What is Bitcoin?
Bitcoin is a decentralized, peer-to-peer, digital currency system, designed to provide online users with the ability to process transactions through a digital unit of exchange known as Bitcoin. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an undisclosed developer(s). Since then, Bitcoin has attracted much attention and controversy as an alternative to US dollars, euros and commodity currencies such as gold and silver.
Rise to popularity
Bitcoin did not attract much attention in the world of business and finance before 2009. It came to the fore in the period 2011-2012. when he got over 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 attach importance to cryptocurrencies.
In the first half of 2014, venture capital firms invested $57 million in Bitcoin in the first quarter, followed by another $73 million in the second quarter for a total of $130 million, up 50% from last year’s total of $88 million dollars. This is a stark contrast to the 2012 scenario where Bitcoin companies raised a relatively modest $2.2 million.
These statistics prove beyond doubt that Bitcoin is worth your investment, which begs the question, how can you buy and invest in Bitcoin?
Guidelines for Beginner Bitcoin Investors
The easiest and least complicated way to invest in Bitcoin is to buy bitcoins. There are many established companies, mostly in the US as well as abroad, that are involved in the business of buying and selling bitcoins, BTC for short.
If you live in the US, Coinbase is the place you are looking for. Coinbase provides BTC to its customers at an estimated 1% margin over the prevailing market price. United States residents have the option to sync their Coinbase wallets with their bank accounts. As a result, future payment transfers go smoothly. This company also gives you the ability to automatically buy bitcoins from time to time. For example, if you are interested in buying $50 in bitcoins at the beginning of each month, Coinbase allows you to set up an automatic purchase for that amount.
Please note the terms and conditions before using this service. If you have subscribed to an automated bitcoin service, then you will not be able to control the price at which BTC is purchased each month. Note that Coinbase does not function as a Bitcoin exchange, i.e. you buy and sell coins directly from the company. Because the company must source coins from other buyers, you may experience delays or interruptions when placing orders during rapid market movements.
BitStamp meets the requirements of a conventional bitcoin exchange. Bitcoin acts as an intermediary that allows you to trade with other users, not 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 in a 30 day period.
Alternative ways to buy Bitcoin
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 potential buyers and sellers. Bitcoins are kept from sellers in escrow and can only be given to buyers.
Buying bitcoins offline is not always very reliable or secure. So it’s a good idea to meet the vendors during the day and let a friend tag along with you in case things go wrong.
Bitcoin is not just a modern trend. Venture capital firms consider Bitcoin a decent long-term replacement for conventional currency. There are countless ways to enter the realm of bitcoin investing. As mentioned above, 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.