Reflecting about investing in Bitcoin? In this article you can find the list of facts, which you have to know before making a purchase. We are going to tell you about:
- The foundation of investing in bitcoin;
- Why this must be treated seriously;
- How to buy BTC (with the help of credit card or bank account);
- How properly protect security of your bitcoins, if you have decided to invest.
Is Investing in Bitcoins Worthwhile?Investing in Bitcoins is one of the best alternative ways to earn money at present time, and this situation will continue – so it’s really worthwhile. Being one of the most famous cryptocurrencies in the world, Bitcoin is gaining increasing importance and investors` interest don`t stop growing. According to experts, the value of this cryptocurrency in the future must grow up and this fact is a solid reason to invest in BTC. What is more, you can make profit even if the price is decreasing, and you have the full picture. The convenience of investing in Bitcoins is reasoned by the fact that it`s not a single form of investment. By this statement we understand that Bitcoin must be the part of a broader investment strategy, which includes currencies (so called Forex Trading), stocks and goods (namely raw materials such as oil, silver, gold etc). Within the framework of wider strategy we also can involve different guaranteed investment possibilities from Bitcoin shares, that will be discussed in detail.
Bitcoin Price on todayThere is no formal bitcoin`s price. Its cost is determined by the sum, which people are ready to pay. CoinDesk`s price index is a reliable resource. The value of BTC is usually indicated as the price for one bitcoin. However, stock exchanges allow users buy any sum, you can purchase less than one coin as well.
Why Bitcoin is Gaining TractionThe world is becoming more and more dependent on the Internet. And it’s true. No wonder that Bitcoin – safe, global and digital currency – caused the huge interest of experienced investors. BTC is opened for everybody and successfully provides a good opportunity to enter absolutely new asset class. Many users are afraid of investing in Bitcoin, but don`t forget that for understanding how this cryptocurrency operates you need much time and efforts. Notification: Bitcoin with a capital “B” means Bitcoin the network or Bitcoin the payment system; bitcoin with a lowercase “b” references bitcoin as a currency or bitcoin the currency unit.
Why Invest in Bitcoin?Some people consider it’s being silly that one bitcoin can cost hundreds of dollars. What exactly makes BTC worthy and why invest in it? Bitcoins are scarce and useful. Let’s take gold as an example of currency. The amount of gold is limited. And the more gold is mined, the less its amount remains in nature, its search and production are becoming more difficult and expansive. The same situation is with Bitcoin. There is only 21 billion of bitcoins, and in length of time they become harder and harder to mine. Glance at Bitcoin’s inflation rate and supply rate: Bitcoins are`t only scarce, but also useful. Bitcoin provides dependable and predictable monetary policy, that can be checked by everyone. Safe monetary policy of BTC is one the most important features. You are able to see when new bitcoins are created and how many units are in circulation. Users can send cryptocurrency from one place of the world to absolutely another. Non bank is able to block payments or close your account. Bitcoin currency is resistant to censorship. Bitcoin makes possible cross border payments, in addition, it gives people common way to avoid failed government monetary policy. Thanks to the Internet, information has become global and easy to access. Reliable global currency, such as Bitcoin, will make the same influence at finances and world economy. If you realize the potential of Bitcoin`s influence, you will easily understand why investing in Bitcoin can be a nice idea.
How to Invest in Bitcoin – Where and How to Buy BTC?In order to invest in Bitcoin, it’s enough to buy it. You can purchase bitcoins directly from other people with the help of trading platforms, cryptocurrency doesn’t differ from any other product or service. Besides, you may use digital currency exchange or broker, such as Bitstamp, Gatehub, Coinbase and Kraken. Coinbase is one of the largest cryptocurrency exchanges in the USA. Newbies should use one of presented exchanges, because they are the most convenient for beginning users. Also, you need a wallet – the place for digital currency holding. The wallet is a necessary condition, independently on what kind of exchange you`re going to use. It holds your private key (secret number) – a 256-bit string, which opens you access to your bitcoin funds. In addition, your private key allows you freely move by trading platforms. Just because you bought Bitcoin on a certain exchange doesn’t mean you have to stick with it; your private key guarantees that you have constant access to your wallet, whichever marketplace you use. There are various types of wallets, including hardware and software wallets. In fact, software wallets represent apps, which you connect to your regular bank account. There are some variants to select from. Coinbase offers its own wallet, and this is conveniently because it’s directly connected with exchange service. Also, exists Mycelium, popular mobile wallet, as well as Electrum. In the meantime, hardware wallets keep the user’s private keys on a safe hardware gadget that looks mainly like a flash memory stick. Hardware wallets are treated by some people being more secure because they can disconnect from the Internet. Have you already prepared your wallet and chosen trading platform? All right. Now, when you have all necessary parts, we can finish the procedure. The first step. Create your wallet. The easiest way to do is to try services of third-parties, such as Exodus, Coinbase, MyCelium or blockchain.info. Follow the website of chosen wallet and register there. To implement this step you should enter your name, e-mail and password. The second step. If your choice has fallen on a software wallet, you will be asked to download its app. Download it through Apple or Google Play app market, depending on whether you have the iOS or Android operating system. Some wallets work only at computers, other variants are good for mobile devices. The third step. Visit the stock exchange, which you have already selected. This can be Poloniex, Coinbase, Kraken, CEX.io, Bitfinex, BitStamp and BitPanda. Sign up at the exchange. And again, you have to provide the service with your name, e-mail and password. Majority of stock exchanges asks you to connect your bank account for paying bitcoins purchase. Some exchanges, like Coinbase, offer an application that works both as the exchange and the wallet. Through this app you can buy and trade BTC, and store them, of course. It’s a good advantage, but using Coinbase exchange doesn`t oblige you to use Coinbase digital wallet. There are many other digital wallets. The fourth step. Enter the exchange`s section “Buy”. Specify the amount of bitcoins you want to purchase, also you have an opportunity to get less than one coin. Bitcoin can be divided up to eight decimal points. This means that you can receive 0,9 BTC, 0,05 BTC and even 0,00000001 BTC, buy as much as you can afford. Depending on the exchange service you can pay by bank transfer, credit card or even by cash.
Tips for Investing in BitcoinsThere are some tips concerning investing in Bitcoin:
- The best way to invest in 2019 is to buy in the long run;
- If you`re going to make short-term investments, you would better trade with CFD;
- It’s important to diversify investments, among various cryptocurrencies, and between these and other financial instruments (currencies, goods, etc.);
- Bitcoins cannot be treated as safe investment, that’s why you should understand that you risk losing your money;
- It’s vitally important to choose a safe broker for investing in CFD;
- Purchase Bitcoins from reliable exchanges such as Coinbase.
Trading with Bitcoins – Bitcoin Trading VS InvestingBefore discussing this topic we want to specify what is Bitcoin trading and how it differs from Bitcoin investments. Investing in Bitcoin consists in purchasing the cryptocurrency for a long term. In other words, investors hope that Bitcoin’s price will grow ultimately, independently on its ups and downs. Usually, people invest in BTC because they believe in ideology, technology, and the team behind the currency. In such a way, Bitcoin investors tend to HODL the currency for the long run (HODL is a popular concept in the Bitcoin society that was actually born out of a misprint of the word “hold”—in an old 2013 post on the BitcoinTalk forum). On the other hand, Bitcoin traders buy and sell cryptocurrency in the short term, they catch the periods of high Bitcoin`s cost and then get profit. Unlike investors, traders consider Bitcoin as the instrument of making income. Some of them don’t even bother to study the technology / ideology of the product they market. Having said that, people can trade Bitcoin and still care about it, and many people out there invest and trade at the same time. What about abrupt growth of Bitcoin trading popularity (and some altcoins trading) – there are several reasons for this. First of all, Bitcoin is very changeable. In other words, you will get good profit, if you manage to predict the market correctly. In the second place, unlike traditional markets, Bitcoin trading is unblocked around the clock and seven days a week. Most traditional markets, such as goods and stocks, have their time of opening and closing. Bitcoin you can buy and sell in any convenient time. Finally, Bitcoin’s unregulated landscape allows easy begin trading—without the need for long identity-verification processes.
When is the Right Time to Buy BitcoinThere is no exact data about perfect time for buying Bitcoin, as well as on any other market. During whole its history Bitcoin, as a rule, has increased in value very rapidly and then slow sustained downfall has happened until BTC stabilizes. For analysing graphics and understanding Bitcoin`s price history you should use such instruments as Cryptowatch and Bitcoin Wisdom. Bitcoin is global and doesn’t depend on financial stability or difficulty of any single country. Speculation about the Chinese Yuan devaluation, for instance, has caused in the past greater demand from China, which also pulled up the exchange rate on U.S. and Europe based exchanges. Total chaos is generally considered being advantageous for Bitcoin`s price, because this cryptocurrency is unpolitical and stays beyond the control or influence of any particular state. Thinking about political and economical effect on Bitcoin`s price, it’s necessary to suppose globally, but not within the framework of one country.
Are Bitcoins Safe?We are happy to say that Bitcoin is safe…basically. Today Bitcoin is the most known type among all digital coins – cryptocurrencies. One of the most important its aspects is security, and from this point of view we can claim that BTC is decidedly safe. We offer you to look through the reasons for this statement. The reason №1: Bitcoin is encrypted and secure And not just normal, run-of-the-mill encrypted. Bitcoin is encrypted and supported by the special system, named blockchain. Blockchain involves great amount of volunteers for cooperative work on transactions` encryption, which happen in the Bitcoin system. Together with this they control that all personal information has been closed from spying eyes, and even if hackers manage to get into the system, they won’t steal anything. The reason №2: Bitcoin is opened “But this claim doesn`t sound safer”, – you can suppose. However, under “publicity’ we understand that all transactions are transparent and open for public, even if involved members are anonymous. This mean that nobody can cheat, scam, or in another way fraud the system. In addition, they’re irreversible, so as soon as you get your Bitcoins, or sell them, no one can demand their money back. In Bitcoin network thousands of people follow your wallet to make sure that nobody tries to steal anything. The reason №3: Bitcoin is decentralized Bitcoin has its servers all over the world and more than ten thousand nodes tracking all the transactions which happen in the network. And this factor is vitally important because when one server or node falls, all other can replace it. This also means that there is no sense to hack one of servers: it contains nothing hackers could get and servers & nodes couldn’t prevent. The exception is when a malefactor controls 51% of nodes. In theory this situation is possible, but practically it’s unlikely. And it’s much better than the alternative, because when you store all your important things in one location, it provokes trouble: just ask people at Equifax.
How to Store Purchased Bitcoins – WalletsBefore buying bitcoins you should care about the place, where to keep them. This place calls “wallet”. Instead of actual holding your bitcoins, the wallet has a private key that allows you get access to your Bitcoin address (which, at the same time, is a public key). If wallet`s software is well-developed, this will look like you actually have BTC and this makes the usage more convenient and intuitive understandable. In fact, the wallet contains several private keys and many Bitcoin investors own several wallets. Wallets may locate at your PC or mobile device, on a physical storage gadget or even at a sheet of paper. Below we will briefly consider various types of wallets. Electronic wallets Electronic wallets can be downloaded as software or hosted in the cloud. The first variant is just formatted file that stays on your PC or another gadget and makes a transaction easier. Hosted (cloud-based) wallets generally have user-friendly interface, but you trust your personal keys to the third party! Software wallets Wallet`s installation directly on your PC provides your keys security. Most of such wallets have relatively easy configuration, and are free. There is one disadvantage: they demand more backup services. Be aware, if your computer with the software wallet is stolen or crashed, and your private keys aren’t kept in additional place, you will lose your Bitcoins forever. Also, they need more stringent security measures. If your PC is hacked and a thief takes possession of your wallet and private keys, he will also lay hold of your BTC funds. The original software wallet – is Bitcoin Core protocol, the program that launches the bitcoin network. You can download it here (this doesn’t mean that you must become a fully operational node), you also have to download the ledger of all transactions since the dawn of Bitcoin time (2009). As you can guess, this function occupies a lot of memory. Majority of currently used wallets are, so called, “light” wallets or SPV wallets (Simplified Payment Verification), which don`t download whole ledger, but they are synchronized to the real thing. Electrum.org is well-known SPV bitcoin wallet for desktop computers, which also offers “cold storage” (completely autonomous variant for extra security). Exodus.io is able to track some assets with the help of complicated user`s interface. Some wallets (like Jaxx) can contain wide range of digital assets, and another examples (like Copay) offer an opportunity of shared accounts. Online wallets Online (or cloud-based) wallets offer increased convenience – you can get access to your Bitcoins from any device, if you have correct public and private keys. All wallets of this type are common in setting, they provide desktop and mobile applications, which allow easily spend and receive cryptocurrency. Most of these wallets are free. The disadvantage is low safety. Your private keys are stored on the cloud, and you should trust to security measures of the host, believe that it won’t disappear with your money, or close down and leave you without access. Some leading online wallets are attached to exchanges (for instance, Coinbase and Blockchain). Some representatives propose additional security functions, such as offline storage (Xapo and Coinbase). Mobile wallets Mobile wallets are available in the view of an app for your smartphone. This opportunity is especially useful if you`re going to pay things in stores by bitcoins, or if you want to purchase, sell and send BTC being on the way. All online wallets and most mentioned desktop types have mobile versions, while other, such as Airbitz, Abra and Bread, were created exactly for mobile devices. Hardware wallets Hardware wallets represent a small device, which sometimes is connected to the Internet for making bitcoin transactions. This variant of wallet is extremely secure, because it isn’t usually connected to the World Wide Web and that’s why it cannot be hacked. However, there is a chance that hardware wallet can be stolen or lost together with your bitcoins. Some large investors hold their hardware wallets in safe places, such as bank vaults. Trezor, Ledger, Keepkey, and Case are bright representatives. Paper wallets Very likely, the easiest of all existing wallets is paper wallet – the sheet of paper with printed on it public and private keys of a bitcoin address. These wallets are perfect for long-term BTC keeping (keep it far from water and fire, of course) or for presenting bitcoins as a gift, because they aren’t connected to the network. On the other hand, paper bitcoin wallet is easy to be lost. With such services, as “WalletGenerator”, you can without difficulties create new address and print your wallet on your printer. Fold, seal and it’s OK. Send some bitcoin to that address, and then store it safely or give it away.
Are bitcoin wallets secure?Safety depends on the wallet`s version and format, that you have chosen, and on the way you use this. The safest type is a hardware wallet, which you hold offline in a protected place. In such a way, there is no risk for your account to be hacked, your keys won’t be stolen and bitcoin will always be yours. But if you lose your wallet, your BTC will disappear, if you haven’t cared about a clone or haven’t prepared safe copies of keys. The least safe variant is online wallet, because keys are stored by the third party. Anyway, it’s the most convenient type in setting and usage. Online wallet offers constant choice: comfort VS security. Many serious Bitcoin investors practice hybrid approach: they store major part of long-term BTC offline, while keeping a “spending balance” for liquidity in a mobile account. Your choice will depend on your Bitcoin strategy and your readiness to become “technical”. Whatever variant you have selected, be careful. Make a backup copy of necessary info and provide with it a couple of people you trust.
How to Secure BitcoinsAs with anything valuable, thieves, hackers and scammers will hunt down your bitcoins. That’s why it’s necessary enough to ensure security of your money (BTC). If you treat seriously Bitcoin investment and want to purchase significant sum, we advise you to use bitcoin-wallets that were created with safety in mind.
- Ledger Nano S – is a Bitcoin security company, which offers wide range of safe BTC storage gadgets. Today Ledger Nano S is considered as the safest type of wallet;
- TREZOR – is a hardware wallet, created for Bitcoin security. It generates your Bitcoin private keys offline.