Thankfully, with a little bit of knowledge, you can also jump into Bitcoin. But first, there are a few things you need to know.
What is Bitcoin?
Bitcoin is a cryptocurrency. This means that, unlike paper currencies, it doesn’t have any physical presence at all. All transactions occur online. There are a few other elements that set this currency apart.
First, Bitcoin uses an electronic ledger to keep track of all their transactions. This is called the blockchain. When a new transaction is recorded, this is added to the blockchain. This technology has been designed to be as secure as possible. This means that Bitcoin, unlike banks, can’t be hacked. This has attracted a lot of people to the currency. It also allows people to use the currency to complete transactions anonymously.
Another key difference between Bitcoin and traditional currencies is that it’s decentralized. This means that no-one controls it. This further increases the security of the system. It should also be noted that, unlike traditional currencies, there is only a finite supply of bitcoin available. Currently, some bitcoins are released each day, until there are 21 million in circulation. If needed, these can be divided into smaller amounts, called satoshis.
Why Should You Invest in Bitcoin?
There are several reasons why people view Bitcoin as an attractive investment. First, there is only a limited amount of supply available, only 21 million, will ever be available. This means that, as the currency becomes more popular, demand increases while the supply stays the same. In this case, the value of each bitcoin will rise. If you invested in them early, you would have made money. This will allow you to capitalize as more people start to use the currency.
Some investors prefer to use Bitcoin as a way to hedge their funds. For example, when the share market falls, the Bitcoin price tends to rise. This can be a great way to protect your other assets from the chaos that the share market can produce. In other cases, investors might be concerned about the effect of inflation on the value of the currency. As central banks put more currency into the economy, the increased supply causes the value of each dollar to fall. As the amount of Bitcoin available is capped at 21 million coins, this won’t be the case with this currency.
However, one of the biggest reasons why you might want to consider investing is because of how fast Bitcoin is growing. For example, when it was first created in 2009, bitcoins were only valued at a few cents each. By 2013, the price had grown to $13.5 per bitcoin. By November 2019, one bitcoin was worth $10,000. At its peak, it had been valued at around $20,000. In a few years, investors would have been able to make thousands of dollars. This rate of return is significantly higher than traditional investments like stocks.
How Do You Invest in Bitcoin?
As we’ve seen, there are multiple great reasons why people might want to invest in Bitcoin. There are a few steps required to do this.
First, you will need to go to a cryptocurrency exchange. This will allow you to us traditional currency to purchase Bitcoin. This will then be transferred into a Bitcoin wallet. This is where your Bitcoin will be stored. If you want to, you can use this Bitcoin wallet to buy things using your Bitcoin. When you want to convert your Bitcoin back to traditional currency, you will need to use the cryptocurrency exchange.
It should be noted that there is a range of cryptocurrency exchanges and Bitcoin wallets available. For this reason, you should make sure to investigate each potential option to find the best one for you. When doing this, look at the fees and charges that apply. You should also make sure to choose a service that has a good reputation.
Investing in Bitcoin can be a great way to make money, as the price of the cryptocurrency continues to rise. If you want to take advantage of this opportunity or find out more about Bitcoin, make sure to get in touch with our friendly team to learn more today.