The $1 Investor is a weekly Bitnob series that delves into practical tips and habits for anyone with a desire to make smart bitcoin investments.
Do you know that you can save in bitcoin with Bitnob just as you save in your local currency with your bank?
You only need to create a bitcoin savings plan, and Bitnob does the rest by helping you save automatically without missing a beat.
Why Consider Creating a Bitcoin Savings Plan?
First of all, why should you even think of saving bitcoin? There are so many reasons, but here are some of the main reasons that will pique your interest:
Protects you from the effects of inflation
All currencies worldwide are controlled by the government. Governments keep printing money to meet the financial needs of running the country. When this happens, they are increasing the supply of money but at the same time dropping the intrinsic value of the currency.
As a result, the currency's overall value drops, meaning that people will have to spend more money to buy an item. This leads to an increase in the prices of goods and services.
Since bitcoin is not controlled by a central body like the government, no one can "print" more bitcoin. Bitcoin has a fixed supply of only 21 million bitcoins. This means that the intrinsic value of bitcoin will continue to increase because of its limited supply.
So while fiat currency is losing value due to inflation, bitcoin continues to increase in value. So if you start saving in bitcoin now, your bitcoin will be worth much more than your local currency. Your bitcoin isn’t negatively affected by the inflation in the system because bitcoin keeps appreciating.
Potential for appreciation in value
We mentioned this a little in the point above, but let’s dive into it more deeply.
The law of supply and demand plays a significant role in the financial economy. This law states that supply increase of an item leads to a drop in demand for that item. When the demand is low, the value of that item also drops.
The opposite is also true.
When the supply for an item is low, the demand for that item increases, and this is because people see it as scarce. Do you know what happens when something is in short supply? It instantly becomes more valuable, and more people want to get their hands on it.
The same law does not just apply to items but currencies, whether physical like our banknotes or digital like bitcoin.
The government can keep printing more money to meet the ever-increasing expenses of running a country.
And you know what that means?
High supply = Low Demand = Decrease in value
As the value of your local currency decreases, inflation kicks in, and you will need to spend more money to buy necessities.
That is where bitcoin is different.
Bitcoin supply is capped at 21 million bitcoins. Once it has reached that amount, more bitcoin will not be created (or, in this case, mined). Since the supply of bitcoin is limited, the value of bitcoin will continue to increase.
Of course, these are not the only reasons to start saving bitcoin. Bitcoin also provides other benefits like
- Giving you total control over your finances without it being under the jurisdiction of a centralized body like the Central Bank or the government;
- Creating a space for transparent transactions;
- Speed in making cross-border payments and remittances
But in the case of this article, we narrowed our scope to the financial benefits of saving in bitcoin.
How Does Bitnob Automatically Save in Bitcoin?
Bitnob uses an investment strategy known as Dollar Cost Averaging (DCA) to make a periodic bitcoin purchase for you, which helps to hedge against inflation and price volatility over time.
DCA means that when there is a drop in the value of bitcoin in the market, you get to acquire more satoshis (units of Bitcoin) at a lower price, and when the price of bitcoin goes up, you have even more value from your investment. It is always a win-win situation with DCA.
If you decide to save $1 a day in bitcoin for 12 months using the DCA strategy, you would have invested $356, which is estimated to be a value of $527.15.
You can estimate how much you would be able to save through the DCA strategy using Bitnob’s DCA calculator. You can check out the DCA calculator here.
Would You Want to Start Saving in Bitcoin?
Now that you know why you should consider saving in bitcoin and its long-term benefits, do you want to embark on this journey?
Make sure you watch out for Part 2 of this series where we will guide you in setting up your own bitcoin savings plan on Bitnob.