Bitcoin does not allow wagering. Is it still a purchase?

Bitcoin (BTC -1.06%), the world’s oldest and most valuable cryptocurrency, arguably has the potential to change how people digitally store and exchange wealth. Although it is still a long way from achieving any meaningful adoption due to its volatility and lack of scalability, it has delivered an amazing 450% return over the past five years, failing S&P 500.

Despite all its attractive features, Bitcoin does not allow that strike, which can reject income seekers. But even without this feature, I believe so top crypto is still worth buying Today.

What is staking?

Many crypto followers believe that Bitcoin’s consensus mechanism, or the way the network validates and adds transactions to the blockchain, is problematic. Known as one proof of work (PoW) system, it requires a large amount of electricity and computing power to solve complex math problems to confirm new transactions. Opponents argue that it is slow and energy-intensive.

Contrast this with a proof of effort (PoS) model, which allows token owners to unlock (or stake) their holdings to earn returns while securing the network by validating new transactions. Proponents of PoS argue that it’s cheaper, faster and allows crypto networks to scale better, not to mention far more environmentally friendly because it doesn’t require as much power.

Staking is a good way to earn passive income on crypto holdings, especially if the intention is to trade frequently. But there are risks. The specific blockchain’s native cryptocurrency may fall in value, and it may take some time for tokens to be staked out and eventually sold.

Also, because there are no laws protecting investor interests in cryptocurrencies as there are in other financial markets, stakers are vulnerable to losing their entire balance for any reason. Even with these risks in mind, stakes can be attractive to dividend-focused investors.

Ethereum (CRYPTO: ETH)the second most valuable digital asset, with a market value of $230 billion at the time of writing, is moving to a PoS system known as The merger. And right now, holders of their original ETH on Coin baseits exchange can stake its tokens until a date to be determined, earning an annual return of 3.25%. With the 10-year Treasury at 2.8% right now, this may not be a sufficient return for some, especially when considering the risk.

Nevertheless, in addition to other blockchain networks such as Cardano, Polka dotand Solanafans of staking are probably encouraged that a top crypto like Ethereum now has this feature as well.

The case for Bitcoin

Because Bitcoin operates on a PoW consensus model, it does not offer stake rewards. But that doesn’t mean investors should write it off completely when allocating portfolio cash to crypto. Bitcoin has its own investment advantages that require serious consideration.

First, it can be seen as a digital store of value. Some might immediately argue that an asset as volatile as Bitcoin cannot be a true store of value, but this is a short-sighted answer. When it comes to protecting (and actually increasing) purchasing power, Bitcoin’s performance speaks for itself, as returns have crushed gold over the past decade. Additionally, Bitcoin is more divisible, portable and easier to trade than gold.

And Bitcoin has the potential to be a medium of exchange, especially in poorer countries with weak financial infrastructure and inflationary currencies, but only if two things improve. To upgrade scalability, a layer-2 solution running on top of the Bitcoin network, known as the Lightning Network, is being developed to speed up transactions and significantly lower fees. And the hope is that over time, as the price continues to rise and more individuals and institutions own it, Bitcoin will show decreasing volatility. An improvement with these two factors will be beneficial to Bitcoin’s utility.

Right now, however, Bitcoin can only process about five transactions per second, which seriously limits its ability to achieve wider adoption. And even worse, the aforementioned volatility could be a disadvantage for someone holding Bitcoin for short-term spending needs.