What is Bitcoin?
Bitcoin is a decentralized, peer-to-peer digital currency system designed to allow online users to process transactions through the digital unit of exchange known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an unknown programmer. Since then, Bitcoin has gained a lot of attention, as well as controversy, as an alternative to the US dollar, the euro and commodity currencies such as gold and silver.
rise in popularity
Bitcoin did not gain much attention in the business and financial world until 2009. It rose to prominence in 2011-2012, when it won more than 300%. Bitcoin has seen a 400% increase in value since August of last year. As a result, venture capital firms and investors around the world continue to place importance on cryptocurrency.
In the first half of 2014, venture capital firms invested $57 million in Bitcoin in the first quarter, and another $73 million in the second quarter, totaling $130 million, which is 50% higher than last year’s $88 million. This is in stark contrast to the scenario of 2012, where Bitcoin companies raised a relatively meager amount of $2.2 billion.
These statistics definitely prove that Bitcoin is worth your investment, which begs the question: How can you buy and invest in Bitcoin?
A Bitcoin Investor’s Guide for Beginners
The easiest and most complicated method of investing in Bitcoin is to buy bitcoins. There are many established companies, mainly in the US as well as abroad, involved in the business of buying and selling bitcoins, abbreviated as BTC.
If you live in the US, Coinbase is the place you’re looking for. Coinbase offers BTC to its customers at a markup of 1% over the existing market price. Residents of the United States have the option to sync their Coinbase wallets with their bank accounts. As a result, future payment transfers are made hassle-free. This company also allows you to buy bitcoin automatically from time to time. For example, if you are interested in buying $50 worth of bitcoins at the beginning of each month, Coinbase allows you to set up an automatic purchase for that amount.
Please read the terms and conditions before using this service. If you are subscribed to an automatic bit coin service, you will not be able to control the price at which BTC is purchased each month. Note that Coinbase does not operate as a Bitcoin exchange, meaning you buy and sell coins directly from the company. Because the company has to pull coins from other buyers, you may experience delays or interruptions in placing orders in the fast moving market.
BitStamp fits the requirements of a traditional bitcoin exchange. Bitcoin acts as an intermediary, allowing you to trade with other users and not with the company. Liquidity is higher here and you always have a good chance of finding someone willing to trade with you. There is an initial fee of 0.5%, which can be reduced to 0.2% if you trade $150,000 within 30 days.
Alternative ways to buy Bitcoins
Exchange is not the only method of investing in bitcoins. Local Bitcoins are often used to buy BTC offline. The website is designed to connect buyers and sellers. Bitcoins are held by the seller in an escrow and can only be released to buyers.
Buying Bitcoins offline is not always very reliable or safe. That’s why it’s best to meet the dealers during the day and let a friend tag along with you in case things go south.
Bitcoin is not just a modern trend. Venture capital firms believe that Bitcoin is a decent substitute for traditional currency in the long run. There are no-nonsense ways to enter the Bitcoin investment arena. As mentioned earlier, Coinbase, BitStamp and Local Bitcoins are the most popular channels for investing in bitcoins in the United States. Do your homework and find out which avenue ticks all your boxes.