Closer Look at Bitcoin and Why You Should Start Investing
The basic rule of investing is to diversify your financial portfolio. This ensures that you don’t incur significant losses if, for example, you put all your money in the real estate market and it crashes.
Spread out your assets and enjoy the monetary gains you get from investments that don’t move in the same direction. Diversifying your assets can help you grow your wealth while reducing overall risk in your portfolio.
Another pro-investment tip: explore non-traditional investment opportunities, such as cryptocurrency. While it sounds like a concept fit only for tech-savvy individuals, it’s pretty simple to understand.
Of course, it will take a learning curve, as how it goes with anything worth pursuing. To simplify and get you started with cryptocurrency, you may want to zero in on Bitcoin.
What is Bitcoin?
The emergence of cryptocurrencies is the result of Satoshi Nakamoto’s vision. He wanted to democratize financial transactions using digital technology. The idea was to cut the middleman, such as banks, and provide people an alternative means to accumulate and trade assets online. What followed is the birth of the first cryptocurrency, Bitcoin.
The Bitcoin Protocol governs Bitcoin transactions. This entire system constitutes transaction processors, also called miners. They come in the form of a distributed network of nodes that allow a seamless flow of data.
To verify and validate Bitcoin transactions, a globally distributed ledger called blockchain comes into play. The term blockchain comes from how the process unfolds—blocks of data are recorded for new transactions, creating a chain of data.
All Bitcoin Blockchain stakeholders have access to this ledger. They can either legitimize or nullify a transaction based on the principles stated in the original Bitcoin white paper. This makes the system foolproof and not subject to the whims of a sole mediator, such as a bank or national government.
Everyone involved in Bitcoin mining and trading holds a degree of power over the system. You, too, can partake in this fascinating financial model once you invest in bitcoin.
Why is Bitcoin Investment Popular?
Initially, Bitcoin investment became popular due to its novelty. Since it’s been around for more than a decade now, it can no longer be considered new, especially when other types of cryptocurrency are now in the market. However, it remains a sought-after investment alternative to traditional assets, and for good reasons.
Many consider cryptocurrencies, Bitcoin specifically, as the future’s currency. They want to get into it before everyone does. That would mean they can accumulate Bitcoin assets while it’s still relatively affordable. Once demand reaches its peak, the value of this cryptocurrency is bound to peak as well, which would be great for those looking to profit from their cache.
Bitcoin is also appealing to people who have lost their trust in traditional financial institutions. Banks, for example, can easily cause the value of fiat money to depreciate via inflation. Meanwhile, central governments can trigger forex fluctuations due to flawed policies. The Bitcoin blockchain renders these institutions obsolete, and its decentralized nature can be more secure than traditional payment systems.
Lastly, part of the appeal of Bitcoin and blockchain technology is their security. Compared to traditional modes of payments, there’s little risk that your financial data will be compromised, and whatever money you have saved will go defunct with Bitcoin. After all, the technology that gets the whole system going is top-notch.
How Do You Invest in Bitcoin?
Bitcoin investment has been made easier through partnerships with cryptocurrency exchanges. The most in-demand among these include GDAx, Coinbase, and Bitfinex. In addition, you can use your debit card to purchase Bitcoin. If you can’t afford to own one just yet, you can buy a fraction of it.
You can also cut the middleman and go straight to a Bitcoin seller. Platforms like LocalBitcoins allow direct transactions between sellers and buyers. However, bear in mind that this option might be riskier than when you purchase from a cryptocurrency exchange, where the legitimacy of any transaction you partake in is guaranteed.
Once you’ve purchased your Bitcoin, the next step is storing it somewhere safe. That would mean a dedicated cryptocurrency wallet, which can either be in the form of hardware or software. Signing up with a cryptocurrency exchange account automatically provides you with a software wallet. This comes in handy when you decide to begin trading.
To further secure your unique Bitcoin code, you might want to consider a hardware wallet. A hardware wallet is a detachable device that looks like a flash drive. It’s less prone to hackers since it’s not connected to your network until you hook it up to a computer.
Bitcoin is arguably one of the most popular cryptocurrencies out there, and understandably so, given how it pioneered the industry. Since Bitcoin’s introduction, many other digital coins have tried to follow in its footsteps.
If you’re seriously considering investing in cryptocurrency, research the available and top virtual currencies in the market and study the price movements. As the rules of supply and demand go, the less there is of something, the more valuable it gets.