It goes without saying that everyone by now knows what Bitcoin is. It started the year of 2017 with a value of $1000 USD and it has since smashed the $10.000 USD record (and more than that). So naturally, everyone is curious if they should either invest in mining, trading or leave such things to the experts?
First things first – Bitcoin is a currency and that means its value is incredibly volatile. Investing in Bitcoin is essentially buying the currency. The highs and lows of bitcoin’s unpredictable nature may discourage many of its possible investors, but that doesn’t stop some from going in at full throttle.
Investing in Bitcoin
What does investing in Bitcoin actually mean? That depends on what you plan on obtaining. These are a few investment methods:
Buying and Holding
The most practiced method of investing in this Cryptocurrency, also known as ‘holding’, is buying with the prospect that its value will grow. The principle is pretty simple: if you think the price will rise, you decide upon a favorable time to buy.
The current price of Bitcoin makes it a risky investment. Be sure not to put in more money than you are willing to loose.
After you have bought your Bitcoins, make sure not to leave them on the exchange platform and move them to a secure, personal wallet. Be careful to always check the reputation of the exchange before buying.
There is a buying technique that has the purpose of averaging the price over the course of a year by buying Bitcoins in more trades in fixed amounts every month, week or day throughout the day.
Trading Bitcoins means that you are purposely seeking to find the lowest price to buy the coin and then sell it back at a higher price in a short time interval. Trading with successful results takes lots of practice and knowledge and this kind of market should be approached with caution as there are a lot of experienced traders and scammers waiting for you to make an unwise move.
There is a category of investment that implies mining the Bitcoins. Nowadays, Bitcoin has become profitable only if mined in large groups or pools. For such process, you need to buy expensive mining equipment and be prepared for a steep electricity bill. It has been proven that buying Bitcoins is more cost efficient than using the same amount of money to buy mining equipment.
Performant hardware is not the only thing you should take into consideration. Mining software is also a criterion in the matter.
There is also the practice of cloud mining which uses outsourced hardware to mine for those that do not have the means to invest in mining devices. A great majority of cloud sites are scams which only take money and don’t actually produce any Bitcoins at all. And those that are not scams produce less Bitcoins than if you were to buy them.
Pooled mining is practically the only way you can mine Bitcoins and not wait for a lengthy time period to have some results. The downside is that you receive only a fraction of the cut due to the fact that the block reward has to be split among the pool’s users.
Bitcoin companies and other HYIPs (high yield investment programs)
There are many companies that claim they can double your Bitcoins by giving you a huge daily interest or by promising to help you invest in some elaborate get-rich scheme. There are sites that host investment programs, but a large majority of those turn out to be also scams.
The principle behind such operations consists of taking money from interested investors with the promise that they shall receive tenfold their investment. At first, they will pay some of these returns from the sign up money they accumulated through their campaign. This will continue for a few months and then the whole operation will disappear into thin air.
The fear of getting scammed is legitimate and real because Bitcoin is a decentralized virtual currency that has no regulatory framework implemented by financial institution. That mean that loses cannot be backed up by authorities.
Yes, the Bitcoin market seems like it is lurking with malevolent force, trying to dupe and take your money, but a very few who have been wise about their investment strategy have reaped the benefits of their hard work. Some had extremely good luck and cashed in on the unexpectedly high increase in Bitcoin value.
In addition to price fluctuations and a possibility of a bubble burst, investment in Bitcoin has become incredibly hard due to the increasing numbers of newbie miners and evolving complexity of the block solving algorithms.
Investment in Bitcoin is not for the faint of heart, but if you’re willing to make a few sacrifices for the long-term financial potential, you shouldn’t wait any longer.