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How to Invest in Bitcoin

Photo by Ivan Babydov from Pexels

Photo by Ivan Babydov from Pexels

Bitcoin is an open-source, peer-to-peer currency with no central authority. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government issued currencies.

Bitcoin has experienced a surge in both popularity and value since it was created in 2009 by an anonymous programmer (or group of programmers). The total Bitcoin market cap has increased from $1.37 billion to as high as $29.36 billion as of Dec 2013, and the Bitcoin currency’s value has risen from about $2 per Bitcoin to more than $750/Bitcoin! Some people believe that Bitcoin is currently undergoing unsustainable growth due to fractional reserve banking practices used for traditional currency , but others argue that Bitcoin is a good store of value that will be much more useful in the future. Bitcoin detractors argue Bitcoin is not backed by anything , and its value comes from simple speculation.For more information visit Brexit Millionaire

Bitcoin has been used as a vehicle to evade economic sanctions such as those placed on Russia for their actions in Crimea, and Bitcoin has been used by some people living under oppressive regimes to purchase items online or send money to friends and family outside the country . Bitcoin’s relative anonymity also makes it feasible for anyone wanting a digital currency transaction without government scrutiny . However, Bitcoin does raise serious concerns about illegal activity because of its ease at which large sums of money can be transferred anonymously with little possibility of recovery if stolen or hacked.

The primary goal of this article is to help the reader understand Bitcoin and Bitcoin trading. We will briefly touch on Bitcoin mining , Bitcoin wallets, and Bitcoin exchanges, but this article is not meant to be a comprehensive guide for Bitcoin.

If you decide you want to invest in Bitcoin or other digital currencies, read further. I will explain how Bitcoins are bought and sold online; we will go over Bitcoin wallets and exchanges; and we will finish up with some short anecdotes about real people who have successfully invested in Bitcoin.

Bitcoin is all the rage right now, and recently Bitcoin has been making headlines as more and more retailers (and even some real estate brokers ) are starting to accept Bitcoin. This article will get you up to speed on Bitcoin if you already don’t know about it or help you decide if this is something that might be of interest to you.

Remember: Bitcoin is a very volatile market and investing in it carries some risk. Investing in Bitcoin can yield great returns, but lack of liquidity may make its value hard to realize quickly and the digital nature of Bitcoin makes it harder for investors to protect their investments against certain events such as cyber-attacks. Bitcoin may be the future of currency, but Bitcoin is still in its infancy and it’s subject to many changes. Bitcoin may also go “underground” due to governments attempts at regulation or even attempts at banning Bitcoin altogether (especially if Bitcoin gains widespread use among criminals).

Before we begin with Bitcoin, let me make one important distinction: there are two types of Bitcoin wallets – a hot wallet, which is connected to the Internet, and a cold storage wallet, which is disconnected from the Internet. This article will focus on transactions involving Bitcoin exchanges – for transactions made directly between 2 parties, crypto currencies such as Bitcoin have been increasingly popular due to their relatively low transaction costs. However, an individual or business that wishes to convert Bitcoin into fiat currency (such as the US dollar) will have to go through an exchange. Bitcoin can be bought and sold at various Bitcoin exchanges, which will be the focus of this article.

Bitcoin wallets are used for storing Bitcoin until it is spent or exchanged for another currency (usually fiat). There are three main types of Bitcoin wallets: software wallets stored on your computer, online wallets stored on someone else’s computer but still accessible over the Internet, and offline wallets stored on some physical media that isn’t ever connected to the Internet. To spend Bitcoin, you often need to import your private key into a digital wallet (although certain websites like Blockchain.info allow you to store your Bitcoins online in what is called a brain wallet ).

 If there is no middle man, who verifies the Bitcoin transaction? The Bitcoin network does. Bitcoin miners create a block after a certain amount of time that includes all of the transactions from that time period. They then “hash” it, turning it into a string of letters and numbers called a hash-rate . That hash-rate is stored in the Bitcoin blockchain (more on this later), which acts as proof of the transaction because if you tried to falsify a Bitcoin transaction by modifying any unit in the original block, that same amount would show up as changed when hashed.

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