Over the years, Bitcoin has become a popular choice among investors today. While the image of cryptocurrency was still growing in investors’ minds, there had been various debates about Bitcoin, Bitcoin price, and a lot of other cryptocurrencies. While some argued that cryptocurrency was the future of investment and currency, others claimed that it’s a risky investment that may not generate great profit.
To understand it, we must consider its latest movements. Recently, the value of Bitcoin price has increased has had over 763% increase within one year.
So what really is Bitcoin, and how can you tell if it’s the right investment for you?
What is Bitcoin?
A programmer or group of programmers that came up with the name “Satoshi Nakamoto” created Bitcoin. To date, the real name(s) or creator(s) of Bitcoin is still largely unknown. Bitcoin has earned the reputation as one of the most widely-used types of cryptocurrencies in the world. Rather than physical cash, virtual “tokens” or “coins” are used in the world of cryptocurrency. However, Bitcoin price is not always stable.
Bitcoin originally came as a solution to a couple of cryptocurrency mistakes. First, they designed Bitcoin in a way that it prevents crypto coins from being duplicated fraudulently. Imagine making copies of your computer data, such as files, photos, documents, etc. cryptocurrency would have become a joke if anybody could easily duplicate a coin and create a great amount of currency for oneself. Just like you cannot easily make a genuine $20 bill, so is it not easy to produce a crypto coin.
Understanding Blockchain Technology
Blockchain is a digital technology that Bitcoin uses. Without blockchain, there will probably not be Bitcoin price. Blockchain is an advanced coding mechanism that spreads a single code over thousands of various computers. For instance, if your coin is built from the code “FXS652TPP”, blockchain breaks the code into smaller units and store the units of code across various computers. This is done to prevent hackers from easily gaining access to your code. If any hacker wants to access that code, they will have to hack various computers to gain access to the entire code.
Besides that, blockchain also makes use of a “public ledger” that uses thousands of different computers (known as “nodes”) to keep track of coins and their owners. If there is a change in the data of a coin, the nodes will cross-reference their records to verify whether it was the owner that initiated the change.
What are the Things You Need to Invest in Bitcoin?
You don’t need a lot of things in order to invest in Bitcoin. To make sure that your Bitcoin wallet is safe and authentic, you will need the following:
- Personal documents for identification
- Bank account information
- A secure internet connection
However, you should understand that you don’t have to supply your financial or personal information if you would be purchasing Bitcoin from a stockbroker because such stockbroker may have all that information on record and might use them against you in the future.
Investing in Bitcoin in 5 Steps
If you are ready to engage in the business of cryptocurrency, you should read further. Buying Bitcoin is actually simpler than you might think. The following steps are ways you can invest in Bitcoin, depending on the Bitcoin price of the moment:
Join a Bitcoin Exchange
The first thing you need to know is where you want to make your Bitcoin purchase. A lot of investors in Bitcoin use cryptocurrency exchanges. If you want to purchase from an exchange, you must decide which exchange you would like to buy from. Here are some of the best exchange options:
Get a Bitcoin Wallet
The coin you purchase is stored in a wallet – a wallet is where all your cryptocurrency is kept. A wallet is divided into two types – a hot wallet and a cold wallet. A hot wallet is operated by either a provider or a cryptocurrency exchange. Mycelium and Electrum are the notable hot wallets available. A cold wallet, however, is a safer storage method for your coins. A cold wallet is a piece of computer hardware that stores your coins. Ledger Nano and Trezor are popular cold wallets.
Connect Your Wallet to a Bank Account
As soon as you have obtained your wallet, you will have to link it to your bank account. Doing this will enable you to purchase and sell coins. You can also choose to link your bank account to your cryptocurrency exchange account.
Place Your Bitcoin Order
The next step is to purchase your Bitcoin. Your cryptocurrency exchange has everything you may want to buy. What you need to ask yourself is how much Bitcoin you should purchase, and it is equally important to find out the Bitcoin price before making purchases.
Some coins can cost thousands of dollars, but exchanges can allow you to buy fractions of a single coin. Your initial investment could be as low as $25.
Manage Your Bitcoin Investment
After purchasing Bitcoin, you can:
- Trade coins with other Bitcoin owners
- Hold your coin for a while with the hope that its value will appreciate
- Make online transactions with your coins
Bitcoin is a very high-risk investment due to its volatile asset. Be sure that you know exactly what you are doing before delving into Bitcoin investment.
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