[In Layman’s Terms] What Are Bitcoins and How Can You Invest in Them?
You’ve heard about bitcoin and the rising market for it. Now, you’re curious about it and want to invest your money in it.
Since Bitcoin has become more popular, there are websites and even local businessmen that specialize in this. Both resources can help you learn more about Bitcoin and even assist in your initial investment.
In this article, we will discuss how to select a bitcoin wallet and how purchase bitcoin online or in-person.
Before we talk about the main points, let’s go over some basics about bitcoin.
What are Bitcoins?
An anonymous software developer, with the alias Satoshi Nakamato, created Bitcoin as an online payment system.
Bitcoin is the first payment network system that is completely spread out. There’s no predominant authority or middlemen. The people who are invested in it run and hold the power of the network.
How Bitcoin Runs
To break it down, Bitcoin is a virtual wallet-called Bitcoin wallet, where its users can send and receive bitcoins from each other.
Bitcoin users can also use their currency to pay for goods and services. All you need is the merchant’s address and the payment amount to send money.
Your transactions are processed and archived on a public record. Online initials or signatures corresponding to a bitcoin address protects and validates each transaction.
Bitcoin Pros and Cons
With any investment, there are advantages and disadvantages. Before you decide to open a Bitcoin wallet, take a few minutes to read over a few pros and cons.
- Flexibility: There’s no rules or administrative “red tape” involved with Bitcoin. You have the freedom to send and collect bitcoins at any time and from anywhere.
- Regulate your fees: To receive your bitcoins there isn’t a fee. For the majority of the Bitcoin wallets, you can oversee or limit your fees when you send Bitcoins or pay for goods and services.
- Confidence and management: Bitcoin participants have complete control over their transactions. Sellers cannot make undetectable charges and payments do not release personal information. Money is protected using backup and encryption.
- Not everyone accepts it: Although Bitcoin is growing and there’s more awareness, there are still people who don’t know about it.
- Unpredictable: Bitcoin is vulnerable to significant price change over a short interval of time. Small business affairs such as trading potentially change the bitcoin price drastically. Since Bitcoin is new to the market, it is difficult to predict whether this volatility will decline over time.
- Continual growth: Bitcoin still has unfinished attributes, which makes some actions on the market less secure.
If you’re ready to accept the advantages and disadvantages of Bitcoin, we’ve outlined how to choose your Bitcoin Wallet and purchase your first Bitcoin.
Picking Your Bitcoin Wallet
Your Bitcoin wallet serves as a place for you to send and receive Bitcoins.
When you consider what type of wallet you want, think about if you’re using Windows, OSX, or Linux. You can also set up a wallet on your mobile device or without a computer.
- Computer-based wallets will offer more features and a wider variety than ones you could install on your tablet or smartphone. Do the research and pick a wallet that has a high standing with other Bitcoin users and high-security ratings.
Offline Bitcoin Wallets
- Offline wallets are strongly recommended for users who want to deposit a significant amount of money. Unlike online wallets, offline ones are harder to steal from or hack. Most users who have an offline wallet keep it stored on a USB drive in a safe.
After choosing your Bitcoin wallet, the next step is to buy your first Bitcoin.
If you are a United States user, you have to verify your identity before making your first purchase. This involves submitting your identification information such as your social security number.
For users outside the United States, the rules vary from country to country. You can do the research and find out what is expected.
Popular ways to obtain Bitcoins:
- Receiving payment for service or work in Bitcoins
- Buying at a Bitcoin Exchange
- Competitive bitcoin mining
What to Do with Your Bitcoins
You’re wondering: what am I going to do with my new Bitcoins? or How can I make money using Bitcoins?
You can look for which websites accept bitcoins as payment. There are a handful of websites that recognize Bitcoin as payment and that number increases every day.
You can also invest your money in Bitcoin and purchase as many coins as you wish. You can sell and buy shares when you think it’s appropriate.