Let’s start with what Bitcoin entails and how you can reap benefits out of it without running the risk of losing your money on Bitcoin.
Bitcoin is a cryptocurrency (virtual asset) designed in 2009, encrypted, and supported with a special system called Blockchain. It was devised by a pseudonymous software developer, Satoshi Nakamoto, to let people buy or sell Bitcoin using various currencies. It facilitates instantaneous payments in the absence of any middlemen or banks in a safe, immutable, verifiable manner.
Bitcoin constitutes 2 components. One is the bitcoin-the-token, a snippet of code designating the possessor of a digital idea. The other is bitcoin-the-protocol, a circulated network maintaining a ledger of balances of bitcoin-the-token.
Generated by computers, it is a budding asset class imitating the traits of traditional currencies with cryptographic-verification.
Key facts about Bitcoin to be remembered:
Though it mimics currencies like dollars, euros, yen, it differs from fiat digital currencies in ways more than one.
- Unlike fiat currencies, Bitcoin is censorship resistant money
Bitcoin can neither be blocked by the bank nor can its account be closed. This makes Bitcoin unique and popular among bitcoin dice game. It lets people secure one’s investment from failed government monetary policy and makes cross border payments a cakewalk.
It resolves the “double spending problem” through an innovative amalgamation of cryptography and economic incentives.
- Supply Limited
Bitcoins have limited supply as opposed to fiat currencies. Owing to the fact that its supply is strictly controlled by underlying algorithms, every hour, a small number of new Bitcoins trickle out, with a diminishing rate until a maximum of 21 million has been reached.
Studies have revealed that with the passage of time, Bitcoin will be more difficult to mine/draw, thereby proving itself to be sparse and practical. Going by its inflation rate and supply rate graph over time, one can safely say that it is similar to gold, which gets tougher to mine with time.
This is what makes Bitcoin more tempting as an asset.
- Pronounced and foreseeable financial policy
What is interesting is that Bitcoin has some very clear foreseeable policies that can be checked by anyone.
It is pretty transparent that way as it lets people know when and how Bitcoins are on the move.
Bitcoin transactions are irreversible, unlike electronic fiat transactions. After an hour, no documented transaction can be changed, which ensures that Bitcoin transactions are free from interference.
- Assures pseudonymity
Identity checks have been mandated (if required) by law. Law entails, exchanges are, at times, needed by law to undergo identity checks before letting customers buy or sell bitcoin. Each user is identified by the wallet address. Since there is no central validator, a semi-anonymity prevails. But the network being transparent, trackable, the progress of a specific transaction is visible to everyone, thereby posing it difficult for money-launderers, terrorists, criminals to mess with it.
- Be mindful and do your own research thoroughly
Investment in Bitcoin is a fabulous idea. But always remember cryptocurrencies are volatile. Be mindful of their fluctuations, and never invest more than you can afford to lose.
Let’s look at the figures in the past decade. Bitcoin’s value has risen from less than $1 to around $7,500 in the last 10 years. 2017 saw it reach a peak of $20,000.
Carry out your own research to know how Bitcoin is able to create a more equitable monetary system for the public.
Reading the original white paper of the Bitcoin published in 2009 by Satoshi Nakamoto is a must. In order to understand the internal working of Bitcoin Blockchain, the paper titled “A Peer-to-Peer Electronic Cash System” is highly recommended. It talks about the basis of the consensus algorithm used by the Blockchain Bitcoin: the famous Proof-of-Work. Get a grasp over the mining process and then invest.
Remind yourself to be rational and not overpowered by greed.
It is advisable not to get influenced by predictions on social media or feel the pressure of fear of missing out (FOMO) while buying Bitcoins. Tread rationally, responsibly, strategically based on your instincts and procured knowledge, instead of seeking opinions from friends.
- Secure with Bitcoin wallets
When you are determined to invest, you must set up a wallet to store your Bitcoins. Ledger Nano X is the most secure wallet offering a great range of safe Bitcoin storage devices. You may also opt for TREZOR, a hardware wallet that produces your Bitcoin private keys offline.
- Open an account at an exchange
It will be a good idea to buy and sell Bitcoin through the cryptocurrency exchanges. The exchanges will purchase the Bitcoins on your behalf once they receive payment, and deposit them in an automatically generated wallet.
The biggest Bitcoin exchange in the world currently is Bitfinex. Coinbase, Bitstamp, Poloniex are few other high-volume exchanges.
You may take a look at the list of country-wise exchanges from where you can purchase Bitcoin:
- CoinBase: USA
- WazirX, CoinDCX: India
- Bitit, CEX: UK, Europe
- CoinMama: Israel
- Bithumb: South Korea
- Yobit: Russia
- Binance: Nigeria
- Coinmama: Japan
- CoinSpot: Australia
- Luno: South Africa
You may buy Bitcoin via other means from these websites:
- Using PayPal
- Credit cards
- Debit cards
Buying with cash might be risky, but you may go for it. LocalBitcoins will aid you to find people around you who are keen on exchanging bitcoins for cash. LibertyX enlists retail outlets where you can exchange cash for Bitcoin, across the US. If you wish to make a cash deposit in exchange for Bitcoin, then WallofCoins, Paxful and BitQuick will suggest a bank branch close to you. Coinatmradar will aid you in finding a Bitcoin ATM near you.
- Patiently aim for long-term investments.
- Do not hesitate to use tools like Bitcoin Wisdom or Cryptowatch to survey Bitcoin’s price history.
Do not go ahead, making investments in anything without weighing out its pros and cons. Bitcoin, though, is a fascinating concept; it is new in the market. So take your time to be thorough with it, before embarking on the investment.