What is Bitcoin?
Bitcoin is a decentralized, peer-to-peer, digital currency system designed to enable online users to process transactions using a digital unit of exchange known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an unidentified developer. Since then, Bitcoin has attracted a lot of attention, as well as controversy, as an alternative to the US dollar, the euro and commodity currencies such as gold and silver.
Rise to popularity
Before 2009, Bitcoin did not receive much attention in the world of business and finance. It became popular in 2011-2012 when it gained more than 300%. Bitcoin has seen a 400 percent increase in its value since August of last year. As a result, venture capital firms and investors around the world continue to highlight cryptocurrency.
In the first half of 2014, venture firms invested $57 million in bitcoin in the first quarter, followed by another $73 million in the second quarter, for a total of $130 million, a 50% increase from the $88 million total the previous year. This is in stark contrast to the 2012 scenario where Bitcoin firms raised a relatively paltry $2.2 million.
These statistics prove without a doubt that Bitcoin is worth your investment, which begs the question of how you can buy and invest in Bitcoin.
A Guide for Beginner Bitcoin Investors
The easiest and least complicated method to invest in Bitcoin is to buy Bitcoins. There are many established firms, mostly in the US as well as abroad, that deal in buying and selling Bitcoins, abbreviated as BTC.
If you live in the US, Coinbase is the place you are looking for. Coinbase provides its customers with BTC at 1% above the prevailing market price. Residents of the United States have the option to sync their Coinbase wallets with their bank accounts. As a result, future payment transfers are made without difficulty. This company also enables automatic purchases of bitcoins from time to time. For example, if you’re interested in buying $50 in bitcoins at the beginning of each month, Coinbase lets you set up an automatic purchase for that amount.
Be aware of the terms and conditions before using this service. If you subscribe to an automatic bit coin service, you will not be able to control the price at which BTC is purchased each month. Note that Coinbase does not act as a Bitcoin exchange, meaning you buy and sell coins directly from the company. Because the company must source the coins from other buyers, you may experience delays or disruptions when placing orders during fast market moves.
BitStamp meets the standard bitcoin exchange requirements. Bitcoin acts as an intermediary that allows you to trade with other users and not with the company. Liquidity is higher here and you always have a good chance of finding someone willing to trade with you. There is an initial fee of 0.5% which can be reduced to 0.2% if you trade $150,000 within 30 days.
Alternative ways to buy Bitcoins
Exchange is not the only method of investing in bitcoins. Local Bitcoins are often used to buy BTC offline. The site is designed to connect potential buyers and sellers. Bitcoins are held by the seller and can only be issued to buyers.
Buying bitcoins offline is not always very reliable or safe. Therefore, it is preferable to meet the sellers during the day and have a friend tag along with you in case things go south.
Bitcoin is not just a modern trend. Venture capital firms see Bitcoin as a worthy substitute for regular currency in the long run. There are no-nonsense ways to enter the field of Bitcoin investing. As mentioned before, Coinbase, BitStamp, and Local Bitcoins are the most popular channels for investing in Bitcoin in the US. Do your homework and find out which avenue ticks all your boxes.