Like every other kind of investment, learning how to invest is in bitcoin is imperative if you must stand any chance of success.
Investing in bitcoin is a bit can be complicated when you have no idea about how the world of bicoin works, and things could go really wrong too.
In this guide, you will learn how to invest in bitcoin (BTC) like a pro.
Investing in cryptocurrency has it’s fair share of risk, only its a Substantial amount of risk, owing to the unstable nature of bitcoin.
Bitcoin as only grown popular in recent years in the US and the world, but it is still young and quite unstable.
What you will learn:
What is Bitcoin?;
How bitcoin works;
What is Blockchain?
Getting a bitcoin wallet;
How to Connect your bank account to your bitcoin wallet;
Exchanging your Bitcoin;
How to exchange Bitcoin;
How to sell bitcoin to another user;
Hw to Invest in a schedule Purchase Scheme;
How to Investing in more stable commodities using bitcoin;
Investing in bitcoin Investment company;
How to sell bitcoin locally.
Without further ado, let’s dive right in.
What is Bitcoin?
Bitcoin, sometimes referred to as BTC is a from of digital currency and peer-to-peer payment system that is unregulated. It was created by Satoshi Nakamoto, a softwre developer.
Bitcoin in recent times enjoyed a great deal of attention in the financial world globally, making it easier to invest in than it once was.
HOW BITCOIN WORKS
Now the million dollar question: “How does bitcoin work?” you here most people ask.
The value of a bitcoin owing partly to the fact that transactions are much lower than for credit cards.
Due to the scarce nature of bitcoin, it also becomes more difficult to obtain because every four years, the rate of production of bitcoins reduces by half; 2020 is one such year.
Naturally, should demand for bitcoins exceed the rate of production, prices will skyrocket obeying the law of demand and supply.
In 2009, Satochi Nakamoto set a limit of bitcoin to be produced: 21 million, and by Janurary 2020, 18.5 million, which represents 86.42% of the total predetermined were already produced!
When you pay for goods and services with the US dollars, the transactions are verified by financial institution and credit card companies.
What bitcoin does is the same, only without the expensive processing fees charged by banks.
This alternative system as a foundation is known as blockchain.
WHAT IS BLOCKCAHIN?
To better get the scope, here’s an illustration:
Imagine a block “B” being connected to a chain that leads to a block “A”, and a new block “C” being connected to a chain leading to block “B”. This is basically how blockchain works.
When you exchange bitcoin, computers on blockchain swiftly verifies the accuracy of the transaction.
To add a transaction to the blockchain, a hash is done; computers race to solve complex mathematical problem, and the compute that solve the hash permanently stores the transaction as a new block on the chain (remember the block A, B and C illustration?).
And that computer would be said to have mined a bitcoin, earning that computer a bitcoin.
What this means is that, you will be competing for bitcoin using special purpose computers when Minning bitcoin.
Minning botcoin doesn’t require you to use cash, you only rely on the computational power of your computer. To stand a better chance, consider minning in group of established minning pool since bitcoins are issued in blocks of multiple bitcoin at a go.
Nowadays, Minning pools and dedicated minning companies are in control of minning bitcoin.
You can read more about how bitcoin works here.
WHAT YOU NEED TO INVEST IN BITCOIN
Like every business, there are a couple of tools to make your bitcoin investment journey a reality.
You need a Secure internet connection, personal identification documents such as contact details, a digital wallet, payment method, a cryptocurrency exchange account. You will also need a legitimate payment method, which includes: bank account, debit or credit card.
Bear in mind that in early 2020, you are required to present a government-issued IDs in the US to use bitcoin ATMs, because you could actually have a bitcoin ATM card to use at bitcoin-specific ATMs.
Because of privacy and security issues, it is advised you keep a separate public address for bitcoin transactions from the investment public address due to the public nature of transactions.
This helps you should anyone you anyone you are transacting with gets to see your balance.
It is not a reason to fret though as most trading platforms possess the most advance online security infrastructures.
Just like your ATM card pin, anyone with the private key to your public address (bank account equivalent) on the public blockchain gets an unrestricted access to your wallet just like you would.
Because of privacy and security reasons, you are discouraged to not disclose your holdings, especially when large.
HOW TO GET A BITCOIN WALLET
A bitcoin wallet is more like a place to hold your bitcoin like your physical cash, except it’s virtual.
Because bitcoin is unregulated unlike the banks, third party companies provide wallets in the form of softwares and hardwares. This softwares or applications similar to mobile banking applications giving you access too your bitcoin easily.
In the past, Bitcoin wallet software companies have been either hacked or have collapsed due to the inherent risk they share with e-commerce websites.
Among the software wallet company in the United States, Coinbase, is the most popular. It is the easiest and the best platform to use as a beginner.
What distinguishes Coinbase from the others is the availability of a website and a mobile application, plus offline storage of currencies (up to 98%) for added security.
Coinbase also eliminate the need to search for currency exchange since it is directly connected to a bitcoin exchange, further simplifying your transaction of bitcoin, offering added security.
There are also other popular options like Blockchain.com. Mycelium popular also for its secure mobile wallet. Electrum is also another open-source alternative.
There are other offline alternatives that stores private key in some offline hardware which is safer from the than online storage with the risk of hackers.
Also read :How to use Digital marketing Increase sales
CONNECT YOUR BANK ACCOUNT TO YOUR BITCOIN WALLET
To begin buying bitcoin, the next step is to connect your wallet to your bank account, credit or debit card with varying applicable fees.
Linking your bank account allows you to purchase and sell bitcoin, and deposit that money into your account
Again, Coinbase is generally recommeded for new investors, though using bank accounts take four to five days.
It is impossible to sell or deposit money into your bank account when your wallet is connected to a coinbase debit card – they are restricted to purchase only.
HOW TO JOIN A BITCOIN EXCHANGE
Bitcoin exchange are online market places where you can exchange bitcoin for traditional currencies.
Bitcoin exchange acts as intermidiaries to verify the identities of buyers and sellers.
There are many options of bitcoin exchange with varying services, reliability, reputation, exchange rate and processing fees. So, you should get your eyes peeled when trying to decide on what BTC exchange to use.
Check out our guide for choosing the best bitcoin exchange platform here.
You could even trade bitcoin for other types of cryptocurrencies such as Etherum, Dogecoin, Litecoin.
HOW TO PLACE YOUR ORDER FOR BITCOIN
Having gotten to this stage, you are ready to acquire your first bitcoin!
A single bitcoin cost several thousand of dollars.
To ease and facilitate the transactions, one bitcoin can be spilt into smaller units (up to a million times).
The smallest unit of a bitcoin is a satoshi, named after the founder of bitcoin.
HOW TO EXCHANGE BITCOIN
Now that you know how to invest in bitcoin, you should learn how to exchange or sell your bitcoin.
You can trade bitcoin for goods and services where they are considered a legal tender. And this trend is increasing in the US and around the world recently.
Businesses of different sizes and industry are adopting bitcoin as a payment method.
Some popular brands that receive bitcoin as legal tender include:
2. Victoria’s Secret
4. Amazon and many more.
For some form of value, such as goods and services, other types of investment, other types of cryptocurrencies.
SELL YOUR BITCOIN TO ANOTHER USER
Like any risky investment, the risk in investing in bitcoin cannot be over-flogged.
As a result, there are a couple of exit strategies one could employ to to sell bitcoin.
One such method is selling your bitcoin to another user. This allows you to get raw cash in return, or pay for goods and services in return if you want out of your bitcoin investment.
There are a couple of platforms, another type of online marketplace that peers users who may be interested in such deals, such as, CoinCola, CoinBase and Localbitcoins in the United States
And you can also sell bitcoin to some buyers who would in turn help buy you products and ship to you.
LEVERAGE A REGULAR PURCHASE SCHEME
Investing in bitcoin can seem expensive. But there are solutions that allow you to remit some predetermined amount weekly to purchase bitcoin rather than invest in one Lump-some. One such platform is Coinbase.
The flexibility allows you to choose how much, and when this automatic withdrawal to you investment purse, more like a pension withdrawal.
USE BITCOIN TO INVEST IN SOME MORE STABLE COMMODITIES
Because of the volatility of bitcoin, it is advisable to use your investment in bitcoin on some more stable commodities. One such commodity is Gold, Stock and Bonds.
You can invest in gold with your bitcoin in the US at Coinabul.com.
This investment options are more stable.
INVEST IN A BITCOIN INVESTMENT COMPANY
Another alternative to invest in bitcoin is to invest in bitcoin investment company (agency). This companies share price are are linked to the price of bitcoins.
Because this agencies are solely bitcoin experts, having them manage bitcoin investment it is sometimes considered a less risky alternative which makes them popular. The investors only have to sit back and expect a return while the “experts” are at their thing.
The company uses the money to purchase and sell bitcoins in the hope of making profit for the investors.
BUY AND SELL BITCOINS LOCALLY
Consider people from your local community to trade bitcoin with.
Rather than meet anonymous people online, you can meet people in person from your community in real life.
Localbitcoin.com is one such service popular option that pairs you with local buyers and sellers in the US. They service is up to 200 countries and 6,000 cities globally.
BUY WHEN BITCOIN IS CHEAP, SELL WHEN VALUE INCREASES
Remember bitcoin is highly unstable, right?
If you would stand a chance of making the most of bitcoin, play the “buy low, sell high” game, more like you would with any other investment commodity.
If you are really interested in making money on bitcoin, buy when the value to a dollar is low and sell when it higher to make a profit.
Now that you know how to invest in bitcoin, it doesn’t end there. Consider joining online discussion forums to learn more about trends and updates in the the world of bitcoin.
This way, you get more insight from like-minded people who are passionate about bitcoin.
You should also subscribe to updates and news from reputable sources and industry leaders to stay on top of the bitcoin game.
Yes bitcoin is highly volatile, but with the right strategy, the potential to cash out big is there. All you need do is carefully follow expert opinion, stay-up-to-date and look out for any opportunity like it’s real business to capitalize on.
Never think you are too deep or have sacrificed too much into a deal or business to exit
One last word: Have a exit strategy in place should the boat be sinking and bailing cannot save it; Exit with next opportunity you get!
Also read :How to Buy cryptocurrency in Australia