Hello everyone ! Here is new article on “Bitcoin : To Invest or to Not Invest – Full Guide“.
When Satoshi Nakamoto and his often-disputed mysterious colleagues came up with the idea of the “Bitcoin” in 2008, all they were trying to do at the end of the day was simplifying commercial transactions by removing the middlemen that ‘bought’ the trust of their customers. Instead, customers would rely on time-stamped cryptographic proofs that would prevent them from double-spending. Speaking metaphorically, this crypto-technology makes sure you don’t get an extra can of soda from just a dollar of what it’s worth if the vending machine’s acting out of whack.
What is Bitcoin ?
Bitcoins operate like currency. They can be divided into denominations, from one bitcoin to the smallest ranging at a hundredth millionth of a bitcoin (called ‘satoshi’ in the honor of its founder). This means they can measure goods very very precisely. All Bitcoin transactions are recorded by a technology known as the blockchain. One unique thing to note is that bitcoin transactions are irreversible, which means that if you chose to give your bitcoins to someone, there’s no option to cancel it. What’s done is done.
How It Works ?
While most of this information isn’t news to those on the Bitcoin exchange market, I can already imagine the common man being rather confused about the intricacies of this new age decentralized non-refundable currency. To allay your fears, I’ll give you a brief overview on how this works in 3 easy steps.
Step 1: Check if it’s legal
Don’t start right off the bat! Check the legal status of Bitcoin in your country. While most countries have legalized cryptocurrencies, this step is important because there might be some restrictions placed on how you would wish to use your money or certain usages might be illegal. For example, in Vietnam the usage of Bitcoin as a payment tool is illegal and can land you with a fine. In a lot of countries, financial institutions are disallowed from facilitating bitcoin transactions.
Or worse, it might be banned in its entirety as happens in the case of Bolivia, Ecuador and Egypt to name a few.
Step 2 : Get a wallet
Just like how you use your ‘real’ money, you can’t buy Bitcoins before ensuring you’ve got a few pockets to tuck them in. Wallets come in all shapes and sizes, but the best of ‘em is the one that’s secure than the rest of them. Hardware wallets like external USB devices are your best bet unless you’re someone who loses things frequently. Some of the biggest hardware wallet brands include Trezor, ColdCard, and Corazon.
Hardware wallets need to be purchased in comparison to the others which may be available for free.
For Desktop wallets- Armory, Electrum and Exodus are a few well-known ones. Desktop wallets are recommended over online wallets when it comes to the susceptibility of being hacked. However, online wallets are also the easiest to use for practical purposes, for example, Blockchain can get your job done.
Step 3 : Buy your Bitcoin
For beginners the easiest way to buy a Bitcoin is to find a good Bitcoin trader and make an exchange. There are also ways to create your own Bitcoins, a process called ‘Mining’, however it requires an extremely special hardware. So, we’ll stick to the basics for now. For exchanging Coinbase is one of your options, but you can also visit Bitcoin to check your competition. Once you’re on the market, you’ll be required to verify yourself and set up an account. From there on, you can choose to buy and sell Bitcoins as you wish.
Bitcoin : To Invest or to Not Invest – Full Guide
That’s all easy-peasy, but I’m sure you’ll want to know the pros and cons of investing in this digital currency. In the next few minutes, you’ll be able to go back and forth and decide for yourself. So, let’s flip this Bitcoin and see where it lands for you, heads or tails? You decide.
1. Round one: Inflation
To invest : There’s a limited number of bitcoins that can be mined, 21 billion to keep it exact. This prevents devaluation of money as happens in other conventional systems. The current value of your bitcoin is subject to the demand-supply cycles in the economy. This is very similar to investing in ‘digital’ gold.
To not invest: According to critics, the deflationary bias is dependent on public perception of what is ‘good’ and ‘bad’ money. Bitcoins, being undervalued, have had a history of being hoarded which pushes it out of circulation till it becomes ‘bad money’.
2. Round two: Policy & Regulations
To invest: The historically elitist nature of handling fiat money gives Bitcoin the under-dog storyline it requires to pull its weight into the economy. Bitcoins are regulated by strict monetary policies and immune from manipulation often subject to fiat money. The notion of distributed consensus permeates Bitcoins unlike what happens in the case of fiat money.
To not invest: Fiat currencies tend to have legal tender status in contrast to Bitcoins. In settling money-related disputes, this is especially advantageous. So, even though Bitcoins can avoid capital control or disproportionate taxation, money troubles in this area might not suit your country’s legal system.
3. Round three: Network effect
To invest: With respect to other cryptocurrencies, Bitcoins have the first moving advantage. They can last you long into the future despite the influx of investment infrastructure, mind-share and liquidity issues.
To not invest: Critics argue that Bitcoin’s source code is an open one, and can be easily legally replicated opening doors to competition that might lead to a situation of hyperinflation and collapse.
4. Round four: Ease of use
To invest: Bitcoins are easily transportable. Private keys can be carried into USB flash devices or uploaded to your cloud. Transactions are also transparent and protected by cryptographic security measures that gives it an edge over fiat currencies. Thus, bitcoins become very easy to manage given that there is no additional cost of storing them once you’ve set up your wallet.
To not invest: Governments could disfavor the use of cryptocurrencies entirely for preventing misuse or network attacks. Illegal deals in the past have also landed Bitcoins a bad rep that might enforce stricter control over its usage. Generally, ‘card not present’ or online transactions tend to be susceptible to higher risks of fraud if not used with caution.
5. Round five: Survival
To invest: Timing is all that matters. Back in 2009, Bitcoin started at zero value. Now? Each bitcoin is worth thousands of dollars. Bitcoins have the ability to survive long-term, akin to that of gold because the supply is limited. There’s no one that controls Bitcoin except its users. This makes its market very predictable.
To not invest: Bitcoins are highly volatile when it comes to prices. Its stability is dependent on the liquidity of the market.
Every venture in an economy driven by capitalism is bound to go through ups and downs, however, the biggest barrier people might face is the pre-conceived notion of Bitcoins being ‘internet money’ and thus, unsafe. And there’s some ground to that since Bitcoins aren’t all that normalized when it comes to financial practices. However, in recent years the venture has grown and as we approach the mid of the year with Coronavirus still impacting people and economies worldwide, the digital currency might actually become a more viable option for investment as compared to the falling stock market in the but much remains to speculation.
To sum it up, investing in Bitcoins might be a calculated risk on your end. It’s a new technology that’s highly volatile, but it’s also futuristic and might prospectively revolutionize how we view transactions in our globalized economies.
So, which way did your Bitcoin flip?
See Also : What is Google Pay ? How to Use it?
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