Been hearing a lot about Bitcoin lately and wondering what all the fuss is about?
Bitcoin may just be the next great investment opportunity for you. But it can be a little bit difficult to understand how it all works if you’re new to the world of cryptocurrency.
But don’t worry. Below we’ll give you a thorough understanding of the most important Bitcoin basics. Welcome to our Bitcoin 101 guide.
Bitcoin 101: Why Bitcoin is Growing in Popularity
Since its creation in 2009, Bitcoin has gained a lot of interest throughout the world and is revolutionizing the way currency works. The currency was created by Satoshi Nakamoto in 2009 and has gained a lot of value during the time since.
Unlike other types of currency, Bitcoin has grown at a huge rate.
As a result, early adopters who have traded their bitcoins have missed out as one bitcoin is now equal to over $15,000 USD. Those who kept their bitcoins from early on are, of course, now reaping the rewards of their investment.
While other cryptocurrencies have also been created in the past few years, Bitcoin is the original and remains the most popular. Compared to other currencies, Bitcoin is known for being more secure. It also offers increased anonymity when making purchases.
The block-chain technology keeps track of each Bitcoin in the same way that a bank ledger works. However, it is instead decentralized and spread out across many locations.
A Currency Without Borders
While the value of one country’s currency can often affect another in our global economy, the same is not true about Bitcoin. Unlike other types of currency, Bitcoin is relatively unaffected by the financial situation of other currencies around the world.
Bitcoin isn’t linked to a specific government or country. It isn’t reliant on the conflicts and politics occurring around the globe. Any single country’s economy won’t have much of an effect on the value of bitcoins.
Bitcoin can easily be sent across borders from and to any place in the world. With the currency, you also aren’t reliant on financial institutions who can easily close your account or block payments on a whim.
Cross-border payments are a huge reason bitcoin is so popular. It allows many the means to look past a home country’s monetary policy that is less than ideal.
The Bitcoin monetary policy is one of a kind and is one of the most well-regarded features of the cryptocurrency. Anyone in the world is able to find out when new bitcoins have been created and know exactly how many are in circulation at any given time.
Why Invest in Bitcoin?
While you would have done much better if you had invested in Bitcoin back in 2009, investing in Bitcoin can still be a very smart move. The value of Bitcoin is gaining quickly and because of this, it has the potential of being one of the most lucrative investments you can make.
Similarly to the value of gold and other precious resources, Bitcoin thrives due to its scarcity and the basic principles of supply and demand. Like gold, it is a limited resource and becomes more and more scarce as time goes by, helping the value of the bitcoin to increase as time goes by.
There are only 21 million bitcoins in existence and more than two-thirds of these have already been “mined.” This scarcity has made the value of the bitcoin rise quickly and has made the currency become a potentially great investment.
The Best Time to Invest in Bitcoin
Knowing when to invest in Bitcoin exceeds the scope this Bitcoin 101 guide, and there are a lot of variables. While it’s hard to say exactly when the right time to buy is, there are some patterns with the cryptocurrency that have been recognized.
In general, Bitcoin has often been known to rise in value quickly for some time. Then, that is followed by a slow steady decline until it finally gets to a point where it is more stabilized.
A lot can be learned from the currency’s history. You may consider using tools such as Cryptowatch or Bitcoin Wisdom to view charts, analyze the Bitcoin price history, and look for trends.
With a current value of over $15,000 USD, the right time to invest in Bitcoin was in the early days of the cryptocurrency, in 2009 or 2010.
However, if you’re smart and careful with your investment strategy, Bitcoin can still be very lucrative.
How to Invest in Bitcoin
So how exactly do you get started with investing in Bitcoin? How do you buy a bitcoin?
There are several options for buying a bitcoin, but the most popular of these is to use a cryptocurrency exchange such as Coinbase.
Coinbase is a popular option and has a very easy to use interface that is available on both desktop and mobile devices. The company also has a reputation for great customer service.
CEX is another simple and easy option for people looking to get started with buying cryptocurrency.
In addition to the exchange platforms above, you also have the option of buying Bitcoin directly through a peer-to-peer service. BitQuick and LocalBitcoin are two excellent options that allow you to buy a bitcoin directly from a seller.
Investing in Bitcoin Mining
If you’ve heard about Bitcoin, chances are you’ve also heard about “Bitcoin mining.”
Bitcoin mining is the process of creating a bitcoin. It’s done using a powerful computer to solve mathematical puzzles. These mathematical puzzles are actually what ends up creating a new bitcoin, and what gives it its security.
While in the early days of Bitcoin, it was possible to perform these calculations on a home computer, it’s not so easy today. This is because more mining is being done around and because the calculations are becoming more and more difficult.
Now bitcoin mining is typically only done in large warehouses using powerful and expensive hardware. This hardware was specifically made for mining bitcoins. Bitcoin mining is only usually profitable these days when done on a large scale.
For many people, the technology and startup costs required at this point in the game simply doesn’t make Bitcoin mining an option.
One possible exception to this is a Bitcoin mining pool. When you join a Bitcoin mining pool, using a less powerful computer can still work. You will be sharing your mining profits with other users based on how much processing work each computer performed.
The Importance of Securing Bitcoins
Our Bitcoin 101 guide wouldn’t be complete without mentioning how to secure your bitcoins. If you’re new to cryptocurrency, you may not realize the importance of keeping your bitcoins safe after purchasing.
Because Bitcoin is an internet currency, there is always the risk of hackers and scammers trying to get a hold of your money. When you invest in Bitcoin, you need to keep your investment secure by placing your bitcoins in a secure Bitcoin wallet.
These online cryptocurrency wallets are made with security in mind. They are developed for the sole purpose of keeping your bitcoins safe.
Online digital Bitcoin wallets come with a lot of security.
However, there are still risks since your currency will still be connected to the internet. The absolute safest way to keep your bitcoins in an offline Bitcoin wallet, otherwise known as a “hardware wallet” or “cold storage” wallet.
To use a hardware wallet, you will transfer your bitcoins from your computer using USB. The bitcoins will then be safe in the hardware wallet. No hacker will be able to reach your currency in a hardware wallet since it will be kept completely offline after transferring.
While Bitcoin remains a topic that many people find difficult to understand, you should now have a good understanding of Bitcoin 101. Hopefully, this article has given you a bit of a clearer look at how it all works.
Cryptocurrency remains a very new technology in the world including Australia, and its future is still uncertain. However, those that are smart and lucky can make a killing in Bitcoin investing if they play their cards right.
Ready to start investing in Bitcoin? Need a secure way to store your investment? View our selection of the best cryptocurrency hardware wallets now.