Created by Satoshi Nakamoto, Bitcoin is a cryptocurrency that has no physical form. It was designed in the year 2009. Since then there have been a number of improvements and updates that have taken place. In the year 2013, the currency shot up about 300% of its original value and since then its popularity has shot up. Investors have been trading and betting on this cryptocurrency since then.
The Bitcoin currency is totally decentralized and deregulated. There is no insurance coverage or any collateral for the currency.
The first half of 2014 saw venture capitalists invest about $130 million in the virtual currency. This amount was almost a 50 percent increase from the previous year. In this context, it is interesting to note that the investment was only a mere $2.2 million in the year 2012. This year has seen a 34 percent decrease in the value of the Bitcoin. Read on to find out how to invest in the cryptocurrency as more merchants are accepting it as payments and it continues to grow in importance commercially.
Is it good To Invest in Bitcoins ?
The Bitcoin will assume a value only equivalent to the trust that the Bitcoin community places on the virtual currency. Therefore, it only has an apparent value and not real value such as that held by gold/silver or land. These can be traded at any point in time no matter what happens.
Whether one should invest in Bitcoins or not is a point to be decided by the individual; however, it is time and again been revealed that Bitcoin is one of the most carefully watched currencies of the modern times. Given below are some important points to be kept in mind by the investor/venture capitalist before investing their fortune in Bitcoins:
- Bitcoins had major setbacks when the Silk Road website scandal surfaced and Mt. Goc, the Bitcoin exchange collapsed.
- There are only a limited number of Bitcoins in the world. There is no scope for creation of more Bitcoins than this number. Once all the BItcoins have been generated, their value will depend on the supply and demand of this virtual currency.
- Bitcoins transactions can be done for no fees at all unlike other banking transactions. This will be especially helpful when large amounts are being transacted. Business can take place with practically no costs across international borders.
- As the Bitcoin currency does not exist physically, there is possibility for any counterfeiting to take place.
- There is no chance for identity frauds during Bitcoin transactions as no personal information needs to be provided when using the currency.
- The Bitcoin ledger is transparent and can be viewed by any individual. The Bitcoin ledger cannot be manipulated by any individual or the government.
For individuals that are interested in investing in Bitcoins, it pays to do some research before investing their hard-earned money into the cryptocurrency. Firstly, he investor has to be aware of what is Bitcoin, what it can be used for, how it would help society, and if the investor is sure that it is going to be adopted in mainstream commercial transactions, they can then invest in the virtual currency.
How to Invest In Bitcoins
The easiest method there is to invest in Bitcoin is to buy them directly. Though buying Bitcoins was very complicated in the initial times when it was started, it is easy right now because there are many firms that buy and sell Bitcoins. Coinbase in the United States is one such company. However, one who wants to buy the currency has to pay an extra of 1 percent of the current market price. Coinbase even provides its clients with the facility of linking their bank accounts with the company’s wallet. This makes all transfers and payments easy. The client can also opt for an auto-buy option in their account which will facilitate automatic purchase of Bitcoins in a regular manner, say once a month on a specific date. However, there would be no control over the Bitcoins’ purchase price. It is also important to note that Coinbase does not function like an exchange. The client would end up buying Bitcoins directly from the firm. Therefore there may be unprecedented delays and the client may not be able to purchase Bitcoins at the latest value when the cryptocurrency’s value moves up in the market.
If you want to buy or sell Bitcoins through an exchange, BitStamp is an option to look into. This works like a typical exchange and the client can trade Bitcoins with other investors. The company only facilitates the trades. It is easy to buy or sell Bitcoins whenever the client wants to do so. The trading fee is varies between 0.5% and 0.2% of the value of the trade. The fee is fixed according to the volume of trade that has been executed.
The online Bitcoin trading business is still new and is gaining acceptance among investors and venture capitalists alike. Investors step in when the price of Bitcoin rises as they want a share of the profits. It is global and easy to send and one can trade all 24 hours of the day. If you own Bitcoins you can right away step into trading them. In a majority of cases, there is no requirement for any kind of verification. There is no official Bitcoin trading exchange and no official price for the Bitcoin. However, exchanges that allow trading of Bitcoins stay within the same price range. Most trading companies offer a CFD for trading Bitcoins.
Bitcoins can also be purchased offline. One company that facilitates offline purchase of Bitcoins is Local Bitcoins. This firm facilitates pairing up of potential buyers and sellers of the cryptocurrency. The company acts as a third party and holds the Bitcoins on behalf of the seller uptill the transaction is completed. The Bitcoins are held till when the money transactions have been completed by the buyer and seller (i.e., the Bitcoins are held in escrow).
One can also think of mining Bitcoins to generate the virtual currency. The Bitcoin network consists of many individuals or miners that contribute their computers to the currency’s network. These miners work to maintain the transaction ledgers as well as audit the Bitcoin transactions that take place. Miners are rewarded for their work using Bitcoins. This is referred to as mining.
The Bitcoin cryptocurrency is being used by large corporations such as Expedia, Amazon, Subway, etc., for their commercial transactions and it is predicted that it will be only time when its value will surge. The true value of the Bitcoin is yet to be seen and investors think it is best to invest in Bitcoins now.