Over the past 14 years, investors have been drawn to bitcoin (BTC) for many reasons: from being a potential solution to the economic problems of the current fiat economic system to reaching the unbanked and diversifying portfolios. However, a large part of the general public sees bitcoin as a doorway to financial freedom amid rising fiat inflation and geopolitical uncertainties.
Traditional banking systems have time and again served centralized governments to dictate financial access, especially in emergency situations.. More recently, the war between Ukraine and Russia served as an example of how cryptocurrencies helped the displaced and the unbanked to access funds to cover their basic needs.
As intended by its creator, Satoshi Nakamoto, bitcoin aims to return power to the people. No regulation, sanction, or ban can stop people from using bitcoin as money. Beyond that, a calculated investment in bitcoin has the potential to move people closer to achieving their dream of financial freedom. But how can they get it?
The enormous volatility of cryptocurrencies coupled with investor unease is a recipe for instant loss. Many don’t understand that bitcoin, unlike other cryptocurrencies, is a long-term investment. This is why bitcoin veterans recommend holding the asset during bull markets and buying during dips when markets are bearish.
According to data from UpMyInterest, A few bad years aside, bitcoin holders have witnessed an average annual return of 93.8%.that in its best-performing year it shot up to 302.8%.
Simple as it may seem, hodling (crypto slang for “holding assets”) has proven difficult for investors. Some of the factors that trigger the abrupt sale of bitcoin are the spread of FUD (fear, uncertainty and doubt) and price movements.
While it makes sense in the short term to profit from bitcoin’s volatility, expanding the price chart reveals a greater long-term incentive to hold.. In addition, investors who own bitcoin will always have the option to use it beyond geographic borders without losing value.
When considering bitcoin as a viable long-term investment option, many investors tend to apply the dollar-cost average (DCA) strategy. This implies set aside a predetermined amount of dollars from regular income to be reinvested in bitcoin every day, week or month.
Although El Salvador was initially criticized for adopting bitcoin as legal tender amid crippling inflationthe country could reuse the resulting unrealized profits to finance social projects, such as the construction of hospitals and schools.
With bitcoin’s bull run petering out in 2022, Salvadoran President Nayib Bukele followed a similar strategy to DCA, in which the country would buy 1 BTC every day.
We are buying one #Bitcoin every day starting tomorrow.
— Nayib Bukele (@nayibbukele) November 17, 2022
We are buying one #Bitcoin every day starting tomorrow.
When Bukele announced his plan to buy bitcoin, its price was approximately $16,600.as data from Cointelegraph Markets Pro and TradingView show.
Since then, the BTC price has risen 40.46%, providing some much-needed relief to Salvadorans. Investors seeking financial freedom should follow a similar strategy while reacting to market changes and public sentiment..
When it comes to long-term holding of bitcoin, the key is not to trust any outside entity with the private keys to the assets. Investors who store bitcoin on cryptocurrency exchanges unknowingly give up full control of their assets.
Since the FTX fraud came to light, the arguments in favor of self-custody have gained strength. Investors who suffered losses due to alleged embezzlement realized the importance of self-custody. Maintaining ownership of the private key—through self-custody wallets—becomes paramount for those seeking financial freedom in its truest sense.either.
Will be sending an email every week strongly advising our people to never keep savings on any exchange, including @paxful This is the way! Self custody your savings ALWAYS! pic.twitter.com/DI95Gaa5Y6
— Ray Youssef (@raypaxful) December 11, 2022
We will be sending out an email every week strongly advising our people to never keep savings on any exchange, including @paxful This is the way! Maintain self-custody of your savings ALWAYS!
The FTX crash also forced cryptocurrency exchanges to prove the existence and safety of user funds to avoid a low liquidity situation.
Binance Releases Proof of Reserves System | Binance Support https://t.co/pdA2OdvAKG
— CZ Binance (@cz_binance) November 25, 2022
Binance Launches Proof of Reserve System | Binance Support
Although hardware alternatives for self-storage of cryptocurrencies require an initial investment, it is up to users to choose an ideal method of storing private keys, even if it means writing the private keys on a piece of paper.
The three mentioned practices —hodl, DCA and self-custody—constitute the main pillars of financial freedom. However, users are not limited to try other strategies that suit their needs.
Achieving financial freedom with Bitcoin is possible. Given the nascency of the crypto ecosystem, investors are advised to focus on the long-term benefits of Bitcoin while reaping short-term gains in the process.
Achieving financial freedom with bitcoin is possible. Given the nascent cryptocurrency ecosystem, investors are advised to focus on the long-term benefits of bitcoin while making short-term gains in the process.
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