3 Key Advantages of Bitcoin over Traditional Investments

Traditional investors always take an extra precaution when dealing with digital currencies like Bitcoin due to their highly volatile market value. However, Bitcoin’s overwhelming performance as an investment and currency over the past few months has attracted the attention of traditional investors.

As an investment tool, Bitcoin has three significant advantages over traditional investments: high liquidity, large market demand, and simple transactions.

High liquidity

Bitcoin is now considered one of the most liquid assets in the financial market as it has Bitcoin exchanges, trading platforms and brokers around the world.

Bitcoin investors or holders can easily exchange Bitcoin for cash or other assets, such as gold and cryptocurrencies, with low fees and instant transactions, unlike company stocks and exchange-traded funds, which require third-party institutions such as stock exchanges to process and settle.

There are some regions, such as Venezuela, Brazil and Argentina, whose financial regulations are extremely strict and rigid, and prohibit the use of foreign currencies and assets for transactions, but they also have their own Bitcoin exchanges and trading platforms, allowing Bitcoin holders to bypass the national government and transfer their wealth abroad.

The high liquidity of Bitcoin creates an ecosystem for investors to trade, especially for those who are looking for short-term profits. At the same time, the digital currency is also a practical long-term investment because its market demand is particularly high.

Strong market demand

Traditional investors often question the demand and value behind Bitcoin. Investors often have limited knowledge of the technology and fail to understand exactly the economics behind Bitcoin and how its market value is determined. Ultimately, like any asset in today's market, the value of Bitcoin is directly dependent on its demand.

Unless demand for Bitcoin evaporates completely, the value of Bitcoin will continue to increase. The currency is now worth nearly $10 billion, up from just $1.3 billion three years ago.

Mark Vaughan, founder of Bittylicious, explained:

“In the future, Bitcoin will be more widely used because it’s the first time since the internet that there’s something that’s not completely controlled by any one entity like a government or a bank. It’s been around for seven years and there’s nothing fundamentally wrong with it.”

The huge demand for Bitcoin in the market guarantees a bright and long-term future for Bitcoin investors because, in theory, Bitcoin is a deflationary currency. The value of Bitcoin will continue to rise until its available supply is maximized.

Simplify transactions

Whether it is stock trading or any activity in the public stock market, investors need to hold a license or certificate to prove their identity and trading history. If you want to trade a company's shares, investors must place an order in the market through a broker. The settlement of the order may take days, weeks or even months.

Stock exchanges also require investors to submit a wide variety of personal information and financial accounts, such as bank statements, settlement slips and personal ID cards, which makes it very difficult for investors without proof to invest.

However, Bitcoin trading is much simpler than stock trading. Investors simply buy or sell Bitcoins on an exchange and store them in their wallets. While some exchanges may require personal information as part of KYC, exchanges elsewhere can conduct orders anonymously.

In short, compared to traditional investments, Bitcoin has many advantages. Traditional investors can trade digital currencies with higher efficiency and lower costs, making a viable long-term or short-term Bitcoin investment.