Compare the Very Best Bitcoin Brokers and Choose yours Now. Buy Bitcoin with a Regulated Broker!
With more and more people becoming exposed to the work Bitcoin, the question that keeps cropping up is - 'what exactly is it?' Given the huge increase in price we have seen in Bitcoin, it is no wonder lots of people are getting enticed in by the stories of 'overnight millionaires'. However, it is poorly understood by the mainstream, so what is it?
Bitcoin, essentially, is digital money. Which, in itself, definitely raises more questions than answers them. Money is a worthless commodity that we have assigned a value to. When we say 'we', we mean humans, or more specifically central banks and governments, centralised institutions. Bitcoin is the same, it is something we have decided to assign value to. The 'something' is defined as a peer-to-peer payment system that uses cryptography to function as a private yet transparent ledger system.
Bitcoins value simply comes from people’s decision to place value onto this piece of software. It has been designed to follow the same path of common commodities like gold and oil. There is only so much of these two assets on the planet and the same applies to Bitcoin, it has a topside cap, once it is reached no more will be produced.
Another comparison it has with oil and gold is that it is mined. It is mined using powerful computers that complete mathematical algorithms rather than being dug from the ground.
Like both oil and gold, the price of Bitcoin is driven by supply and demand, fluctuating dramatically at the moment due to the new phenomenon of the crypto market. It therefore is acting like a valuable commodity or even like stocks and shares. But there is something that differentiates it.
It was created to be used as a digital currency but the hope was that it revolutionises the currency market, whereby it is not controlled in a centralised system. Bitcoin uses no banks and no central banks. It is accessible to everyone regardless your location in the world, assuming you have internet access.
Currently central banks control money supply, they have the power to give and take money from an economy. Meaning the average Joe is merciless to the rules and regulations they enforce. Money is difficult to move across borders, banks charge fees for accessing your own money and even spending money is regulated by banks.
Bitcoin is different, it is a decentralised monetary system as well as an anonymous currency. Bitcoin transactions are sent from a digital address to another, each address is identified by its own set of random numbers and letters. You only send to the address (wallet) and do not know who owns that address nor where the transaction has come from.
Bitcoin being the market leader in the crypto world has lots of different ways in which you can buy the cryptocurrency. You can buy directly using various exchanges with your credit card. The likes of Coinbase allow you to buy directly using your credit card, which is considerably quicker than linking your bank account to your Bitcoin wallet. Coinbase offers two other cryptocurrencies; Ethereum and Litecoin.
Using a credit card however does limit the amount of digital currency you can buy and there are also the same associated fees attached to your credit card as there are anywhere else you use it.
Coinbase does require verification that the credit card is yours, and they do this by charging the card a small amount. You must then confirm the amount for your card to be accepted on their platform.
There is also a daily limit to the amount of Bitcoin you can purchase using your credit card.
Another widely asked question is whether you can buy Bitcoin using Paypal. Coinbase is an exchange that supports Paypal and allows you to buy Bitcoin. If you are a US citizen, you can link your Paypal account to Coinbase however for the moment you can only withdraw your fiat currency. You cannot deposit into Coinbase using Paypal.
Again, with Coinbase, you will be required to verify your Paypal account before they are linked.
Bitcoin is 100% the easiest cryptocurrency to get your hands on. As it is the first cryptocurrency, nearly every exchange offers you the chance to buy and trade Bitcoin. Most of them require you to buy Bitcoin first in order to trade for other coins.
There are a few different ways in which you can buy Bitcoin, you can buy directly off another person, you can use a Bitcoin ATM machine or arguably the easiest is to buy using an exchange.
One of the most popular and trustworthy exchanges is Coinbase. It has a huge customer base and services a large portion of the Bitcoin traffic around the world, especially in the US and is also widely recommended (just like I am doing here).
Trading Bitcoin depends on the level of exposure you want on the cryptocurrency. The process we have just identified means that you are the owner of the actual coin. In order to trade it you must own it first. This limits you to only making profit from the Bitcoin market by buying low and selling high.
The other option is to trade Bitcoin on leverage, this means that you do not need to front the full size of the trade, the broker will pay the rest of the trade. This method also allows you to short sell the market, meaning you can take advantage of price fluctuations in both directions.
If you want to trade Bitcoin by owning the actual cryptocurrency there are various sites you can use; Polonies, Bittrex, CEX and many more.
If you are interested in trading Bitcoin on leverage, you must go through a broker. All brokers are similar and different at the same time. They will offer you slightly different rates and customer service. We highly recommend you use a broker that you trust, this obviously comes with time. Below are the brokers we have tried and tested and feel give the best service to their clients.
All five have very low minimum deposit amounts, which means you can deposit a small amount and test the brokerage out before committing a larger portion of your capital.
Rather than asking 'should I buy bitcoin,' what you are in fact doing is asking 'whether you should be getting into cryptocurrencies.' This is because bitcoin is the Granddaddy of all of them, where Bitcoin goes, the rest follow. It is usually the first place new investors go before looking at other coins.
There are definitely other cryptocurrencies out there and just because Bitcoin was the first doesn't mean it will always be first. Does it have the potential for further growth? Will it ever be stable enough to actually work with? Does it have longevity? Or is it simply a bubble getting ready to burst?
To address the first point, you should get involved with cryptocurrencies, the reason this market is going up is because of peoples fear of missing out and until that ends, jump on the band wagon while it’s still there!
Bitcoin has had a meteroric rise in the past 12-18 months. From a once contraversal point in Bitcoins history, where a miner was deemed to be forcing the price up abnormally. This period was when the coin cost between $2-4. Now, we have seen it soar through the $4,000 mark, and experts claim that $12,000 is the next target!
There is nothing on the plant that can boast those kinds of returns for an investor, especially with Bitcoin being so readily available to the public, it is an exciting prospect.
People are seeing the coin as the future of money, to revolutionise currencies but its primary function for casual investors is to act as an asset, something they can hold and see returns on a price increase. Bitcoin definitely defines high risk, high reward because of its huge volatility. The growth was so quick but we have also seen similar speed in the decrease in the price, so if you can't stomach huge profit and loss swings, maybe Bitcoin isn't for you.
Caution is advised when approaching cryptocurrencies because they are an unknown quantity. Such a new market can throw up so many questions and vulnerabilities, so for all its excitement, do not invest your life savings into it!
If you are already in the crypto market and want to know which basket your eggs should be in, then you should feel safe with Bitcoin. It is the original and while there are new coins being developed all the time there is no denying that Bitcoin is still the king. As mentioned earlier, the current trend is, where Bitcoin goes, the rest follow.
Furthermore, because Bitcoin was the first it is the easiest to get your hands on, it has the most functions, support, stability and recognition. It should be an investors first port of call.
There is, of course, still a lot of scepticism surrounding Bitcoin, especially given Chinas recent decision to ban all crypto exchanges and ICOs, as well as the chief exec of JP Morgan claiming Bitcoin is fraud!
Despite the recent negative press Bitcoin has had it is still holding at a decent level, investors got nervous but that appears to have subsided. One thing it certainly has on its side is its originality and that for those who are in the crypto market, it is the cryptocurrency everyone still looks to for forward guidance.
There are lots of superfluous coins on the market at the moment that are trying to compete and better Bitcoin, however the majority are failing. For a small handful that look like real competitors, none have come close, and the ones that are close are still behind. Bitcoins infrastructure has the most support and stability in this hugely volatile market, so it is still an attractive investment option.
Will it ever be considered a safe investment? The chances are slim. But will financial advisors ever consider adding it their clients portfolios? Not any time soon but there is potential for their high risk clients in the future.
The next step would then be robo-advisors, however these are programmed to invest in assets that are research proven to out perform others. The history of Bitcoin is comparatively young to other assets and so the chance of any robo-advisors investing in Bitcoin any time soon are very, very low. More information on the best robo-advisors can be found at roboadvisors.com.
Bitcoin is not perfect, being the first cryptocurrency, it learnt the hard way. Every hurdle a cryptocurrency might encounter, it encountered, but also managed get past those hurdles. Scalability was the last problem it had, with developers and miners locking horns about the right direction to take the cryptocurrency. This created a fork in the currency and led to the birth of Bitcoin Cash. For more information, here is a guide to Bitcoin Cash.
Bitcoin is not going anywhere, the debate is whether there will be a new start up coin that provides innovative technology and longevity to compete with Bitcoin and knock it off its perch. The chances are, it will happen, when? Not any time soon anyway.