The Ultimate Bitcoin Invest Guide for Dummies 2022
Bitcoin has been at the center of investment options for the last two years, especially in 2021. People who never have heard about Cryptocurrency are now coming into crypto trading and investment primarily because of hearing about bitcoin. And there are true stories of many people who have been wealthy from bitcoin investments, even billionaires from it. We will be discussing all bitcoin investments – ways, risks, gains, and everything there is to know about it.
What is Bitcoin
Bitcoin is a digital currency, popularly known as Cryptocurrency, which the government of any country does not control. All bitcoin transactions get recorded in Digital Public Ledger, which servers worldwide share jointly. Bitcoin works on peer-to-peer network systems with cryptography for security. It is an intangible decentralized currency that can be mined, traded, stacked, or used for buying and selling.
How does Bitcoin work?
The simplest way to understand the working of bitcoin is to think of a ledger sender and receiver both have. If they make any transaction, the sender’s ledger gets debited, and the receiver’s ledger gets credited in bitcoin. But to properly understand the system, we need to know a few things first.
If we think a box contains all Bitcoin ledgers, the chain connects all these boxes. The system enables bitcoin transactions from one person to another through blocks.
Cryptography is the process of sending anything securely and receiving it at the other end and decrypting to understand its contains. Bitcoin relies on Cryptography entirely to provide security in transactions between the sender and the receiver.
The wallet is equal to digital bitcoin vaults where bitcoin is stored. Every wallet has an address known as a bitcoin wallet address, and we use the wallet address for receiving or sending bitcoin.
So when the sender sends bitcoin, three things are recorded – sender wallet address, receiver wallet address, and the amount. This transaction is inserted into the block with a cryptographic math problem and shared with everyone in that network. The user that first solves that problem with his computing power gets a bitcoin as a reward, and the system adds his solution as a valid block on the whole blockchain system. All in the network, these records are again shared to prevent anyone from misusing the received address or transaction amount.
Is Bitcoin safe?
Wallets store the Bitcoin, and like any other digital medium, they are hackable. But the security bitcoin transaction provides is best in standard, and that is entirely safe. However, when investing in Bitcoin, keep in mind that they are not safe from value fluctuations. So if you own 1 bitcoin in your wallet and withdraw after 5 years, the amount of bitcoin may be safe, but its value in USD will be changed completely.
Bitcoin Hardware Wallet
A hardware wallet is safer than a digital wallet. A hardware wallet is like a USB Drive where you store your bitcoin offline. When you need to manage or change your bitcoin investment or do any transaction, you insert the hardware wallet through the USB port in your computer and access your bitcoin reserve.
Bitcoin Purchase options
You can purchase Bitcoin through multiple options, but you must have a bitcoin wallet and a bitcoin address to store and receive the Bitcoin.
Cryptocurrency exchanges are the most usual options for buying or investing in Bitcoin. There are many decentralized, tax-free exchanges where you don’t have to pay the government additional tax for bitcoin investment. Below is a list of the most popular currency exchanges.
- Bisq etc.
You can buy and sell Bitcoin through PayPal here – https://www.paypal.com/us/digital-wallet/manage-money/crypto. You can start with just $1, but the transaction charges are higher than Cryptocurrency exchanges.
These brokers started trading in Cryptocurrency and traditional stocks, seeing the potential profit. Robinhood was the first among them, followed by SoFi, TradeStation, Webull, etc. You can directly buy bitcoins here or purchase future contracts to allow you to access bitcoin purchases.
Canada, the United States, Europe, and South Africa have Bitcoin ATMs. Here you can purchase bitcoin through cash or debit card. You must have a bitcoin wallet to receive since tangible coins will come out of the ATM. But the charges are very high compared to all other bitcoin purchase sources.
Peer to Peer Networks
Since many Bitcoin holders are ready to sell Bitcoin for fiat currency, you can buy from them directly. But this process involves risks since any organization or authority does not oversee this. Some cryptocurrency exchange networks like Binance have their peer-to-peer crypto transaction system, which is safer and offers various payment options.
Future of Cryptocurrency
People worldwide have been using Cryptocurrency as a viable investment solution more and more in the past two years. Although many traditional stockholders or fiat currency lovers question its viability since any asset of the same value does not back it, the investment margin in Cryptocurrency, especially bitcoin, is multiplying day by day.
Many of the fintech, ecommerce, and tech giants are not accepting payments in Bitcoin. To name a few
- Microsoft Xbox
- Coca Cola
- Visa etc
With more and more companies announcing to use the cryptocurrency system in 2022, the future of Cryptocurrency is brighter than ever.