I'm new to the world of cryptocurrencies and, after doing some research, I'd like to help people understand the basics of this world.
You have probably heard about investing in Bitcoin in last months. In fact, it’s fame has grown exponentially in the last 10 years, as has it’s value. Someone who had decided to buy a single Bitcoin in 2013 (about 76€), today could sell it for more than 40,000 €.
But do you know what this new cryptocurrency is?
We can say that cryptocurrencies as a digital medium of exchange are here to stay. In fact, in Europe its boom is so great that there is already talk of a Law that regulates the market.
Many economists believe that the future is here, so if you want to get started in the world of cryptocurrencies, this will interest you!
What is a cryptocurrency?
Before we learn how to invest in Bitcoin let's start with the basics: what is a cryptocurrency?
A cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a LEDGER existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership
Sounds complicated, doesn't it? Don't be scared! This is simply digital money, which is possible thanks to the Blockchain system; a system that eliminates intermediates and decentralizes any monetary management.
The key is that the control of all the processes belongs to the users, not from the banks.
What is Bitcoin?
Before we start investing in Bitcoin, we must understand what it is exactly.
Bitcoin is a virtual, intangible, and independent currency. This means that it doesn’t have physical format like traditional money in the form of coins or bills; and that it doesn't depend on any state or government. That's why it's a decentralized currency.
In the case of the Euro, for example, the Central Bank can manipulate its value by issuing large amounts of money. However, there is a limit to the number of Bitcoins in circulation, which will be reached in 2030, after which they will cease to be produced. This limit is 21 million Bitcoins.
So, who controls the value of Bitcoin?
The users of the currency control the value, which buy, sell and transact without the intervention of the state or financial entities.
Therefore, it is impossible to manipulate its value from above, it needs the approval of the whole community.
It is from 2013 when Bitcoin begins to increase in value and in 2020, due to the economic-health crisis caused by Covid-19, when Bitcoin reaches its highest point in its history, with a growth of 55,000%. And now in 2021, it has broken all its records reaching all-time highs of $ 46,000.
How to invest in Bitcoin in 2021?
There are two methods or strategies to invest in Bitcoin.
- Holding
The first is the Holding, which would be the simplest and most common. It consists of buying "x" amount of Bitcoin and waiting for its value to rise to sell later. This strategy has the advantage that you do not have to spend time on it, simply buy and save them in a virtual wallet until their value rises, therefore, this way of investing in Bitcoin is suitable for anyone. Although it seems like a very simple strategy, it can work incredibly well. For example, someone who has decided to invest in Bitcoin in March 2020, in March 2021 they would have made a profit of 500%.
- Speculation
The other most widespread method of investing in Bitcoin is speculation. This is already something more complex and it isn’t so easy, but it can bring us many more benefits in less time. Speculation consists of investing in the same way that has been done for a long time with the price of gold or oil, or the value of a company on the stock market. It basically consists of buying when the price is low, and we believe it’s going to go up and selling when it is high, and we think it’s going to go down. Investing in Bitcoin through this method sounds simple, however, it’s much more complex than it seems, and to be able to do it with the lowest possible risk we need a good knowledge about graph analysis and a small percentage of luck as well.
Advantages and disadvantages of investing in Bitcoin
The advantages of investing in Bitcoin are obvious, and we have already mentioned them. In summary:
- Huge profitability
- a secure payment method
- a way to have our money outside the control of states, governments, or entities.
However, as in everything, investing in Bitcoin also has its downside and risks:
- the great volatility of its value, which can make it fall more than $ 5,000 in a single day (Although considering his history we can be sure that it will not take long to recover).
- In addition, we must not forget that investing in Bitcoin is an investment, so we must think that we can lose money. We should never invest an amount of money that we are not willing to lose.
Well, that's all for today!
I will continue to publish posts on the subject.
THANK YOU!! ?? ?? ??
