Since the predicted fork of Bitcoin started with a bang as it shot through the $2000 mark with no signs of slowing down. Before we begin, I want to get something out of the way for new users. Bitcoin is not a company or a stock, it’s a currency. If you still don’t understand what Bitcoin is, please read on
WHAT IS BITCOIN
Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank remember bitcoin has become a hot commodity among speculators, bitcoins can be used for online transactions between individuals.
HOW TO USE BITCOIN
You can Buy, Hold, Trade and Invest in Bitcoin.
WHAT DOES IT MEAN TO INVEST IN BITCOIN?
In order to answer this question the first thing you need to answer is what it means when you say you want to invest in Bitcoin. Do you want to buy the currency in hopes it will appreciate it value? Do you want to invest in Bitcoin related companies? Are you looking to day trade with Bitcoins?
BUYING AND HOLDING
The most common form of “investing” in Bitcoin is buying the currency in hopes it will appreciate in value (also known as “holding”). If this is the case then you need to decide for yourself if you think this is a good time to buy. Meaning, do you think the price will continue to rise.
Don’t take anyone’s advice about what will happen with the currency, do your homework, learn about Bitcoin and come to a conclusion. Personally I believe we are just starting, but that’s my own opinion and you shouldn’t consider that as investment advice as well.
A FEW POINTERS FOR BUYING AND HOLDING BITCOINS:
- Never invest more than you are willing / able to lose – Bitcoin is a very risky investment and you should keep in that in mind at all times.
- After buying Bitcoins make sure to move them into your own personal wallet and never leave them at the exchange. My personal recommendation is to use a hardware wallet to store your Bitcoins. If you can’t afford a hardware wallet, try a paper wallet.
- Make sure to buy Bitcoins only from exchanges that have proven their reputation.
- Buy Bitcoins through Dollar cost averaging – This means that you don’t buy all of your Bitcoins in one trade but instead buy a fixed amount every month, week or even day throughout the year. This way you average the price over the course of a whole year. Here’s a short video to explain this concept:
TRADING IN BITCOINS
Bitcoin trading is different from buying and holding. When you are trading Bitcoins it means that you are actively trying to buy Bitcoins at a low price and sell them back at a higher price in relatively short time. Trading successfully requires knowledge, practice and predicting. The trading market is occupied by very large players who are just waiting for newbies to come in and throw their money away by trading aimlessly. One have to be careful of the trading platform you choose to invest your money on with the aim of trading because many scams have designed so many trading page for you Newbies to get their money stocked..
INVESTING IN BITCOIN MINING
Some people would like to invest their money into mining Bitcoin. For the past few years mining Bitcoin is only profitable if done at large scales. This means you will need to get expensive mining equipment and hopefully have access to free electricity. Also it’s usually much more cost effective to buy Bitcoins with this money instead of using it to buy mining equipment.
Some of you may have heard of all sorts of sites that allow you to mine Bitcoins through them. This is known as cloud mining and these sites fall into one out of two categories:
- They are complete scams that will run away with your money and don’t actually use it to mine Bitcoin.
- They are not scams, but they are bad investments since you will probably get more Bitcoins if you just use that money to buy Bitcoins instead of paying the site..
INVEST IN BITCOIN COMPANIES OR GROW YOUR BITCOINS OR HYIPS
Finally, every other day I get a question about a site or company that claims to double your Bitcoins, give you insane daily interest on your Bitcoins or help you invest them in some sort of complex and obscure scheme. These sites can be categorized mostly as scams or HYIPs (high yield investment programs).
What these sites usually do is they take money from people around the web and promise to give them good returns. They will then start off by paying these returns through money they get from new sign ups and create a big buzz around the site. Usually they will also have some sort of referral program so that users can bring in their friends. This will go on for around 3-4 months until one day the website will just go offline and the money will be gone. No more payments will be made and a lot of people will get mad that they got scammed.
I have reviewed many Bitcoin investment sites in the past 3 years (e.g. BTCJam , Bitconnect, Bitcoin Trader) and I have yet to find a site that I can say is legit or safe to invest in. Any site that promises you something that is too good to be true is probably just a facade for scammers trying to steal your coins..
SO SHOULD YOU INVEST IN BITCOIN?
By now you can probably see that the answer isn’t that simple. It’s not just a matter of should you invest, but also a matter of how to invest, your knowledge of the currency, the site to invest with, what affects it, what are its advantages and disadvantages, etc. one truth is that BITCOIN IS SAFE TO INVEST ON
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