Bitcoin Investing Guide for Beginners

Bitcoin Investing Guide for Beginners

Bitcoin is a cryptocurrency operated by its community and is outside the control of central authorities like banks and governments. Trading in bitcoin is inexpensive and fast, but the most shocking thing about bitcoin’s market is its volatility. Its price is highly volatile, that risk-seeking investors are willing and eager to invest in it to get a high payoff. It is not like traditional assets, and it can be traded without the involvement of third parties. In bitcoin, two parties can independently trade with each other without the requirement of the government’s approval or permission. Users can easily trade bitcoin through by estimating the future of bitcoin.

Is bitcoin a digital currency or a commodity?

Explaining bitcoin is tricky as it is a digital currency, while for others, it is a commodity. Each person has their own opinions and thoughts about bitcoin, but in reality, Bitcoin is software. It is a program that was created in 2008 during the financial crisis by an anonymous entity named Satoshi Nakamoto. In 2009, Satoshi launched bitcoin in the financial world, and it became the first cryptocurrency in the crypto space that is popular even after 12 years of its emergence.

The thing that makes bitcoin software unique is that it runs on a huge network of computers linked to each other. It means that no single authority controls the network, and all computers are operated by individuals located at different places. Each bitcoin transaction is made visible to the entire world because it is recorded in a distributed public ledger called Blockchain. It is the underlying technology of bitcoin, and it has become the best technology that exists to date.

The reason people trust and adopt blockchain technology because it can avoid getting a network hacked or counterfeited. Blockchain and bitcoin can never be hacked as any hacker tries to hack the network; they are required to gain access over 51% of the hash rate, which is nearly impossible. Bitcoin is a program, and therefore it doesn’t have any intrinsic value. The value of bitcoin is determined according to what people are willing to pay for it.

Bitcoin Investing Guide for Beginners

Is bitcoin counted as a good investment?

Bitcoin is completely a speculative investment. Large factors affect your investing purpose in bitcoin and out of all factors, financial goals of the investors is the main one. This digital currency was launched back in 2009, and it is not subject to inflation or deflation stage in the financial world, which makes it equivalent to gold. People consider bitcoin as digital gold, but it isn’t clear whether it will operate like gold or not in the future because of its fluctuating value.

Bitcoin has an abundance of volatility in its market, and it is enticing for each potential investor. After looking at the price history of bitcoin from 2009 to 2021, it makes a good investment. However, its price keeps increasing and decreasing, and trading bitcoin requires investors to set stop limits to avoid losses or risks of losing their investments.

Is investing in bitcoin similar to investing in other currencies?

Satoshi Nakamoto is the founder of bitcoin, and he designed bitcoin as a form of money, or we can say a medium of exchange. After launching bitcoin in 2009, Nakamoto suddenly got disappeared, and no one even knows about him. Investing in bitcoin is completely different from investing in other currencies as bitcoin is an independent currency, and the government doesn’t set its value. Still, it is set by what all investors are willing to pay for it. Also, its market is highly volatile, unlike traditional currencies, and there is no limit to investing in bitcoin because it is a sentiment-driven market.

You can invest in bitcoin through crypto exchanges that are well-regulated and allow investors to buy and sell bitcoins easily by creating an account with the exchange. Creating an account is straightforward, and users have to provide some personal details or documents as proof of identity. Some people also choose to invest in unregulated exchanges to maintain anonymity, but there might be a risk to your investments. Choose to buy and sell cryptocurrencies from crypto exchanges but never store your funds at exchanges.