What is Bitcoin?
Bitcoin is a decentralized peer-to-peer digital currency system designed to enable internet users to process transactions through a digital unit of exchange known as bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an unknown programmer(s). Since then, Bitcoin has attracted much attention and controversy as an alternative to the US dollar, the euro and commodity currencies such as gold and silver.
Rise to popularity
Bitcoin did not attract much attention in the world of business and finance until 2009. He became famous in the period 2011-2012 when he gained more than 300%. Since last August, the value of Bitcoin has increased by 400%. As a result, venture capital firms and investors around the world continue to attach importance to cryptocurrency.
In the first half of 2014, VC firms invested $57 million in bitcoin in the first quarter, followed by another $73 million in the second quarter, for a total of $130 million, a 50% increase from last year’s $88 million dollars. This is in stark contrast to the scenario of 2012, when Bitcoin firms accumulated a relatively paltry $2.2 million.
These statistics prove beyond any doubt that bitcoins are worth your investment, which begs the question, how can you buy and invest in bitcoins?
Beginner’s Guide to Bitcoin Investors
The easiest and least complicated way to invest in bitcoins is to buy bitcoins. There are many well-known firms, mostly in the US as well as abroad, that buy and sell Bitcoins, abbreviated as BTC.
If you live in the US, then Coinbase is the place for you. Coinbase provides BTC to its customers at a calculated markup of 1% of the existing market price. Residents of the United States have the option to sync their Coinbase wallets with their bank accounts. As a result, future payment transfers are seamless. This company also gives you the opportunity to buy bitcoins automatically from time to time. For example, if you want to purchase $50 in Bitcoins at the beginning of each month, Coinbase allows you to set up an automatic purchase for that amount.
Please read the terms carefully before you start using this service. If you subscribe to an automatic bitcoin service, you won’t be able to control the price at which BTC is bought each month. Note that Coinbase does not function as a Bitcoin exchange, meaning you buy and sell coins directly from the firm. Because the firm must receive coins from other buyers, you may experience delays or disruptions in placing orders during fast market movements.
BitStamp meets the requirements of a regular Bitcoin exchange. Bitcoin acts as an intermediary that allows you to trade with other users rather than with the company itself. Liquidity is higher here and you always have a good chance of finding someone willing to trade with you. There is an initial fee of 0.5%, which can be reduced to 0.2% if you trade $150,000 within 30 days.
Alternative ways to buy bitcoins
Exchange is not the only way to invest in Bitcoins. Local Bitcoin is often used to buy BTC offline. The website is designed to connect potential buyers and sellers. Bitcoins are held by the seller in an escrow and can only be issued to buyers.
Buying bitcoins offline is not always very reliable and safe. Therefore, it is advisable to meet with the sellers during the day and have a friend tag along with you just in case things go south.
Bitcoin is not just a modern trend. Venture capital firms see Bitcoin as a worthy substitute for regular currency in the long term. There are many ways to enter the field of Bitcoin investment. As mentioned earlier, Coinbase, BitStamp, and Local Bitcoins are the most popular channels for Bitcoin investment in the United States. Do your homework and find out which prospect fits your requirements.