To buy or not to Buy Bitcoin, that’s the question! - BTC 2021 Guide
Ten years ago, Laszlo Hanyecz went to his computer and launched an offer that would forever change the financial market's story. He offered 10,000 Bitcoins to a person who would bring him a couple of Papa John's Pizzas.
"I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day," Hanyecz wrote in the crypto forum bitcointalk on May 22nd, 2010.
It happened to become the first-ever tangible article purchased with Bitcoins. In 2010, the total cost for the transaction was 41 dollars. Today, if you want to buy 10,000 Bitcoins, it would cost you over 194 million dollars.
Whatever you think it was the worst, period, transaction, period, in the history of investments, period, or you think it was a milestone that Laszlo wanted to reach, Bitcoin is here to stay. So, the best option for you right now is to understand the basics of the crypto king.
How to buy bitcoin? What is bitcoin trading? How to keep your BTC safe? All these questions are critical information for investors who want not just to catch a trend but to become a successful trader.
What is Bitcoin
Today, everybody is talking about Bitcoin. Even big companies such as PayPal are offering the option to buy Bitcoin. Traditional banking institutions like Fidelity and key market players such as S&P Dow Jones are introducing mutual funds and indexes based on digital assets.
Now, you can buy Bitcoins as quickly as you would purchase a cup of Coffee in a Starbuck's before arriving at your working space. However, ten years ago, it wasn't the same way when an unknown person or group of people called Satoshi Nakamoto invented Bitcoin in 2008.
Nobody knows who Satoshi Nakamoto is, but a paper under his authorship was published on October 31st, 2008, Bitcoin: A Peer-to-Peer Electronic Cash System. Later, Satoshi implemented Bitcoin as an open-source code. The genesis block, yes, like The Matrix, was created on January 3rd, 2009.
This kind of real-world version of the Matrix movie was designed as a counterpart of the traditional government backed fiat money system. Bitcoin creators were tired of the eternal money printing measures implemented by central banks and governments and how they control society.
Thus, Satoshi's team designed a decentralized network where people would be able to deal with no third parties and with rewards to those who make it possible and provide support: The Bitcoin. It was, in fact, a fight against The Matrix.
Blockchain, the technology behind Bitcoin
People usually don't understand what Bitcoin is and why it has value. Well, the best way to understand that is to identify what is behind the crypto king— the Blockchain.
We have a dedicated article about everything you should know about this new technology and the network that is being implemented. But overall, it is a decentralized network where all the information is recorded in each block. That is why it is called the block chain.
Read: "What is Blockchain - The Beginners Guide"
The philosophy says it is virtually impossible to fake the network because every block acts as a witness to what is going on. In other words, the information is in the hands of everybody, not in a single centralized center of power.
Then, how much is Bitcoin value? Well, it depends on how much you think the whole Blockchain is valued. Read more about Blockchain in our 2021 Guide.
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The Bitcoin’s box
Author: Satoshi Nakamoto Market Cap: $360B Volume (24 hrs): $25.6B Circulating Supply: 18,5M BTC Max Supply: 21M BTC All-Time High: $20,800.00 (Dec 2017)
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Bitcoin mining - How are Bitcoins generated?
As commented earlier, the Blockchain, and the Bitcoin coin perse, exists because of the network. So Satoshi Nakamoto designed a way to have a sustainable net of workers that would make Blockchain possible. He also decided that those workers would get rewards for their service to the community.
In the industry, the work and rewards those enthusiasts do and get are called mining. There are three main ways of getting bitcoins: You can buy it, you can exchange it, or you can mine it.
Mining is the process when people add transaction records to the Blockchain, Bitcoin's public ledger. It also is the process of solving the network's problems and then obtaining Bitcoins.
Basically, they use mathematical formulas and algorithms to the data, and then they turn that into cryptographic structures, called "hash." It includes the new information, but also all the previous data stored in the network.
Every hash contains all the information and represents a sequence of the data. So, if you change a bit of it, it would change everything. In that line, if a hacker tries a fraud, it would be spotted by the community.
The reward is halved by half every 210,000 blocks. So, now, people who mine Bitcoins get 6.25 BTC for the hash, while in 2018, it was 12.5 BTC, 25 in 2013, and 50 in 2009. Profitable enough?
In the beginning, they were just people with a computer and a lot of time to spare in the Blockchain. Today, there are companies focused on the mining of Bitcoins. It requires a lot of energy and computational power. Some companies are Poolin, Antpool, F2pool, BTC.com, and ViaBTC.
According to Satoshi's Bitcoin white paper, BTC generation would be stopped at 21 million BTC, when the maximum supply would be reached. It is a cornerstone of Bitcoin philosophy, as the roof would restrain the money printing characteristics of the traditional money system.
Investing in bitcoins
There are two ways to buy Bitcoins. Depending on your motivations, you can either buy and sell Bitcoins, or you can trade cryptos. If you see a future in the whole crypto industry and see bitcoin as the one to break the Matrix and blockchain becoming the standard for every industry.
In that case, you will be more willing to use Bitcoin as a fiat currency alternative to make your regular purchases.
On the other hand, you can decide to take it as another asset and trade bitcoin to make money with price increases and decreases. In that case, you can either buy the underlying asset or invest with CFDs in brokerages such as eToro, Plus500, etc.
How to buy Bitcoins in exchanges
You can first buy the underlying asset in an exchange platform such as Coinbase, Gemini, or Binance. You will have to keep your BTC safe using a hot or cold wallet, and you will be the sole owner of that crypto asset.
The process is easy. Open an account in a trustable crypto exchange. Second, fund your wallet with money and identify the deal you would like to do. Finally, buy the bitcoin and close the deal. Usually, you can buy bitcoin with debit cards.
Finally, you can also sell it in the same exchange or on another platform, as Bitcoin is not associated with the platform but with you with your very own personal crypto address.
After that, you should think about security. Would you keep your Bitcoins on the platform, or do you prefer them in your own wallet?
How to trade bitcoin in a broker
Another way to buy and sell bitcoins is by trading them via contract for differences. In that way, you would deal with bitcoin prices, but you will not own the underlying asset.
When trading Bitcoin, you would open BTC positions against another crypto or fiat currency such as BTC/USD, BTC/EUR, or BTC/EUR, among others. You would make money with price differences. For instance, when you buy Bitcoin cheaper, and you sell it at a higher price.
In the same way, you can also make money with Bitcoin CFDs when you sell the crypto asset expensive, and then you close the position at a lower price.
The process of doing day trading with Bitcoin is easy. First, open an account in a trustable brokerage that offers CFDs of Bitcoin and other crypto-assets. Then, fund your account with your debit or credit card. Complete all the requested information and finally start trading.
When trading Bitcoins, you shouldn't care about your Bitcoin's safety as you don't have to keep the underlying asset. However, it is essential to open an account in a regulated broker that offers top security.
Bitcoin Security - How to keep your BTC safe
It always happens. No matter how hard you have worked for your money and your Bitcoins, some individuals are still waiting for the precise moment to steal it from you. That's why it is so critical to understand the best ways to keep your Bitcoins safe.
In the crypto world, you should take care of your Bitcoins with a crypto wallet, which is a solution that helps you store your digital assets safely. Basically, it keeps your assets safe with a private key, which is the wallet's address.
It could be hardware, like a portable memory or USB, software, a platform, or a hybrid device. They are also known as hot and cold wallets.
Hot wallets are the ones that are connected to the internet. You can have access to them via a platform, and all your information is stored online. On the other hand, cold wallets are devices and hardware that are offline, and you only connect them to the internet to make the transactions.
Cold wallets are the safest way to store your Bitcoins. Think about that like a safe that nobody, but you, can enter. The only con is that you should remember your key as it is the only way to open these wallets.
If you would like to add a layer more of security, try using a hybrid wallet that combines a cold wallet's independence but the real time information feature of a hot one. Plus, an aggregate that allows two-factor authentication or 2FA.
This way, you'll have to prove at least one more time it is actually you trying to access your Bitcoins. The 2FA could be sent to your email, phone, and more.
How to avoid Bitcoin scams
Security is vital with bitcoin, but another fundamental topic is avoiding scams. Bitcoin transactions are irreversible. It can't be undone. That's why all trustable market players in the crypto sphere and governments alert against scams.
"SEC and CFTC staff have recently observed investment scams where fraudsters tout digital asset or "cryptocurrency" advisory and trading businesses," the regulatory body in the United States says. The ultimate tip: If it is too good to be true, it would probably be not good.
Here essential tips to stay safe:
Don't share your wallet address with anybody
Don't give anyone your two factors of authentication
Never give support staff key details of your account nor remote access to your computer
Avoid those companies that guarantee instant gains and millionaire outcomes
Pay attention to free giveaways, read the small print, terms and conditions.
Watch out for impersonations, scam artists, and pseudonyms
Don't click suspicious links
Finally, as the Federal Trade Commission of the United States says in a report, remember that "most crypto scams can appear as emails trying to blackmail someone, online chain referral schemes, or bogus investment and business opportunities. But here's what they all have in common – and what they have in common with yesterday's Twitter hacks: A scammer wants you to send money, or make a payment, with Bitcoin or another type of cryptocurrency. Once you do, your money is gone, and there's generally no way to get it back."
Should I buy bitcoin?
Bitcoin is the future, and the future is now. The crypto king is the biggest, most traded and invested digital currency globally, and governments and traditional banking are taking steps to normalize its inclusion in the investing industry.
However, it is imperative to learn everything about Bitcoin before investing and buying the digital asset to make the best decisions. Keep reading about BTC here at dobuybitcoin.com. All the guides about the crypto markets, including Bitcoin trading for beginners, top altcoins, and opportunities and advantages in the industry.