Don’t put all your eggs in one basket. That’s an oft-cited word of wisdom heard by people starting to take control of their finances. The advice advocates the diversification of a financial portfolio by including multiple asset types in it. That way, should one investment crash, the gains from other assets could recoup whatever is lost. Through diversification, there’s no way to lose in investing entirely. That is unlike funneling all resources, say, into real estate where investments could crash because of a housing bubble. If that bubble burst, like what happened in the U.S. housing market in 2008, the result would be a financial disaster.
This situation is where cryptocurrency comes in. Contrary to popular belief, it’s not merely a hobby for technophiles who understand complex computing lingo. Cryptocurrency is a legitimate money-making opportunity that individuals looking to buff up their financial future should consider. Cryptocurrency is a viable option even for those who are not necessarily tech-savvy but are searching for alternative ways to invest.
What is cryptocurrency?
Think of cryptocurrency as a mode of encrypted online payment. You can use it instead of traditional currencies to pay for goods and services exchanged digitally. Or it can be amassed and later sold strategically for profit. It does not rely on financial intermediaries such as banks. Cryptocurrency transactions happen peer to peer, maintained and reviewed by participants in the system using blockchain technology.
Currently, 6,700 publicly traded cryptocurrencies exist. As of February 2021, the market value of cryptocurrencies is at $1.6 trillion.
There’s no arguing that Bitcoin is the most popular and sought-after cryptocurrency out there. Publicly traded Bitcoins have reached $969.6 billion, the highest valuation of any cryptocurrency iteration. That’s not surprising, given that Bitcoin pioneered the entire movement, with a certain Satoshi Nakamoto introducing the concept and its implementation. Now that identity is attributed to Craig White, an Australian computer scientist.
Bitcoin’s popularity has inspired the emergence of altcoins or alternative Bitcoins and many other copycats. Still, Bitcoin remains the king of the deck, which investors trust the most for their bets.
Who can invest in Bitcoin?
The short answer is anyone interested. It does not take a techno wiz to succeed in cryptocurrency investment, although it pays to know the basics, such as relevant terminologies and definitions. For starters, here are terms often used interchangeably, which should not be the case.
· Bitcoin – A unit of the Bitcoin digital currency
· Bitcoin protocol – This set of guiding principles governs data flow through transaction processors and client software. It uses digital signatures instead of encryption.
· Blockchain – This pertains to a globally distributed ledger that creates linked data for recording all legitimate Bitcoin transactions. Here new data entry approved by miners is called a block, thus the term Blockchain.
· Bitcoin SV – Considered the gold standard of Bitcoin technology, it is the most consistent with the original vision of Satoshi Nakamoto. SV stands for Satoshi Vision.
Anyone who’s just beginning to explore cryptocurrency and Bitcoin SV specifically will inevitably come across more technical-sounding terminologies and concepts that might sound intimidating. But that should not be a reason to get dissuaded. Push through with the exploration. In time, those terms and concepts would be graspable in an almost intuitive manner.
Now, if things get too tough, financial advisers/cryptocurrency experts can be of help. They can guide a novice throughout the process of investing in cryptocurrency.
Why invest in Bitcoin?
There are many reasons why people are rushing to get their hands on cryptocurrencies, specifically Bitcoin. Most assume that it’s going to be the future’s default mode of financial transactions. Therefore, it’s better to invest in it now before the increase in demand further elevates supply price.
Keep in mind that the number of mineable Bitcoins is 21 million. As of this writing, there are already 18.6 million Bitcoins in circulation. Once all of the remaining Bitcoins have been mined, supply has essentially been exhausted. The system’s source code does not allow for reproduction, it being a finite resource that makes Bitcoin valuable akin to tangible assets like gold and diamond.
Another selling point of Bitcoin is its autonomy. No central banks govern the system. That means the value of a Bitcoin is not susceptible to inflation. A Bitcoin can continue rising in value regardless of the fluctuations of the U.S. dollar or any traditional currency, for that matter.
Lastly, many see Bitcoin as a more secure way to move money. Plus, it allows relative secrecy, which is no longer possible via old-school financial transactions mediated by banks. For those looking to tuck away assets digitally, Bitcoin is a viable option.
When to invest in Bitcoin?
The short answer is now. That is while there are still millions of Bitcoins to be mined. The law of demand and supply best explains how things will pan out in the near future. As mineable Bitcoins become rarer, their value will exponentially increase. Those holding on to previously purchased Bitcoins get to demand heftier price tags for their digital asset should they decide to sell.
However, remember that cryptocurrencies are volatile. They can go through significant value fluctuations within too short a timeframe. That requires investors to always be on their toes. The ideal Bitcoin trader reads about the latest trends in the market. They know when to buy or sell, depending on what’s happening in the world of cryptocurrency.
Or better yet, there’s an easy and stress-free strategy to entertain. That is holding on to Bitcoins until supplies last. By then, what are the chances their value will dip?
Bitcoin depletion will most likely happen around 2140. Here Bitcoins as heirlooms become an exciting subject for contemplation. But let’s not get ahead of ourselves.
With that said, the best time to invest in cryptocurrency is when one feels at ease with their financial status. Someone who has no debts to pay and with assets spread across various financial portfolios is a great candidate for Bitcoin investment.
Where to buy and sell Bitcoins?
To purchase Bitcoins, one needs to visit cryptocurrency exchanges. These platforms allow the use of a debit or credit card. Buyers will be charged a fee for the transaction.
Alternatively, one can go straight to platforms where Bitcoins are sold straight from their owners. Top of mind example is LocalBitcoins. However, be ready for longer processing than cryptocurrency exchange transactions that follow a streamlined system. Also, take into consideration the risk of inadvertently doing business with a fraudulent seller.
Purchased Bitcoins are stored in a wallet. That can either be a hardware or software wallet. Think of hardware wallets as a flash drive for cryptocurrency. They hold pertinent codes that give access to cryptocurrency cache and are less susceptible to hackers. Software wallet, meanwhile, allows active trading. Coinbase users automatically get a Coinbase wallet upon signing up with the platform.
The same rules apply to Bitcoin selling. Either one goes to a peer-to-peer platform like LocalBitcoins or Paxful or joins a cryptocurrency exchange.
How do you stay protected when investing in cryptocurrency?
Before buying Bitcoins from a cryptocurrency exchange, get to know the platform first. Make sure to read the fine print. There might be purchase clauses that put you at a disadvantage. The same goes if buying from a direct seller. Deal with someone who can show a proven track record in Bitcoin transactions. Do not get swayed by pure sales talk. Ask for receipts.
After securing a Bitcoin wallet, guard it like you do your bank account details. Whether that’s a hardware or software wallet, make sure private keys remain private. Refrain from connecting to public-access Wi-Fi, for starters. No one knows who is lurking behind those networks. They can quickly steal information from compromised phones and gadgets.
Lastly, get into the game with clearly outlined goals and limitations. Those will ensure that only calculated risks are faced. Remember that betting big can yield either big rewards or significant losses. Be ready for either of those outcomes.
You may consult with a financial adviser who’s a cryptocurrency expert. That’s an investment that could prove worthy in the long run.
With cryptocurrency, options run the gamut. But Bitcoin is arguably the most viable route to pursue, as everything crypto started with it. From being a niche subject, now Bitcoin is pretty much a household word. Even boomers have heard or even used it at least once. And it’s only bound to get more prominent and more popular, as more Bitcoins are mined, and fewer are left out in the wild.
Now is the best time to invest in cryptocurrency via Bitcoin. And there’s no need to be a blockchain expert to pull that off either. Anyone who can commit to learning about the subject and keeping abreast of the latest Bitcoin SV news will inevitably get the hang of it. Here patience and dedication will be aptly rewarded. Plus, opting out is relatively easy, too, so that should not be a cause for concern.