You all are familiar with digital money and transactions. You do a lot of transactions through digital wallets and payment apps.
Even the banking-related tasks like transferring money, making payments etc., are done digitally, through your mobile phone. The idea of digital money isn’t alien anymore.
What is Cryptocurrency?
The concept of digital money that is used online is not that difficult to understand. In this digital world, you may be familiar with online money transferring procedures and protocols.
In this modern era, cryptocurrencies are making headlines every day. Should you be investing in it?
Cryptocurrency is taken as an online digital currency that can be used to do financial transactions (i.e. buy or sell goods & services).
It uses a decentralised online ledger, which means that it is not regulated or monitored by any regulatory or financial body or even government.
These decentralised ledgers make sure to make the transactions transparent, cryptic, and secure. This technology is called the block-chain.
What is Bitcoin, and how it works?
Bitcoin is a cryptocurrency, which follows peer to peer payment method. It is based on blockchain technology. There are no physical coins for Bitcoin as it is a digital currency. Hence, none of the banks or any regulatory body is involved.
An encrypted code is used to create (mine) a bitcoin. Mining is done to mint Bitcoins, which are available infinite quantities (21 million) in the market.
There are umpteen platforms that allow you to do transactions amongst various cryptocurrencies.
Bitcoin can be traded on almost all platforms. Not only the trading platforms but there are also companies too which are accepting the
Bitcoins as the currency for their goods and services. Not only this, you can even take car finance bad credit loans through crypto loans these days.
Is it profitable to invest in Bitcoin?
Bitcoin has an extremely volatile nature. Nonetheless, it has proved itself to be a great investment option in the past years. The prices have surged, and so has the demand, making Bitcoin a potential investment option.
If your risk appetite allows you, go ahead and invest in Bitcoin. First, you need to make sure to understand what and where you are investing in. Prepare a proper investment strategy for cryptocurrency.
You need to have the answer to a few questions before getting into the world of cryptocurrency:
- Are you having the right understanding of the working of Bitcoin that you invest in?
- Are you familiar with the level of risk Bitcoin brings?
- Has the currency become expensive a few months ago? If that is so, then why do you wish to buy Bitcoin at a higher price?
- Do you understand the price movement of Bitcoin properly? Is there any evidence that suggests the further price rise of Bitcoin?
- Are you going to invest for a shorter period of time, or you can handle it if your money stays blocked for a longer period?
- Who will I sell it to and that too at the higher price? Who will buy it from you and why?
Some things to understand before investing in Bitcoin
Like any investment option, cryptocurrencies also bring risks and rewards with themselves.
As compared to the traditional investment options, cryptocurrencies are relativity at a higher risk. You should look at some things that you should understand or think about before you start investing in Bitcoins.
- Since any regulatory body does not regulate Bitcoin, you should understand all the risks attached to it before investing.
- Do not invest all your savings into cryptocurrency. Plan and apportion some of your investments into cryptocurrency while the rest are in the traditional forms of Investments.
- Look at the cryptocurrency like gambling option. Invest the amount that you spare and then leave it to fate. Consider investing smaller amounts and keep a close watch to start with.
- Consider investing longer-term and invest only the amount you can afford to lose if you encounter a downfall.
- Investing in cryptocurrency should not affect your regular savings or your other traditional methods of savings. It should be over and above your regular savings.
How to buy Bitcoin
Investing in Bitcoin is an easy process. Just a few steps, and you will own bitcoins in your digital wallet.
- Select a cryptocurrency platform and create an account by signing up
- Submit your personal details and complete the process of verification of the platform
- Deposit the planned investment money to the platform account from your bank
- Buy the number of Bitcoins and shift them to your web wallet
There are several cryptocurrency exchanges where you can trade your currency. Bitcoin being the most famous currency, it is available on almost every platform. Look out for the features and then select the most suitable platform for buying Bitcoins.
Bitcoin is the new currency in the world of cyberspace and digital money. Its valuation has picked up in the recent few years where the demand has surged, and hence the prices skyrocketed.
More and more people are investing in Bitcoin. Not only limited to Bitcoin but there are also umpteen currencies opening every few days.
This all indicated a positive trend in the world of cryptocurrency. Hence missing out on the opportunity to invest in it is not a wise decision.
But understanding the complexity and volatility is a must before entering the world of cryptocurrency.