How to Invest in Bitcoin

Bitcoin investment seems to be the future of all investments. Hence we find many big companies today investing heavily into  Bitcoin and other cryptocurrencies. As the interest in digital currency spread daily, many investors become all the more curious to find out how exactly they can easily invest in Bitcoin to get maximum returns. Of course, there are many viable options one can use to invest in Bitcoin today.

What is Bitcoin

Bitcoin is a digital asset used as a decentralized means of payment and storing values. Because not only countries have legalized it today, its use is limited to those countries, companies, and individuals that accept cryptocurrency payment. This digital asset was created in 2009 by an unknown founder popularly known as Satoshi Nakamoto. The fact that the inventors created only a limited amount of this digital asset has helped to increase the potential price of this coin in years to come. Thus, Bitcoin has been immune to inflation over the years and used as a hedge against other currency inflations. As more people come to realize this; the more interest in Bitcoin investment rises to its maximum, creating l higher prices in the market every day.

To ensure that fraudsters do not create new Bitcoins, the digital asset had been built strongly on a decentralized Blockchain and locked permanently through digital codes.

How Does Blockchain Technology Work?

Blockchain technology is a sophisticated digital system that uses code to link thousand of users together making it possible for them to share data and other digital values without revealing the identity of the participants. It further keeps records of all the transactions carried out on its ledger. Users of a Blockchain are commonly connected via peer-to-peer linking also known as chain connection. The device stores data of all users on its database which makes it impossible for hackers to decode.

Blockchain technology is commonly known for using a “public ledger,” compiled from thousand of its users through computers in keeping track of all the coins exchanged and the receiving wallets. Hence, the sender’s wallet and receiver can easily be seen by all block users but not the name of these two parties.

What are the basic tools needed to invest in Bitcoin

There are four tools every cryptocurrency enthusiast must have before he can obtain any crypto. They include:

• Mobile device
• Internet connection
• Wallet
• Investment capital

Where Can One Obtain Bitcoin

To best place to obtain Bitcoin is to visit an exchange. An exchange allows one to buy Bitcoin with a credit card or any other preferred means from the list of options provided. There are often four steps to be followed to buy Bitcoin from an exchange. The first is to decide exactly the exchange to buy.

A second means to obtain Bitcoin today is through mining. This method uses a Proof-of-work technique to allow the creation of new Bitcoins by solving complex mathematical puzzles. Of course, this process simply rewards miners for work done.

Is Bitcoin a Good Investment?

There is a wide interest in Bitcoin investment today. The fact that Bitcoin has been built on a strong Blockchain has helped reduce the risk involved in investment. Hence we find many attracted to it today. Bitcoin’s volatility has all the more made investment into it, a lucrative activity. But not risk-free.

How to Invest in Bitcoin

There are two broad ways through which one can invest in Bitcoin today. One can choose to invest in Bitcoin either as a trader or hodler. Whichever way one decides, both are equally good but the process may vary.

Investing in Bitcoin as a trader

The great volatility we experience in Bitcoin today is usually caused by the fact that we have a lot of Bitcoin traders in the market. Investing in Bitcoin as a trader means getting actively involved in speculating the prices of Bitcoin in the hope of profiting from them. Here, one will have to get actively involved with an exchange where Bitcoin is traded daily.

Spot trading

Spot trading gives the investor legal ownership of the total Bitcoin purchased from the exchange. This type of Bitcoin investment involves buying a given amount of Bitcoin from an exchange at lower prices and hodling it for a long time otherwise waiting to sell at higher prices. There is a minimal risk involved in investing in Bitcoin investment via “spot trading” when compared to other forms.

CFD trading

The term CFD is an acronym for “Contract for Difference”. Investing in Bitcoin via CFD trading allows the investor to agree with the broker, to receive returns; any changes in the prices of Bitcoin counting from his entry to exit point. This type of Bitcoin investment is highly speculative and bears the highest risk. CFD type of investment in Bitcoin is often a leveraged investment and can deliver good profits if the right speculations are made. The majority of investors today are attracted to CFD trading.

Future trading

Future trading is a highly leveraged type of trading that allows the investors to either long or short the market with any desired leverage, and count on huge returns when successful. It is a type of contract that allows investors to speculate on Bitcoin’s future price movement and place orders in the market.

Margin trading

This is equally a leveraged form of trading that allows the investor to speculate on both the long-term and short-term price movement of Bitcoin.  Margin offers lower leverage compared to futures.

Investing in Bitcoin as a Hodler

The common phrase used to summarize this type of investment is “Buy and Hodl”. The latter term means buying Bitcoin when the price is fairly low and holding it in one’s wallet without selling it over a long period; in the hope that the price would appreciate more. Hodlers are confident Bitcoin investors who predict higher prices for Bitcoin in the long term. To this end, they prefer to buy large quantities and hold over a long time to grow their capital as the digital asset appreciates over time.

Conclusion

Bitcoin’s proven volatility has made the digital asset a lucrative asset for investors today. However, there is no guarantee offered for investment in Bitcoin today. Be sure to carry out your research before investing in Bitcoin or any crypto asset.