If you like see-saws, you might like investing in Bitcoin as well. Bitcoin investing does need the courage of your convictions but the rewards can be unparalleled.

A glance at Bitcoin rates starting in 2010 will tell us that the currency has been through many ups and downs. While the peak was reached between 2013 and 2014, by 2015 Bitcoin had fallen again to US $200 levels and has been steadily inching its way towards $1000 levels again.

However, even in the short term Bitcoin has been volatile, while on May 24, 2016 Bitcoin prices reached US $775, by June 23, 2016 they had again fallen to US$ 560. At the time of writing of this article one Bitcoin was worth US$ 673 and most of the recent rise in Bitcoin price was due to the uncertainties caused by ‘Brexit’ or Britain's withdrawal from the European Union.

Bitcoin Market Cap

- Source: Coinmarketcap

Bitcoin beats every other investment

Compound Annual Growth Rate (CAGR) is a way of measuring return on investments over a given period of time. In order to calculate CAGR we need a beginning value, an ending value and a given time period.

In short the formula for CAGR = (Ending Value/Beginning Value) (1/No. Of Years) - 1

CAGR gives us an idea of how much an investment grew at an annual rate for the period of time we are looking at. If we compare CAGR of various investments in the last 3 years, we get a picture that Bitcoin has far outperformed traditional investment products.

- Source: Money Morning

As is clear from this table, Bitcoin is leaps and bounds ahead of most major assets when it comes to returns, be they stocks, commodities or real estate.

Should you be in Bitcoin?

Well, it really depends on who you are and how much of a risk appetite you have but digital assets like Bitcoin are certainly something investors should consider for their portfolios. Way back in December 2015 Reuters carried a news story titled, “Record highs predicted for Bitcoin as new supply halves.”

Not only did Reuters assert that as supply of the virtual currency diminishes, the prices should rise as in the case of traditional fiat currencies. It also carried an interesting comment from Daniel Masters, co-founder of Jersey-based Global Advisors Hedge Fund.

The prediction Masters made was Bitcoin hitting US$ 4,400 by 2017. The assertion by Masters is based on increasing acceptance by big companies, the technology behind Bitcoin and growing demand for Bitcoin in China as the Chinese economy slows down and the Yuan weakens.

What should you consider before investing in Bitcoin

If you are attracted to Bitcoin you should think about a few things before investing. You should definitely consider the volatile nature of the investment and not put all your money into Bitcoin alone. However, on the other hand, Bitcoin’s very nature makes it especially useful as a hedging tool.

Alexander Matanovic, CEO of ECD, says to Cointelegraph:

“Bitcoin is a great hedging tool because it is immune to events that often heavily influence regular financial markets. In fact, its price often rises when there is a crisis on the financial markets. One important advice: take special care how you store your Bitcoins!”

Finally if you are investing in Bitcoin, think about Bitcoin just as any other investment.

Bas Wisselink, Founding Member of Nxt Foundation, explains:

“If you are just using it as an investment: treat it like a traditional investment. I don't really see why it should be in a different category if you are going to just invest.”