a wider swathe of investors.

Store of Value:  As a digital store of value, Bitcoin offers a modern alternative to gold, appealing to those looking for assets that can preserve wealth over time despite market volatility or inflation.

Hedge Asset:  Its characteristics as a hedge asset are particularly compelling in times of economic uncertainty, where traditional investments might be under threat from factors like inflation or currency devaluation, providing a non-correlated asset that can potentially increase in value when other assets are declining.

Currency:  As a currency, Bitcoin presents a novel and efficient means of transaction, facilitating global transfers without the need for intermediaries, at lower fees, and with greater speed than traditional banking systems.  Notably, this particular use-case is only strengthening over time with the advent of layer 2 solutions like the Lightning Networl.

This broad utility not only broadens the appeal to invest in Bitcoin, but also highlights its potential to reshape financial interactions, making it an attractive option for investors seeking multifaceted value in a single asset.  The convergence of these uses underlines Bitcoin's revolutionary potential, catering to diverse financial needs and preferences in a way that traditional assets and currencies cannot, thereby securing its position as a multifunctional cornerstone in the digital age's financial landscape.

10. Ideology

Finally, one of the most important fundamentals of the Bitcoin network that has allowed it to thrive are not the attributes themselves which it boasts, but the set of ideologies on which they are based.

The goal is to democratize finance, providing an even playing field for all, free from the manipulation of governments and central banks.  It is meant to be the perfect means to transact value in the digital age.

It is this group of ideologies that spurred early adopters into action and prompted them to nurture the network when it needed it most.  An autonomous and decentralized medium for value transfer that removes the need for trust and boasts a fixed supply.

To this day, much of the adoption experienced by the network is not by people looking to strike it rich but to take part in a safer, fairer system that brings the entire world closer.

Bitcoin (BTC) – A Monetary Revolution

Overall, the multifaceted appeal of Bitcoin (BTC) stems from its unique combination of technological innovation, economic principles, and ideological underpinnings. From its fixed supply and disinflationary emission schedule to its decentralized nature and autonomy from traditional financial systems, Bitcoin offers investors and users alike a diverse set of reasons for engagement.

Its ability to serve simultaneously as a store of value, a hedge asset, and a currency, underpinned by the security and transparency afforded by blockchain technology, positions it as a revolutionary asset in the digital age.

As Bitcoin continues to evolve and gain mainstream acceptance, its appeal is likely to continue growing, reflecting its potential to reshape not just investment portfolios but the very foundations of global finance.

Now that you have a better understanding of the various reasons may cause someone to invest in Bitcoin, make sure to take the time and learn about the more technical aspects of how the network works in our investing guide.