Why invest in bitcoin?

Investing in bitcoin, BTC/USD - Bitcoin US Dollar

Should you invest in bitcoin?

He battle-tested his investment philosophy and strategies as portfolio manager of Tier 1, a market-crushing Motley Fool real-money portfolio that delivered Critics called it a fraud and a scam. Warren Buffett even went so far as to call it "rat poison squared" back in Yet people's views toward cryptocurrency are changing.

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Some of the best and most respected investors in the world are now buying large amounts of bitcoin. And some have signaled that they intend to buy even more in the coming year.

Here's why.

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Investors are growing more bullish on bitcoin. Image source: Getty Images.

The Top 10 Bitcoin And Crypto Investing Sites

The inflation hedge Famed macroeconomic investor Paul Tudor Jones purchased bitcoin in May as a means to protect his portfolio from the negative effects of inflation. Jones expects the massive stimulus measures enacted to mitigate the carnage wrought by COVID to eventually cause a steep rise in the prices of goods and services.

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To hedge his portfolio against the negative investing in bitcoin of this central-bank-induced inflation, Jones evaluated multiple types of potential investmentsincluding gold, commodities, and stocks. Yet Jones believes bitcoin is the best option.

BTC/USD - Bitcoin US Dollar

He sees the cryptocurrency increasingly becoming a store of value, due in part to its advantages over gold. Bitcoin is easier to store and transfer than the precious metal.

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It's also more divisible. Moreover, Jones argues that the trend away from cash and toward digital transactions favors bitcoin.

The Smartest Investors Are Buying Bitcoin -- Here's Why

Betting against the dollar In November, billionaire hedge fund manager Stanley Druckenmiller announced that he, too, owned bitcoin. Like Jones, Druckenmiller views bitcoin as a means to profit as the dollar declines in value.

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Although he's bullish on gold and owns much more of the precious metal than he does cryptocurrency, Druckenmiller expects bitcoin to generate superior returns. Beta is essentially a measure of volatility.

Investing in bitcoin, like Jones, Druckenmiller sees bitcoin being used as a store of value, particularly by millennial investors. MicroStrategy had announced in August that it was adopting bitcoin as its "primary treasury reserve asset.

How to Buy Bitcoin

Yet Saylor sees several advantages unique to bitcoin that could help to drive the cryptocurrency's price higher. More companies are likely to follow MicroStrategy's lead in the weeks and months ahead.

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Saylor and Tesla CEO Elon Musk recently discussed how the electric vehicle maker could conduct "large transactions" in bitcoin in a series of tweets. Regardless, a precedent has been set. More businesses and investors are likely to buy bitcoin in the coming year, which could help to drive the cryptocurrency's price sharply higher. Motley Fool Returns.