What is bitcoin?
What is Bitcoin? Bitcoin is a type of cryptocurrency. Basically, this means it’s not a coin, but a piece of code, stored in a digital wallet, that connects to a specific transaction on a public transaction record called Blockchain.
This code represents the ownership of a part of Bitcoin and that part may be traded in whole or in part at the current market price against another cryptocurrency or currency via a cryptocurrency exchange, and goods and services using a portfolio cryptocurrency (eg a Bitcoin Portfolio).
All this is then encrypted in different ways via cryptography (hence the term “cryptocurrency”). You do not have to understand that to trade Bitcoin, so let’s not dwell on that.
Small investments are a great way to learn how to interact with wallets without the volatility of the market.
If you want to invest in cryptocurrencies in general, you should opt for Bitcoin. Its robustness is unique in the industry and one of the greatest, if not the greatest, strengths.
The general history of Bitcoin, which has been shaped over the years, is that of “digital gold”, where the given emission rate – driven by the mine’s adaptation and decentralized network – brings significant benefits over other currencies if one Knows that this is not an investment watered down by arbitrary inflation.
If you’re new to bitcoin and cryptocurrency looking for a monetary haven in a hyperinflationary economy, or an advanced user who believes in the ideological aspects of Bitcoin, you’ll need to evaluate a few things when investing in Bitcoin.
What is Bitcoin? Complete instructions
Take a look at our Complete Guide to Bitcoin for an overview of the story
Long-term Investing or “Holding”
Many long-term “hackers” see Bitcoin as the heaviest money available and decide to save large amounts of their income in the cryptocurrency. This poses risks, but it is, in their view, one of the largest investment opportunities in history and a legitimate means of storing and transferring assets outside the traditional financial world.
Their belief in Bitcoin as digital gold with a high stock-to-flow ratio is well founded, and advancements such as Bitcoin’s LN can ultimately scale the network, like Satoshi Nakamoto’s originally planned digital P2P cash.
If you want to save Bitcoin as a long-term investment, the best way to protect your coins is to use hardware for storing refrigerators. Well-known brands of refrigerated wallets include Trezor and Ledger. They also provide support for other cryptocurrencies. Cold storage can even be improved with Multisig services like Casa, which require signatures from multiple physical devices to unlock your stored Bitcoin.
Full bitcoin clients are also a viable means of storing bitcoins over the long term, but not as secure as cold wallet solutions. In addition to investing in Bitcoin, you can support the decentralization and connectivity of the network by running a full node that fits into the Bitcoin core protocol that stores the entire blockchain.
Short-term owners who want to invest in Bitcoin out of curiosity or experiment with sending/receiving can opt for hot purses and purses. These wallets are controlled by third parties. They are therefore not ideal for security insurances but are convenient to use and provide excellent user interfaces for using Bitcoin. Popular Custodial Wallets are Blockchain Wallet, Copay and BreadWallet.
In the early days of Bitcoin, users were able to mine Bitcoin on laptops and desktops, earning significant amounts of Bitcoin whose values were drastically lower than they are today. For example, early mining in Bitcoin was one of the most lucrative investments ever. However, mining has become a huge industry in which oversized companies such as Bitmain and large mining corners such as F2Pool and BTC.com dominate the market.
ASIC miners are really the only way to mine Bitcoin today, and hosting your own ASIC rig is a serious investment that requires hardware cost, uptime, and power. In addition, small, independent miners using on-site rigs often have to absorb losses as Bitcoin spot prices are depreciated as profit margins decline. However, if you want to try Bitcoin Mining, there are plenty of tutorials to help you determine which hardware and software are right for you and your budget.
Cloud mining services also enable users to acquire mining ASIC mining rig contracts in large-scale mine warehouses operated by a third-party mining company. These companies offer regular returns based on your investment and can be handy if you want to earn bitcoins through mining, but do not have to bother building your own rig. Hashflare and Genesis Mining are two popular cloud.
How to buy, sell, trade and invest in Bitcoin explained:
Everything you need to know about investing in Bitcoin
To invest in Bitcoin, you must either:
1. Get a Bitcoin wallet, find an exchange or Bitcoin broker, and buy Bitcoin, or
2. Buy an action that contains Bitcoin
In the future, there may be other ways to invest in Bitcoin, but by the end of 2017, the two options above are essentially the only two. Fortunately, although there is essentially only one title holding Bitcoin (called GBTC), there are many stock exchanges and brokers to choose from.
Keeping these facts in mind, here are some simple and quick steps to go from not knowing cryptocurrency to holding bitcoins or bitcoin security actions.
The key to investing in Bitcoin
To invest in Bitcoin, do one or more of the following
TIP: Each option below is listed in order or premiums paid ease of use, and flexibility.)
The GBTC Trust trades at the highest premium but is extremely simple and flexible. Coinbase charges higher fees than most stock markets, but it’s the easiest option to own a Bitcoin. Also the solution with the lowest fees
Offering a high premium, but has several advantages to balance it.
Learn more about the GBTC Bitcoin advantages and disadvantages.
TIP: Highly recommend Coinbase to get your feet wet. It’s simple, flexible and allows you to have real bitcoins. Many people who trade crypto-currencies will do the three options we list, so going out with Coinbase is not a bad thing.
1. Sign up for a wallet and an exchange,
For example the official Bitcoin Bitcoin Core wallet and a reputable exchange like Kraken that accepts US dollars (Kraken is one of the many choices available).
2. Wait until the registration process is complete.
The steps differ from one exchange to another, but you deposit mostly USD on your account, exchange USD in Bitcoin, then transfer Bitcoin from the exchange into your Bitcoin wallet. Or, when you want to sell, sell your BTC on the stock exchange and then transfer your US dollars to your bank account.
TIP: Different exchanges work differently, you will sometimes need a specific type of portfolio, others a portfolio. In any case, you should have a portfolio in which you can transfer funds.
NOTE: Some states (such as Washington State and New York) and some regions have strict rules on the trade that may occur. GBTC and Coinbase are good options.
TIP: If you have another cryptocurrency and just want to convert it to a Bitcoin, you can use a service like ShapeShift.
NOTE: There are also cryptocurrency IRA options. To take advantage of it, you need an IRA, which is not an option for all investors. Learn more about Cryptocurrency IRA options at Investopedia.