Should You Buy Bitcoin? What To Know Before You Invest

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Should You Buy Bitcoin? What To Know Before You Invest

Cryptocurrency has become increasingly popular, and there’s an ever-growing public interest in buying Bitcoin and other digital assets. As more institutional investors enter the cryptocurrency industry, investing in Bitcoin will be as easy as withdrawing money from your bank account.

However, it’s important to be cautious and do your research before purchasing digital currency. The industry is volatile, and fraught with technical jargon and sophisticated scams.

Bitcoin Basics

Like any other currency, Bitcoin can be used to buy or sell goods or services. As a decentralized currency, no single person or group controls Bitcoin. Traditional currencies are geographically and politically locked, but Bitcoin has the same value everywhere, and you can use it anywhere you have an internet connection. This means you can exchange Bitcoin with someone halfway around the world or your next-door neighbor, and it will hold its value.

All cryptocurrencies are secure because they are based on blockchain technology. The blockchain is a shared public ledger that uses cryptography to record the entire ledger. Bitcoin “miners” confirm transactions and add them to the public ledger. Once added, the transaction is permanently recorded, and is virtually impossible to hack or corrupt.

While it is a volatile asset, Bitcoin’s worth has reached new heights nearly every year, with its most recent all-time high reaching nearly $20,000 in December 2017. Every time Bitcoin’s price increases, more people get interested in cryptocurrency, and speculators make outlandish claims, from Bitcoin crashing to Bitcoin reaching $250,000 in 2022.

How To Get Started With Bitcoin

Cryptocurrency Wallets

The first thing you need to buy Bitcoin is a digital wallet. There are several types of wallets with different levels of security, depending on how you want to use and store your cryptocurrency:

  • Desktop wallets are downloaded and installed on a single computer. They’re very secure, so long as your computer is clean of malware, but they’re only accessible on that one device.
  • Online wallets can be accessed anywhere with an internet connection. These cloud-based wallets are more convenient, but there is a greater risk of getting hacked by a third party, as your private key is stored online.
  • Hardware wallets require a physical device, such as a USB drive, to make transactions. It’s more secure than a software wallet since the device only connects to the internet when you plug it into your computer. However, it can get lost or stolen.
  • Paper wallets are the most secure cryptocurrency wallets because nothing is stored online or on your computer, so it can’t be hacked or intercepted. This involves printing your keys on paper and storing it a safe place, but this may be inconvenient.

Earning Cryptocurrency

Once you have your wallet of choice, you can start earning Bitcoins in several different ways. You can purchase them directly from an cryptocurrency exchange, which is the most straightforward and easiest option, but there are risks involved.

For example, in 2014, Mt. Gox, once the world’s largest exchange, discovered that an attacker had stolen approximately 850,000 Bitcoins over the course of three years. Mt. Gox was shut down and new exchanges place higher standards of security to prevent this from happening, but the risk is still there.

Alternatively, you can mine cryptocurrency by running software on your computer and getting paid in Bitcoin for the work. It can be time-consuming, and somewhat expensive to purchase the necessary hardware upgrades, but it’s a safe process. You can also gamble Bitcoin, but this is extremely risky and not recommended.

Regardless of how you start loading your wallet, it’s important to review your security standards and watch out for the latest scams. Remember to keep your wallet key private, and be suspicious of anything that seems too good to be true.

Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.

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