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Things You Need To Know Before Investing In Bitcoins

Investing in Bitcoins
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Bitcoins have been around for s decade now. You can buy, exchange, and trade them in certain communities. Bitcoin was the only one of its kind in the start. Later on, other sorts of cryptocurrencies like ethereum, ripple, and litecoin found their way in. Nevertheless, bitcoin investment remains the most common among traders. Here we will delineate some things you need to know before going down the road of Bitcoin trading.

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Let’s get back to things you need to know before investing in bitcoin.

What is bitcoin?

Bitcoin is a digital currency. Every coin is a line of code generated through mining. You cannot duplicate this code which makes bitcoin very easy to track and identify. Beside bitcoin, there are other cryptocurrency coins as well. The art of creating a cryptocurrency is called cryptography (the process of writing and solving codes).

People use bitcoin for purchase, exchange, and other sorts of financial transactions. The operations do not come under scrutiny by the governments. Hence many opt for bitcoin as a safe and secure method of transactions.

Is Bitcoin worth it?

Bitcoin has many perks that are making it popular day in day out. In the beginning, it was an excellent way to stash your income far from governmental sight. However, with time bitcoin is gaining legitimacy. Now many exchanges impose anti-money laundering terms for verification of accounts.

Bitcoin is in the mainstream today with traditional banking systems becoming fragile. Here are some of the reasons why Bitcoin is worth holding.

1. Bitcoin is rare:

Bitcoins will cap at 21 million. They aren’t great in supply. This makes bitcoin expensive just like gold. Also, when the currency is scarce it increases in value over time.

With fiat currency, governments try to push away the fear of economic collapse by printing more money. Resultantly, the price of goods spike. But bitcoins issuance is flexible and steady in growth. Currently, the supply of bitcoin is at 18 million.

2. Bitcoin is divisible:

Divisibility of any currency makes its use possible for exchange across the economy. Bitcoin has an edge in this sense over all the fiat currencies. The smallest unit of bitcoin ‘Satoshi’ is equal to 0.00000001 Bitcoin. So, the global economy can contain quadrillion individual Satoshis.

The scarce presence of bitcoin is balanced with this extreme divisibility. The way bitcoins are increasing in value, people holding the fractions will be able to transact in the future.

3. Bitcoin is decentralized:

Bitcoin goes through a decentralized system. Essentially, this means that no third party can intervene in bitcoin exchange. It is a person to person transfer. That’s why there is no pressure from government or financial institutions on transactions. Additionally, in the long run, nobody can seize or devalue bitcoins.

The popular Fiat currencies like US dollars and Japanese Yen are under the control of the central government. They receive an impact from a crisis in the country. However, bitcoin in digital space is less sensitive to these matters.

4. Bitcoin is real:

Bitcoin may not be tangible like paper money but it is a real currency. You can make purchases with bitcoin, use it as an asset for trading and exchange it for fiat currency. Many famous organizations such as Microsoft Corporations now accept Bitcoin in payment.

There is a whole parallel system of crypto exchanges and trading like stock exchanges. People have made millions out of bitcoin trading.

5. There is a range of coins:

Bitcoin is one of the many cryptocurrencies available in the crypto world. You can always invest in multiple coins to diversify your options. This keeps you on the safe side. As mentioned earlier, there are altcoins such as Ripple, Ethereum, Bitcoin Cash, Binance Coins, and others. Don’t put all your eggs in one basket. The diversified investment will provide a cushion in case prices of one crypto coin fall.

6. Bitcoin is transportable:

The blockchain revolution has provided a lot of ease with regard to transportation. You can easily transfer bitcoin on different exchanges within seconds. Also, exchanges charge a very little fee for this service. Hence it is much more convenient to transport a big size of crypto assets beyond borders.

In case of assets like gold, you need to pay for logistics and stuff. Furthermore, moving assets beyond borders involve taxation as well. With bitcoin, you don’t have to worry about any of this. You can trade this currency is in digital space without any physical hurdles.

7. Bitcoin is durable:

The physical existence of fiat currencies puts some constraints on them. Currencies like the US dollars can tear off, burn down, or get lost in some other ways. But bitcoins are not susceptible to such harm. This makes them stand apart as secure currency, with forever existence. In case of losing a cryptographic key, a holder will no longer have access to his/her coins. However, even in that case currency is not completely destroyed. It still exists on blockchain as a record, so that no one else could duplicate it.

8. Bitcoin cannot be counterfeited:

Due to the complex blockchain system, bitcoins are extremely difficult to counterfeit. The only way to duplicate is through double-spending. Essentially, this involves confusing multiple actors involved. In a double spend situation, a user makes transactions at two or more different places with the same bitcoin.

Unlike, fiat exchange the record of every transaction in crypto is present with blockchain. So, the criminals will have to control the maximum of blockchain in order to falsify records. Additionally, this requires a lot of money, computing power, and effort to do so. Hence the counterfeiting is a very rare possibility with bitcoins.

The downside of Bitcoin:

Bitcoins have been able to gain the trust of many in recent years. However, there are still some challenges involved with bitcoin trade. Here we can some up all the issues with bitcoins usage:

  •  Bitcoins are extremely volatile. There are stories of traders who lost millions as a result of unfortunate market moves.
  •  Bitcoins are not as well-regulated as fiat currency. Therefore, at times transactions can’t be as transparent as in banking systems.
  •  The threat of hacking is always present in digital space. Your coins on exchanges can be stolen or apps you are using for the transaction can get hacked.
  •  Bitcoins aren’t very much common to date. The reason is the complexity attached to their existence. Only tech-savvy communities understand bitcoins. That’s why they have very limited use.

Conclusion:

Crypto enthusiasts believe that bitcoin is the currency of the future. We don’t know how true is this claim. But, one thing is for sure that Bitcoins are making their presence felt at rapid speed. More and more individuals are getting involved in crypto trading. Consequently, the number of cryptocurrency exchanges has also increased. Bitcoin investment is turning into modern-day ‘gold rush‘.

This article has summarized the benefits of investing in bitcoins with the challenges involved. Clearly, the benefits are outweighing. Thus, it is recommended that you give bitcoin investment a shot as a source of passive income. Nonetheless, you will need assistance as a newbie so that you don’t lose money. We at auto trading strategies are more than happy to help you out. Sign up for our services and start your investments today.

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