Bitcoin Investment Guide
This year can be defined with a single word – cryptocurrencies. Bitcoin has been in the news more times than anything else, and Elon Musk is planning to take Doge to the moon. Now, there are two types of people. There are those who understood the reference and those who have no idea what anything of those terms means.
This is a guide for the people who have seen crypto in the headlines but they never understood the concepts. In this guide, we’ll tell you the basics of crypto, as well as all of the steps you need to take in order to invest. Let’s get right into it. Click here to read more.
What is Bitcoin?
There are plenty of definitions online, but all of them are fuzzy and nonsensical. The best way to think about Bitcoin is to associate it with gold. The two share a lot of characteristics. First of all, both of them are limited in supply.
There is a limited amount of gold on the planet. There is also a limited amount of BTC that’s capped at 21 million. The creator of the cryptocurrency is completely anonymous, but the person who posted the whitepaper is called Satoshi Nakamoto.
This could be one individual, and it can also be a group of people nobody knows. The main thing that this cryptocurrency aims to do is to become a reliable, decentralized way to send money to people. The keyword here is decentralized.
Ever since the invention of money, a few institutions have been handling it. Those institutions are banks and the state. Depending on the economy, the state tells the Federal Reserve how much new money needs to be printed. Follow this link for more info https://www.tomsguide.com/news/top-cryptocurrency-by-value-bitcoin-ether-dogecoin-binancecoin.
However, we all know that by printing more money, inflation comes faster. This means that the intrinsic value of the dollar will keep falling. That’s why one dollar was worth more 20 years ago than it is now. The buying power of regular currencies is dropping, and it can drop down 25 times in the following years.
The reason why Bitcoin is the best alternative to that is that there’s a limited supply. There will always be 21 million coins. That number is embedded in the algorithm. This way, the price will only keep rising. Nowadays, people are investing in it because it also works as a store of value.
How does the money come into the equation?
When it was first created, this cryptocurrency was worth nothing. It was just a program that was on a computer. However, the program started gaining more and more users. People were mining it as a hobby and because they wanted to support an interesting project.
The first block that was ever mined was given to Satoshi himself, and everyone can find it online, as well as all of the other transactions. After a while, people started writing on different forums whether they could exchange this coin for a tangible object.
After a couple of days, there was a reply, and one person bought a pizza for 10 000 Bitcoin. That was an important day in the history of cryptocurrencies because that’s when the price reached 0.39 cents per coin. Ever since then, it’s been a steady rise all the way to 64 000 dollars.
The beauty in the entire concept is that every user is anonymous. Nobody knows who you are, and that’s why governments can’t impose their regulations on the blockchain. The only regulation happens when you want to exchange it for fiat money, and then you need to pay taxes. On the internet, everything is completely transparent, and everyone can take a look at who’s sending, buying, or selling these coins.
Plus, the entire network is so secure that it’s hacker-proof. Even the most powerful computers in the world combined together can’t compete against the algorithm. The public ledger has a history of every single transaction that ever happened. This means that it’s completely transparent, but it works perfectly.
How can you invest in it?
The first thing you need to do is find an exchange. The most popular ones are Coinbase, Binance, Cex, KuCoin, and Kraken. All of them do the same things, but you need to find one that suits you best. Some of them have a better user interface, and you might not want to deal with the trading graphs on others.
These sites work as a middleman between you and the person that wants to sell you coins. Think of them as the broker. You can read this metal-res bitcoin investment guide to learn more. As soon as you get some coins on the exchange, then you need to put them in a wallet.
A lot of people want to keep their cryptocurrencies on the exchanges, but they can get hacked, and there have been a few scandals where a lot of people lost their money. A physical wallet lets you keep all of your cryptos in one secure place, and that’s best when it comes to large sums of money.
If you’re planning to put a small chunk of your portfolio to trade, then it’s much better to keep it on the exchange since you could earn interest too. When you want to sell, you can connect your wallet to a bank account, or you can transfer the coins back to the exchange and transfer the dollars back to your account. Either option is fine, but one of them requires hassle upfront, while the other at the time of selling.