The popularity of Bitcoins is high nowadays. Created in 2009 by Satoshi Nakamoto, digital currencies have emerged as an accepted payment method for online transactions. Bitcoins promises lower transaction fees than traditional online payment mechanisms. It is managed by a decentralized authority, unlike government-issued currencies.
How much is a Bitcoin?
Bitcoin uses peer-to-peer technology to facilitate instant payments. The price of Bitcoins has been volatile over the years increasing at one time and dropping at another. In 2017 alone, the price of Bitcoin increased from a little under $1,000 at the beginning of the year closing to $19,000, closing the year more than 1,400% higher.
Investing in Bitcoins
Because of its volatile nature, there are many individuals that are having second thoughts in investing in Bitcoins. However, it is a robust industry that can deliver huge returns when done right. Investing in bitcoin stocks has inherent risks you should be aware of before purchasing.
When investing in cryptocurrency, you need to do some research first and find extensive information about Bitcoin. This will help you determine whether investing in Bitcoins is right for you. Bankclip offers these 3 tips on how to invest in Bitcoins.
Mining is the most common method of investing in Bitcoins. To mine Bitcoins, you need to solve complicated mathematical problems and show proof of work. Once you have solved a problem correctly, a new Bitcoin node will appear in the software running the currency.
In Bitcoin mining, you connect your computer to the Bitcoin network and set it to solve a cryptographic puzzle. Once you are able to solve the puzzle, the Blockchain gets a new digital block and you will receive a fixed number of Bitcoins.
Some small and independent miners use home-based rigs. The problem with this is that they could end up operating at losses during extended depreciations which could decrease Bitcoin’s spot price and profit margins.
Bitcoin mining can be a little bit tricky. If you want to try your hand on Bitcoin mining, you can take some tutorials for learning how to discern which hardware and software will suit your needs and budget.
There are many online exchanges that individuals can consider when investing. Websites such as Coinbase provides a good venue for exchanging Bitcoins. However, one issue with online trading is that it may take a couple of weeks for your bank account to be connected and verified. You first have to set-up your account. When creating an account, you will need to take some photos, submit proof of residency. Without them, you may have to wait longer.
Exchanges are the most straightforward and popular method for buying Bitcoins. There are more than 100 operating worldwide. However, you need to avoid exchanges that are known for wash trading. There are different types of exchanges in the Bitcoin market such as centralized exchanges, decentralized exchanges, P2P marketplaces, crypto-to-crypto exchanges, and fiat-to-crypto-on-ramps. It is best that you stick with reputable exchanges. Each exchange has its own pros and cons so understanding the advantages and disadvantages is crucial.
If you are serious with Bitcoin investing, you may consider the more complicated face-to-face Bitcoin exchanges. Often called Buttonwood meetups, these exchanges involve a group of people getting together to exchange goods and currencies for cryptocurrencies.
Serious Bitcoin investors may look into this more complicated version of a face-to-face Bitcoin transaction. Bitcoin exchanges, often called Buttonwood meetups, are similar to the oldest version of the New York Stock Exchange: a group of people getting together to exchange goods (silver and gold) and currencies for cryptocurrencies.
Most of these face-to-face exchanges aren’t large. The goal is to inform and educate people about Bitcoins. However, they are often a good venue for meeting other Bitcoin enthusiasts and for trading coins, currency, and other Bitcoin-related valuables.
Face-to-face exchanges offer the quickest way to purchase Bitcoins. While they are often the best option, they can be somewhat risky. In fact, there have been instances when investors have been robbed. That’s because face-to-face transactions involve a bit of cash. These transactions could involve $100 or even more.
There are safe ways of buying Bitcoins in face-to-face exchanges. Be extra cautious with Craiglist transactions—where you meet a stranger and hand them cash in exchange for something else. If safety is your concern, it is better to meet in a public location. There are also websites that give Bitcoin buyers and sellers a reputation score so you can decide on whom to buy Bitcoins.
When meeting in public, you give cash to the seller instead of virtual Bitcoins. However, these transactions usually take seconds to complete. The seller directly transfers money from their virtual wallet to yours. You can see the transaction happening in real-time.
These are just 3 ways you can invest in Bitcoins. If you are just starting out, it pays to do some research first before embarking.