October 19, 2018

How to Get Started with Buying Bitcoin

Bitcoin has become the ultimate buzzword in the business world and its historical growth in value (currently worth little more than $14.800) inspired many to get involved. It is the very first decentralized digital currency that shook up the world, leaving financial experts speculating its future and long-term impact on the economy. Some are skeptical of the whole cryptocurrency craze, while others ask fewer questions and hurry to capitalize this revolutionary trend while it lasts. Wondering how to get started? Here’s what you need to know.

Understanding Bitcoin

 

The concept of Bitcoin might be difficult to comprehend mainly because it’s a bit abstract. In layman’s terms, Bitcoins represent a digital form of money which uses encryption to secure transactions and control the process of creating new units. Bitcoins are not concrete and tangible like cash and money but are simply a line of code numbers with value. However, they can be exchanged for real money. Bitcoin is specific because of the way the transactions are handled. Whereas with conventional money, you always have a trusted third party involved (i.e. a bank), where the transaction occurs directly between two parties, without going through financial institutions or clearinghouses, which means the fees are much lower.

How Does Bitcoin Work

 

Many people are confused about how does Bitcoin work, given the fact it implies operating in a whole different financial system compared to the one we are used to. To prevent frauds and misuse, Bitcoin is based on certain sets of norms and rules. That’s what is known as the Bitcoin protocol. Bitcoins can be spent and earned, so, therefore – you cannot send one specific Bitcoin several times. A cryptographic pair of keys ensures Bitcoins get sent and received properly. There is a private and public key. The public key is actually Bitcoin address to which Bitcoins are sent. The private key is a specific digital signature that authorizes the transaction, i.e. enables the sending of Bitcoins. The network is secured by individuals called miners which verify transactions. Sending and receiving bitcoins is as simple as sending a text message.

Earning Money With Bitcoin

 

There are numerous ways to earn money with Bitcoin today. To get started, firstly you have to make your own free digital wallet, which can be kept on your computer or mobile device. Once you decide on your wallet, you can start buying your very first Bitcoins. You can start by investing a smaller amount of money (e.g. $100) and putting it into your exchange account. This way, you’ll buy a fraction of 1 Bitcoin. You can also sell your product and services for Bitcoins. Experts advise to put some amount of purchased coins into cold storage and developing a portfolio over time. Given the fact Bitcoin has high volatility, you should invest for a period no longer than two years.

Myths and Truths About Bitcoin

 

Bitcoin is not guaranteed to make you rich overnight, although some people were that lucky and now sitting on their fortunes. However, whereas in the standard financial system banks are held responsible for defining the value of currencies, when it comes to bitcoin – the situation is different. The worth of a single Bitcoin depends on supply and demand; its value is defined by the current belief of the key stakeholders (e.g. people using Bitcoin), which is somewhat unstable. In any case, Bitcoins are definitely not worthless, nor are they a part of a pyramidal scheme, as some belief.

Opinions regarding the future of Bitcoin are divided, but if we investigate a bit, we’ll see that an increasing number of merchants and companies have started accepting it, including the great Microsoft itself and the globally renowned online store, Shopify. Maybe we will truly see some sort of standardization and therefore – stabilization of this crypto value. Undoubtedly, investing is not such a crazy idea. And if you have the resources to treat Bitcoin as a stock market – even better.