The gigantic leap of Bitcoin for the past ten years has made it one of the most preferred investments of 2019. Ten years ago, $10,000 BTCs were $50 worth and a lot of people nowadays, wish they had invested in Bitcoin back in 2009. Can you believe that in 2010, the first bitcoin exchange was trading one Bitcoin of $,0.003?
Bitcoin is believed to be the safest cryptocurrency to invest in. So, how can one invest in the hottest cryptocurrency currently, if he has to start now, in 2019?
The options people have nowadays are far greater than they were only a few years ago. Several cryptocurrency exchanges exist, where you can buy or sell Bitcoins for Dollars, Euros, and more. But which exchange is the most secure one and how can one invest in the hottest cryptocurrency right now? Keep on reading to find out.
What is Bitcoin and Why Invest In It?
Bitcoin (BTC) is the first decentralized digital cryptocurrency. This digital currency was created in January 2009 as a white paper that follows the ideas of Satoshi Nakamoto.
No one knows who invented Bitcoin. It is believed that Satoshi Nakamoto is the person or a part of the group of people who released the original Bitcoin white paper in 2008. He or they also worked on the original Bitcoin software that was released a year later.
Also, Bitcoins has no physical backing, and it can be sent electronically from one person to another person. BTCs are balances kept using public and private “keys” on a public ledger in the cloud. These “keys” are random strings of numbers and characters which are linked through the mathematical encryption algorithm that was used to create them in the first place.
However, Bitcoins have many advantages as they are transferred directly from person to person without having to go through a bank or clearing house. This cryptocurrency offers the promise of lower transaction fees than banks or other online payment mechanisms.
Also, Bitcoin is not issued or backed by any banks or government. Some of the advantages of investing in Bitcoins are:
- Can be used in every country to buy anything the investors wants
- Operated by a decentralized authority
- Peer-to-peer technology to facilitate instant payments
- Lower transaction fees for Bitcoin payments
- Can be exchanged for traditional currencies
- No risk of inflation because Bitcoin holders can preserve their coins
- Lower fraud risks for buyers
How Bitcoin Works?
Bitcoin is like a digital file or a ledger that contains names and balances. As I previously mentioned, one BTC represents a random string of numbers and letters without actual physical backing.
People exchange money by changing this file. Due to the finite number of Bitcoins, the value continually varies.
Also, there is no gold or government issued money backing Bitcoin. There is no centralized control. Therefore, every Bitcoin participant maintains their personal copy of the ledger.
Everyone can see the balances of other people, yet they cannot know the name of the person’s balance, because it uses account numbers.
Moreover, when a new account number is created, the account holder receives a private key mathematically linked to that account number. These keys can be found inside a Bitcoin wallet and are what allow you to create signatures.
To create a signature, a private key and the text from a transaction are fed into a particular cryptographic function. These signatures are unique to each transaction and cannot be reused in the future.
And since Bitcoins price has raised its value to never seen before prices on the last few months, people want to know how to invest in Bitcoin and become part of the cryptocurrency sphere. So, keep on reading to find out what do beginners need to do to buy or sell bitcoins and most importantly, how can they invest their money in Bitcoin?
How to Invest in Bitcoin
As Bitcoin has gained in popularity and the fact that many Bitcoin supporters believe the cryptocurrency is the future, many new investors want to invest in Bitcoin, yet they don’t know how.
The easiest way nowadays to buy or sell cryptocurrencies is through online exchange platforms. Several cryptocurrency exchanges are among the most trusted and preferred ones among Bitcoin traders, who want to buy or sell Bitcoins.
Let’s take a look at the two leading online exchanges when it comes to buying and selling Bitcoins.
The most popular cryptocurrency platform right now. It is based in San Francisco, and it is the world’s largest Bitcoin broker.
Coinbase offers an exchange, waller, and developer API. So, why people chose Coinbase?
- Easy to use due to its simple interface
- User-friendly for beginners
- “Instant Buy” option available with a debit card
- You can buy Bitcoins using your Paypal or credit and debit card
- SEPA Transfers in Europe and Xfers Transfers in Singapore are available
- You can purchase up to $1,000 worth of Bitcoin per week
- Instant transfers among users
- Insured deposits
- Well-documented API
- Offers wallet for storing units of currency
- High liquidity and buying limits
- Supports 55+ countries
- Actual deposit of coins into your account is free
- Coinbase charges a 1.49% fee per purchase.
- Fully compliant with US regulation
Disadvantages of Coinbase:
- Lack of cryptocurrency options ( Only Bitcoin and Ethereum )
- Some people believe Coinbase can track how and where users spend their Bitcoins
- It has limited payment methods
- Bank transfer purchases can take up to 5 days to complete
- Lacks Trading Instruments and advanced trading tools
The most volume of all cryptocurrency exchanges and the best mobile app. Binance is based in Malta and supports lots of coins.
As one of the world’s biggest cryptocurrency exchanges, Binance has it’s own Cryptocurrency Token known as BNB. This token has successfully passed the Initial Coin Offering (ICO).
So, why people chose Binance as a cryptocurrency exchange:
- Easy to use and excellent trading interface
- Fast and effective
- Ideal for both big and small traders and buyers
- One of the most well-designed apps that is available for iOs and Android users
- Lowest transaction fees of around 0.1% of each trade
- Low withdrawal fees
- Has its own Cryptocurrency Token known as BNB
- Users that choose Binance Token as currency for covering trading fees get a 50% discount.
- Users can also enjoy up to 20% commission of trading fees from friend referral accounts
- To use the exchange, users will have to create a trading account
- You can start trading instantly on Binance with just an email address
Disadvantages of Binance
- Provides options for limit and market orders only
- Relatively Low Liquidity (after China Regulation Efforts)
- Not very accessible to beginners
- Has no fiat currencies
Other great cryptocurrency exchanges are:
To use any of the mentioned above exchanges, users will have to create a trading account or “digital currency wallet” where they can safely store their money.
Once you do that, you have to follow the instructions of the exchange you chose to finish the registration and if needed, the verification process.
Using exchange platforms user can sell or buy cryptocurrencies for Dollars, Euros, and more. Also, the process of purchasing anything you want with Bitcoins is easy.
However, to be able to invest in Bitcoins after creating a digital wallet, you have to link your bank account to your wallet.
Depending on the exchange you chose, you can either link your Bank account, Debit or Credit card, or your Paypal account.
Those who might see this as a potential risk should know that the risk of linking your bank account to your Bitcoin wallet is almost the same as the risk when you shop online.
Once you have created a digital wallet, passed all verification process, and your bank account information has been verified, you are ready to purchase BTC and add it to your wallet.
So, let’s sum up the steps so far:
- Create a Bitcoin Wallet Using an Exchange
- Link Your Bank Account to Your Wallet
- Buy BTC and Add it to Your Wallet
TIP: Install Google Authenticator
When investing in Bitcoin, you need to be as careful as you can be to prevent your wallet from being hacked and your bitcoins from being stolen. My advice to you is always to have two-factor authentication (2FA) turned on wherever you can.
Another thing you need to do is install and always use Google Authenticator as an alternative to the 2FA. The Google Authenticator App scans barcodes on participating websites to create 2FA codes that change constantly.
What is Bitcoin Mining? (Second Option To Earning Bitcoins)
Bitcoin mining is another way of earning a Bitcoin. This process has a lot of disadvantages when compared to buying and selling Bitcoins on an exchange. However, it is still a preferred way for some people to earn Bitcoins.
Bitcoin mining involves solving a computationally difficult puzzle to discover a new block. This block is then added to the blockchain, and the owner of the hardware receives a reward in the form of a few bitcoins.
In 2009, the reward was 50 new bitcoins. As each year passes, this reward decreases ( roughly every four years) and as more and more bitcoins are created, the mining process becomes more difficult. In other words, the amount of computing power involved in the mining process increases.
Also, the mining difficulty back in 2009 was only 1.0, while as of February 2019, ten years later, the mining difficulty is over 6.06 billion.
So, to “mine” Bitcoins, you must use faster hardware and more advanced processing units like GPUs.
Third Option to Earn Bitcoins: Working for Bitcoin
Another way to earn bitcoins is by working for them. There are several websites as well as job boards, thank to which self-employed people can get paid for a job in Bitcoins.
- Work for Bitcoin
Beware of Scammers!
Even though Bitcoin is probably the safest cryptocurrency to invest in, there are a lot of fake platforms and a lot of scammers who will try to steal your money!
With Bitcoin being one of the safest cryptocurrencies to invest in, there are almost zero risks of investors losing their money or risks of inflation.
Bitcoin has become something of a worldwide phenomenon, and more and more people are doing their best to invest in this promising cryptocurrency. My advice to new investors, cryptocurrency beginners, as well as experiences traders it to invest only what you can afford to lose.
New crypto investors who are going to invest in cryptocurrencies should start small, not risk more than what they can afford to lose, ignore the “noise” around this cryptocurrency, aim to avoid a bad investment or trade strategy, not to place all of their cryptocurrency coins in one place and expect the unexpected at all times.
If you do this and study the market, you can quickly profit from investing in Bitcoin. Good luck!