What is Bitcoin?
Bitcoin is a decentralized, peer-to-peer, digital currency system designed to allow online users to process transactions through a digital unit of exchange known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an undisclosed programmer(s). Since then, Bitcoin has attracted much attention and controversy as an alternative to the US dollar, the Euro, and commodity currencies such as gold and silver.
Rise to popularity
Before 2009, Bitcoin did not get much attention in the world of business and finance. In 2011-2012, it gained popularity by gaining more than 300% in value. Bitcoin has gained 400% since last August. As a result, venture capital firms and investors around the world continue to pay attention to 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, a 50% increase from last year’s $88 million. This is in stark contrast to the scenario in 2012, when bitcoin firms raised a relatively paltry $2.2 million.
These statistics definitely prove that Bitcoin is worth your investment, and the question arises, how can you buy and invest in Bitcoin?
A guide for novice investors in Bitcoin
The easiest and least complicated way to invest in Bitcoin is to buy Bitcoins. There are many established firms, mostly in the United States, as well as abroad, that deal in the purchase and sale of bitcoins, abbreviated as BTC.
If you live in the US, Coinbase is the place to be. Coinbase provides BTC to its customers at a price around 1% higher than the current market price. US residents have the option to sync Coinbase wallets with their bank accounts. As a result, future payment transfers are made hassle-free. This company also allows you to buy bitcoins automatically from time to time. For example, if you want to buy $50 worth of bitcoins at the beginning of each month, Coinbase lets you set up an automatic purchase for that amount.
Remember the terms before you start using this service. If you are subscribed to an automatic bitcoin service, then you will not be able to control the price at which BTC is purchased each month. Note that Coinbase does not act as a Bitcoin exchange, meaning you buy and sell coins directly from the firm. Because the firm must acquire coins from other buyers, you may experience delays or interruptions in placing orders during rapid market movements.
BitStamp complies with the requirements of a regular bitcoin exchange. Bitcoin acts as an intermediary that allows trading with other users rather than with the company itself. 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 Bitcoin
Exchange is not the only way to invest in bitcoins. Local Bitcoins are often used to buy BTC offline. The website is designed to connect potential buyers and sellers. Bitcoins are held in escrow from the seller and can only be released to buyers.
Buying bitcoins offline is not always very reliable or safe. So it’s best to meet with vendors during the day and have a friend tag along with you in case things go south.
Bitcoin is not just a modern trend. Venture capital firms consider Bitcoin a worthy substitute for regular currency in the long run. There are free ways for you to enter the Bitcoin investment sphere. As mentioned earlier, Coinbase, BitStamp and Local Bitcoins are the most popular channels to invest in bitcoin in the US. Do your homework and find out which prospect ticks all your boxes.