Thinking about investing? Think the Bitcoin way

What is Bitcoin?

If you’re here, you’ve heard of Bitcoin. It was one of the most common news headlines of the last year – as a get-rich-quick scheme, the end of finance, the birth of a truly international currency, as the end of the world or as technology that improved the world. But what is Bitcoin?

In short, it could be said that Bitcoin is the first decentralized money system used for online transactions, but it will probably be useful to dig a little deeper.

We all know, in general, what ‘money’ is and what it is for. The most significant problem that arose in the use of money before Bitcoin was that it was centralized and controlled by a single entity – the centralized banking system. Bitcoin was invented in 2008/2009 by an unknown creator who goes by the pseudonym ‘Satoshi Nakamoto’ to bring decentralization of money on a global scale. The idea is that currency can be traded across international lines without any hassles or fees, checks and balances would be distributed throughout the world (not just on the books of private corporations or governments), and money would become more democratic and equally accessible to all.

How was Bitcoin created?

The concept of Bitcoin, and cryptocurrencies in general, was started in 2009 by Satoshi, an unknown researcher. The reason for his invention was to solve the issue of centralization in the use of money that relied on banks and computers, an issue that many computer scientists were not happy with. Achieving decentralization has been attempted since the late 90s without success, so when Satoshi published a paper offering a solution in 2008, it was extremely welcome. Today, Bitcoin has become a well-known currency for internet users and has given rise to thousands of ‘altcoins’ (non-Bitcoin cryptocurrencies).

How is Bitcoin made?

Bitcoin is produced through a process called mining. Just as paper money is made by printing and gold is dug out of the ground, Bitcoin is created by ‘mining’. Mining involves solving complex mathematical problems related to blocks using a computer and adding them to a public ledger. When it started, a simple CPU (like the one in your home computer) was all that was needed to mine, however, the level of difficulty has increased significantly and now you will need specialized hardware, including a high-end graphics processing unit (GPU), to extract Bitcoin.

How should I invest?

First, you need to open an account on the trading platform and create a wallet; you can find some examples by searching Google for ‘Bitcoin trading platform’ – they generally have names that include ‘coin’, or ‘market’. After joining one of these platforms, click funds and then click crypto to select your desired currency. There are many indicators on each platform that are quite important and you should definitely observe them before investing.

Simply buy and hold

Although mining is the safest and, in some ways, the simplest way to earn Bitcoin, there is too much fuss involved, and the cost of electricity and specialized computer hardware makes it out of reach for most of us. To avoid all this, make it easy for yourself, directly enter the amount you want from your bank and click “buy”, then sit back and watch your investment increase in line with the price change. This is called an exchange and takes place on many exchange platforms available today, with the ability to trade between many different fiat currencies (USD, AUD, GBP, etc.) and different crypto coins (Bitcoin, Ethereum, Litecoin, etc.).

Trading Bitcoin

If you are familiar with stocks, bonds or forex, then you will easily understand crypto trading. There are Bitcoin brokers like e-social trading, FXTM markets.com and many others to choose from. The platforms provide you with Bitcoin-fiat or fiat-Bitcoin currency pairs, for example BTC-USD means trading bitcoins for US dollars. Watch for price changes to find the perfect match according to price changes; platforms provide price among other indicators to give you proper trading advice.

Bitcoin as a stock

There are also organizations that allow you to buy shares in companies that invest in Bitcoin – these companies trade back and forth, and you just invest in them and wait for your monthly benefits. These companies simply pool the digital money of different investors and invest on their behalf.

Why should you invest in Bitcoin?

As you can see, investing in Bitcoin requires you to have some basic knowledge of the currency, as explained above. As with all investments, it involves risk! The question of whether to invest or not depends solely on the individual. However, if I were to give advice, I would advise in favor of investing in Bitcoin on the grounds that Bitcoin continues to grow – although there has been one significant boom and bust period, it is very likely that cryptocurrencies as a whole will continue to increase in value over the next 10 years. Bitcoin is the biggest and most well-known of all the current cryptocurrencies, so it’s a good place to start and the safest bet right now. Although it is volatile in the short term, I suspect you will find that trading Bitcoin is more profitable than most other ventures.