Bitcoin has really been having a moment in the past few years. More people than ever have begun to invest in this form of cryptocurrency and the value of bitcoin has skyrocketed over the past few years.
If you’re considering buying bitcoin yourself, you may be curious how the whole world of cryptocurrency works. It goes without saying that bitcoin can be a bit complex and hard to follow, so if you’re new to the idea of investing there’s a lot to learn and get familiar with.
Luckily, we have the perfect bitcoin for beginners guide to help you work through the ins and outs of this new form of currency. Ready to learn? Read on and we’ll walk you through what you need to know.
Understanding Cryptocurrency
Over the course of human history, we’ve used a lot of different things as currency. Today, we use bills created by the government in the country in which we reside. In the past, rare precious metals, shells, wheat, and all sorts of other items were used as currency.
Cryptocurrency is a modern concept of currency flung into the digital space. The currency that is defined as cryptocurrency would exist in the electronic realm, protect the identity of its users, and be rare enough so as to provide value.
This is a key trait of crypto. Just like real currency, you can’t just ‘create’ it from thin air. It’s rare and it takes work to produce. People ‘mine’ bitcoin at their computer, and this process takes a lot of computing power and many hours of work.
Bitcoin was created by an anonymous source way back in 2009 under the moniker of Satoshi Nakamoto. To this day, no one knows the true identity of the inventor.
The idea behind cryptocurrency was to allow the individual more control over the currency. When the government prints money, they also control it. They can prevent you from taking money out of an account in a time of crisis, for example, even if it’s rightfully yours.
Cryptocurrency was created in an effort to produce a currency that could function completely peer to peer, without the influence or interference of large banks.
Bitcoin Mining
Where does bitcoin come from? As we mentioned, it comes from a process known as mining. A computer is required to work through an incredibly difficult math problem, more or less, in order to create a coin.
Every bitcoin that is mined is recorded as part of the public record, which is shared across several thousand computers on a leger known as the blockchain.
Why several thousands computers? Having the record in so many places at once ensures it would be near difficult to hack or falsify records. Every bitcoin transaction is logged on this global blockchain as well.
Because bitcoin is created without the aid of any government, world governments have no control over it. By the same token, however, many countries don’t allow it as legal currency as a result.
Cryptocurrency Investing
If you can’t use bitcoin as direct currency, why go through the trouble of buying bitcoin? It’s because many people view it now as an investment and form of money storage as opposed to direct currency.
The fluctuating and unstable price of bitcoin is one of the major reasons most world governments won’t accept the asset as an official form of currency.
It’s helpful to look at it more like a stock that can be traded on the stock market. The price of bitcoin may rise and fall, allowing your initial purchase to appreciate in value (or depreciate in value, depending) over time.
People who bought bitcoin back near its conception have made hundreds of thousands of dollars in profit as the value of the asset increased. The price is often quite volatile, swinging up or down 10% a day.
Today, many large companies allow bitcoin to be used directly for purchases. An increasing number of major brands seem interested in getting into the cryptocurrency space.
Purchasing Bitcoin
Where would you need to go if you were ready to make an investment in cryptocurrency yourself?
It’s actually quite simple. There are a wide variety of outlets that sell bitcoin and it’s often as simple as providing your credit card information. You’ll be charged for the amount you’ve purchased and receive the equivalent amount of bitcoin in return.
In most cases, you’ll be purchasing a fraction of a coin, as the price of a bitcoin has hit record highs. It’s more than the average person likely wants to invest.
Coinbase and Coinmama are two popular bitcoin purchasing options in the United States, or you could try VirgoCX if you live in Canada.
In most cases, all you’ll need is a credit card. Some places might require that you fill out an application that might request a large amount of background information. There will be fees that vary from provider to provider.
It’s best to shop around when looking to purchase bitcoin to ensure you get the best possible deal.
Bitcoin for Beginners
Bitcoin has been a major subject of the news cycle for many years now, but that doesn’t mean that everyone has a perfect understanding of what this form of cryptocurrency is really about. The above information can help cover all the basics of bitcoin for beginners.
You should be ready to start investing with ease in the world of cryptocurrency.
Need more personal finance advice and information? Keep scrolling our blog for more.