Everyone everywhere is looking for ways to make money. One of the newest trends is through online cryptocurrency known as bitcoin. Bitcoin is the new currency of the internet, a widely distributed, global, decentralized digital form of money. Its value is that it is said to be more resistant to escalating inflation and corrupt financial institutions. With bitcoin, issuers become their own bank, the ‘National Bank of Marty, or even Bob’ if you will. Confused yet? In this article, we’ll discuss what bitcoin is, and how to get started investing in cryptocurrency, hopefully for a profit.
What is Bitcoin?
Bitcoin, or BTC as it is also known, is not owned by any specific entity. In fact, it is virtual, it’s not minted into metal nor printed on paper. While United States currency is controlled by our government via the U.S. Mint, BTC is not. That means it may be issued by anyone and is not owned by a specific bank, company, or nation. Also unlike traditional financial institutions, BTC’s transaction fees are minimal. Yet another feature of bitcoin is that it is anonymous; none of the issuer’s or owner’s personal or financial data is associated with bitcoin currency. There are many claims that unlike traditional currency, that BTC is fully transparent and completely safe. More and more websites are accepting bitcoin for purchases, while others, such as Reddit, no longer support it. This may be a case of being too ahead of the curve, but the future for wide-spread, if not global bitcoin acceptance appears promising.
Acquiring and Trading Bitcoin
Before you start, arm yourself with information. Go online and read everything you can regarding bitcoin. If you know someone who has traded cryptocurrency, ask them about their experience, for example, what did they wish they knew before they invested? What would they do differently today, and most important, are they still trading today? Once you understand both the process and what can go wrong, you’ll be better prepared to start investing.
Bitcoin is traded by bitcoin exchangers, the issuers we talked about earlier. How does one go about locating bitcoin exchangers so they can trade their currency for bitcoin? Via the internet, of course! Here are the steps to follow to buy and to sell BTC:
- Go online and search for ‘bitcoin exchange’.
- Trade your local currency, i.e. dollars, or Euros, for bitcoins.
- Deposit your bitcoins into a secure bitcoin wallet.
Where Can I Buy Bitcoin?
Bitcoin is available through several sources:
- Buy BTC online with a credit card, debit card, or bank transfer (watch out for high fees, also this is not private or transparent).
- There are also Bitcoin ATMs in major cities with more on the way.
- Buy bitcoin locally with cash or via cash deposit (recommended).
- Convert PayPal to Bitcoin online (again, watch out for high fees)
How Do I Know When to Buy?
Online tools such as Bitcoin Wisdom or Cryptowatch are the Dow Jones of cryptocurrency. Their charts analyze BTC trading sites and allow investors to view bitcoin’s price history across its exchanges worldwide.
How Do I Know When to Sell?
If you have dabbled in stock and/or bonds, you know when a commodity is trending upwards and downwards. You will know the amount of risk you can take, and when it is time to fold. For those new to investing, bitcoin is an easy way to ‘get your feet wet’ so long as you do not bet the rent money. Where to sell? Most exchanges that sell BTC also allow its sale, usually for a reasonable fee per transaction.
Caveats and Best Wishes
Now comes the fine print. Some bitcoin exchanges are nothing more than scammers out to steal your personal information. We recommend avoiding those that make extravagant promises and allow traders to pay with their credit or ATM card. Instead, use cash or cash vouchers whenever possible.
As with most trends, those who ‘get in on the ground floor’ are most likely to succeed before the market becomes saturated and, likely, highly regulated. As with any ‘for profit’ endeavor, for newbies, trading cryptocurrency can be highly risky. Remember, bitcoin trading is in its infancy, and therefore experimental. One needs to buy low and to sell high. Exercise due diligence and watch your account to fluctuations that trend downward. Decide at that point to cut your losses, or to ride it out until you can afford that fast car, yacht or vacation home of dreams. Even if you passionately believe in bitcoin’s validity, just like investing in the stock market, one can get burned.
A recent example: during the fourth quarter of 2013, bitcoin’s All Time High (ATH) was over $1,000. By the first quarter of 2015, it had steadily fallen over the course of one year by almost 90%. Bitcoin has since rallied, yet as with the Great Depression in the 1930s, if the bubble burst once, it can happen again. Another caveat: as with the stock market do not gamble with money that you cannot afford to lose. Making money online via bitcoin is risky. For many, however, this has proven to be a risk well worth taking. Be your own judge and best wishes for profitable BTC trades!