- Launched in 2009, bitcoin is the world’s largest cryptocurrency by market capitalization.
- It has a circulating supply of 18 713 700 BTC coins and a maximum supply of 21 000 000 BTC coins.
What Is Bitcoin?
Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. It was created in January, 2009, by a group of people who use the pseudonym Satoshi Nakamoto. Satoshi originally described the need for “an electronic payment system based on cryptographic proof instead of trust.”
Since its public launch Bitcoin has risen dramatically in value. As the supply of Bitcoin is limited and is only 21 millions of coins, many people expect its price to keep rising only as time goes on, especially when more institutional investors begin treating it as a sort of digital gold to hedge against market volatility and inflation.
How Does Bitcoin Work?
Bitcoin is built on a distributed digital record called a blockchain. As the name implies, blockchain is a linked body of data, made up of units called blocks that contain information about each and every transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange. Entries are strung together in chronological order, creating a digital chain of blocks.
Blockchain is decentralized, which means it’s not controlled by any organization. While the idea that anyone can edit the blockchain might sound risky, it’s actually what makes Bitcoin trustworthy and secure. In order for a transaction block to be added to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders, and the unique codes used to recognize users’ wallets and transactions must conform to the right encryption pattern. This level of statistical randomness blockchain verification codes, which are needed for every transaction, greatly reduce the risk anyone can make fraudulent Bitcoin transactions.
How Does Bitcoin Mining Work?
Cryptocurrency mining is a transactional process that involves the use of computers and cryptographic processes to solve complex functions and record data to a certain blockchain. In fact, there are entire networks of devices which are involved in crypto mining and keep shared records via those blockchains. For adding blocks to the blockchain, miners are rewarded with a few bitcoins; the reward is halved every 210,000 blocks. in 2009, The block reward was 50 new bitcoins. On May 11th, 2020, the third halving occurred, bringing the reward for each block discovery down to 6.25 bitcoins.
How to Buy Bitcoin
Most people buy Bitcoin via exchanges, such as TBCC, for example. Exchanges allow you to buy, sell and hold cryptocurrency, and creating an account is similar to opening a brokerage account — you’ll need to verify your identity and provide some kind of funding source, such as a bank account or debit card.
It doesn’t matter where you buy your Bitcoin, you’ll still need a digital wallet where ou will store it. For this purpose, you can use a multifunctional TBCC Wallet.
Strategies For Investing In Bitcoin
In particular, investors may use one of the three most popular Bitcoin investment strategies:
- Buy and ‘Hodl’ Bitcoin
- Hold Bitcoin for a Long Term
- Trade Bitcoin On a Short-Term Volatility
Buy and ‘Hodl’ Bitcoin
Those who are already familiar with Bitcoin are probably aware of the concept between Buy and ‘Hodl.’ Those who aren’t, however, can get caught up quickly. ‘Hodl’ (an intentional misspelling of hold) is merely an investment philosophy. Short for “hold on for dear life,” ‘hodl’ suggests the best Bitcoin investment strategy is to hold it forever. Those who subscribe to this strategy are more than aware of the asset’s volatility but have a strong conviction for its prospects. Therefore, this strategy will require investors to bear many ups and downs of Bitcoin price fluctuations without selling it.
Hold Bitcoin for a Long Term
This strategy doesn’t differ so much from the first one, investors who want to hold Bitcoin for the long period of time are convinced that it will be appreciated over a long period of time. However, unlike the ‘hodl’ strategy, long-term holders may be inclined to sell once they are satisfied with returns.
Trade Bitcoin On a Short-Term Volatility
One of the most popular strategies for investing in Bitcoin relies on the asset’s volatility. If for nothing else, Bitcoin has become synonymous with violent swings in valuation. If you Simply look at a one-year chart of the price you will identify just how volatile Bitcoin can be, that fits for short-term trading. Not surprisingly, this strategy will have investors ride the ups and downs, selling at the peaks and buying on the dips. To sum everything up, this is definitely the hardest strategy and exposes investors to the high risks; however, it may also compound gains faster than the ones those were mentioned previously.
Bitcoin is a highly volatile asset that’s prone to large and fast swings in value, which presents an opportunity for large returns but also poses great risks. It is critical to investigate how to invest in Bitcoin attentively before making any decision. Diversify your investment portfolio to protect yourself from cryptocurrency market volatility.