Bitcoin is something that many people avoid indulging in only because it is pretty complicated to understand. But despite its complexity, today, every financial media covers every little up and down of bitcoin. One cannot deny that bitcoin opens up a whole new universe of investment channels. If you want to start bitcoin trading learn china history with cryptocurrency.
No matter how many times one comes across the term “bitcoin,” it is not a good idea to jump into the bitcoin universe if one is a novice in cryptocurrency investment. The best alternative is to first learn about the ins and outs of Bitcoin and then start with investing. Let’s look into the entire concept of bitcoin. Read on to know further.
Overview of Bitcoins
It is the first cryptocurrency, and today there are 5,000+ cryptos in the market.
Talking the inventor of Bitcoins, Satoshi Nakamoto first introduced Bitcoin to the financial market as an electronic payment system. Every bitcoin transaction is stored in a public ledger accessible to all. This feature leaves no space for conducting any fraudulent acts by faking transactions.
Its public launch dates back to 2009, and since then, its value has grown drastically. But how is it growing in importance? In laypeople’s terms, bitcoin has limited supply, and as its demand keeps increasing, the value of 1 bitcoin also keeps rising. And as it grows in importance, more and more High Net Worth investors treat it as an investment to hedge against inflation, further increasing its demand and value.
Many believe that its value will continue to grow with time.
Functioning of Bitcoins
Bitcoin operates on “blockchain.” What is blockchain? It is a type of digital ledger. As its name suggests, the entire body of the data is linked. The information about every transaction, the buyer and seller’s name, the total value, and the date and time of the transaction are stored in blocks. Each of these blocks is strung together in chronological order. This creates a chain of blocks.
Now one may think that if this digital ledger is accessible to all, how is it trustworthy? To increase the security of the blockchain, each block is protected by cryptography which encrypts the information. So if one wants to access the blocks, one needs to solve long numbers of mathematical equations, which is not an easy task. This whole encryption feature reduces the risk of fraudulent bitcoin transactions.
How Are Bitcoins Traded?
Trading in bitcoin is just like any equity trading. In Bitcoin trading, the market price is speculated based on its future price movements. Based on the price assumption, the investors can either choose to buy or sell as per their choice.
Traditionally, bitcoin traders were only buying and selling this crypto through bitcoin exchanges. But the current bitcoin trading scenario is slightly different. More and more investors have started speculating using derivatives to make most of bitcoin’s price volatility.
As a beginner, one should stick to traditional trading and may bifurcate to derivatives when they feel confident with understanding the price movements.
Should You Invest In Bitcoins?
Many get attracted to bitcoin because of its uptrend graphs and the opportunity to earn a reasonable sum of passive income, which is not a wrong mindset. Still, one must also consider that the crypto market is highly volatile. And it does balance the volatility/risk with potential extreme profits.
Currently, bitcoin is referred to as “digital gold” because just like one invests in gold for profits from long-term appraisals, bitcoin is also seen as a long-term investment. It is common among crypto investors that bitcoin is a project that will give gains in the long term. Also, investing in bitcoins is an excellent way to diversify the investment portfolio and hedge against inflation.
Final Words
There is no doubt in saying the financial investors who have a bullish outlook for bitcoins in the cryptocurrency ecosystem believe that this coin holds the potential to become the first “global currency. Based on certain important points, it can be stated that Bitcoin is worth taking the risk, but before doing so, it is necessary to identify one’s appetite for risks. And based on that parameter, invest in bitcoins.
