When I first heard of Bitcoin in 2015, my inbuilt scam alert went off uncontrollably. The idea seemed too good, and those rarely end well in my experience. In short, I never bought any Bitcoin when it was selling for a few hundred dollars. Fast forward to 2020. I’m deeply regretting the decision to keep an ”eye” on Bitcoin. Prices have shot up, businesses are now accepting crypto payments, and I have been procrastinating all this time. Don’t be like me.
Like any other cryptocurrency, Bitcoin is a digital file that can live in a virtual wallet. Think of it as an online version of cash, minus the regulator. Digital currencies are decentralized, which means no single person or institution controls their prices, production, or distribution. I have bought Bitcoins using real money, took it as payment, and mined it using a computer. However, buying is the easiest and most convenient way of getting cryptos. But mining is no longer a profitable venture considering the time and electricity used to run a mining rig.
I have listened to people say how risky cryptocurrency investment can be, but the same people go-ahead to bet on Bitcoin. And that means only one thing – trading this digital currency can be a rewarding venture. Plus, the liquidity of this digital asset is overwhelmingly great. People don’t need brokers or certification to trade crypto. That allows the average Joe to take advantage of price fluctuations for profit. Now add that to the low inflation risk of crypto, and see why bitcoin can be a good investment.
If 2020 is anything to go by, this year will be even bigger for bitcoin. Not only did the digital asset increase value during the Covid- 19 pandemic, but it also enjoyed more acceptance in the market. Fintech giant PayPal is now allowing its users to trade cryptos, and Square recently invested $50 million on Bitcoin.
Competition from Central Banks is another reason why Bitcoin prices will go even higher. For example, China has made a cryptocurrency called the Renminbi, and they have already started using it in lotteries. They recently rewarded 100,000 winners and encouraged them to use it, or it would disappear in a few weeks. That only means good things for the pioneer of cryptos.
There will only be a maximum of 21 million bitcoin at any given point. And People have already mined 18.4 million, which leaves 2.6 million up for grabs. However, creating the remainder will take an additional 120 years, even if everyone sets up a mining rig in their basement.
Here’s how it works. The blockchain creates a new block after 10 minutes. That means the mining difficulty goes up by 50%, halving the total amount of minable bitcoin. The new block increases the sums required to mine Bitcoin, and that is why people need dedicated hardware to make it work. Currently, Bitcoin production stands at 900 per day.
It depends on how much the investor is willing to risk. It can be a couple of hundred dollars, or even millions like Square did. The only challenge is how to keep the investment safe from hackers. While the blockchain is bulletproof, most online crypto wallets can be compromised. It is easy to lose the investment if someone managed to hack the virtual wallet. Transactions on the blockchain are irreversible, and there is no regulator to moderate any wrong transactions. So, I recommend being careful when choosing a wallet and also when deciding how much to invest.
I have bought bitcoin on several platforms, but Coinbase is my favorite option. They offer an easy to use platform with many cryptocurrency options, robust security, and reasonable fees. The wallet has not had any hacking incident yet, so it would be safe to say they are reliable. I’ve also used Robinhood for their free bitcoin trades and Coinmama when looking to buy a high amount of bitcoin.
Of course, there are other innovative wallets that I haven’t used before, like BlockFi, which allows users to borrow and lend Bitcoin. Bisq is also another reputable platform that promises a high level of anonymity.