Bitcoin has once again seen a meteoric rise in its price. Understandably, more and more people are looking to buy in before it’s too late.
But before you sell your home to buy some at the top, realizing you should have researched it first, what should you know about it? This guide, Bitcoin for Beginners, explains 5 things you need to know.
- What is Bitcoin?
It’s hard to believe that Bitcoin has now been available for over a decade.
Released in January 2009, it is a currency unlike any other, as it is decentralized and not controlled by any government entity. This means it can’t be regulated or manipulated.
Transactions have no middlemen, meaning it’s cheaper to transact in bitcoin than a traditional currency due to the absence of bank fees and commissions.
- How do I buy Bitcoin?
When investing in Bitcoin, remember to do your research and find the best way of getting in that suits your needs. Bitcoin exchanges allow you to purchase bitcoin with different currencies (fiat money), such as Dollars or Euros. You can also buy bitcoin on a crypto exchange with other kinds of cryptocurrency, like Ethereum or Litecoin, usually through wire transfers like SEPA or SWIFT.
Only invest what you don’t mind losing. We discuss why later, but this is a mantra that sticks with every cryptocurrency owner, as one mistake and your assets are gone in a flash. So be careful.
- How do I Use Bitcoin?
You can use bitcoin in many different ways. Firstly, just like buying Bitcoin, you can sell Bitcoin to exchange other cryptocurrencies or fiat currencies. This is called trading Bitcoin.
Bitcoin is also used for peer-to-peer transacting. This means if you want to buy an item, as long as the seller of that item has a Bitcoin wallet, you can send Bitcoin in exchange for that item.
Most recently, however, Bitcoin has gained a reputation as a better store of value. In contrast, other types of currencies have evolved to become more use-case friendly.
For example, Litecoin’s transaction fees are minimal compared to Bitcoin. At the same time, Ethereum allows for smart contracts, which give way for decentralized finance (i.e., lending, rather than swapping).
- Storing Your Bitcoins
If you’ve bought some Bitcoins, you need safe storage. There’s a famous saying in the community; “Not Your Keys, Not Your Bitcoin.” This means that if you don’t own the wallet, your Bitcoins are in (for example, you use a decentralized exchange), then the exchange can shut down at any point and run off with your Bitcoin.
Therefore, an offline wallet is recommended for more significant sums. In the same way, storing wealth in a vault at the bank is difficult to release, so is the increased security of an offline wallet. But that’s a good thing, as it means you’re much less likely to have your assets taken away from you.
Hardware wallets such as Ledger, Trezor, Keepkey, and Safepal are the best way since the beauty of blockchain is that you can transact offline. Then when your device is online, the transaction gets pushed to the network. This adds a new level of security, reducing the chances of interception.
- Asking the Right Questions
If you don’t know, ask. There are tons of forums, communities, and tutorials out there on cryptocurrency for beginners. But do your research, and always second guess everything you read.
Remember, you are in control of your wealth. So like the most personal files on your computer, do your research first and make sure you know what you’re getting into before taking the wrong actions.
Bitcoin for Beginners
Investing in cryptocurrency has improved massively over the last couple of years. Bitcoin for beginners is more accessible now thanks to increased awareness in the media and even governments accepting that cryptocurrencies are here to stay.
For more financial advice to grow your wealth, keep reading our articles and see what tips you can find today!