It is never too late to start investing, and it is never too late to explore more when it comes to investing. This is why today, we are here to talk about bitcoin and other cryptocurrencies, how they work, and to what extent they are profitable. Now, we do not intend to be persuasive in any way, as we understand that personal finance is a critical part of everyone’s life. Our purpose is solely to inform and educate about the crypto exchange. On that note, let’s get started! With the proper guidance from our end, you will broaden your horizons in the investment world.
What Is Cryptocurrency?
Cryptocurrency is a type of currency that makes use of digital files or digital assets as money. The concept of crypto trading comes under decentralized exchange, which means that it is not controlled by a single person or even a single government, for that matter. Many kinds of cryptocurrencies are floating in the market, such as Bitcoin, Bitcoin Cash, Ethereum, Binance Coin, Tether, Cardano, Polkadot, and the list goes on.
Out of all these cryptocurrencies, Bitcoin is the leading one and has the most investments. So, let’s take the example of Bitcoin and further understand how investing in cryptocurrency works.
First Of All, What Is Bitcoin?
Bitcoin is nothing but one of the many cryptocurrencies, but it stands out that it is the most primarily purchased one. This is because it has shown strong market movements over the years, causing many people to profit from it. It has a substantial buzz in the market, making a magnificent impact in the world of digital currency.
How Do Bitcoin Or Crypto Exchanges Work?
There are several “digital wallet” applications that you can access through your smartphone. In this wallet, you can mine bitcoins, and as a reward for completing the blocks, you get a bitcoin in your wallet. The bitcoin that you have incurred gets saved in the form of a computer file, and you can send and receive these bitcoins from other investors. The transactions made by you and several other users go on record in the form of a blockchain. In the same way, your trade volume and number of assets also go on record. As per the daily value of Bitcoin, you can make a profit or loss.
Well, this was just a gist of how Bitcoin works. But to answer the ultimate question- whether you should invest in Bitcoin or not, we need to address a much important question which is:
How Has Bitcoin Performed Over The Years?
Bitcoin was launched in the year 2009, and at that time, its value was $0. In December 2017, it was at $19.497. Now you may be thinking that the growth is truly commendable, but it is highly volatile; Bitcoin’s value fell to $6,603 in April 2018. In the same way, the value of bitcoin has been fluctuating and continues to do so even today. As of April 2021, the value of Bitcoin is $62,000.
Bitcoin has outperformed itself many times but has also seen significant falls in its journey. And similar is the case with other cryptocurrencies. So, how do we know whether investing in bitcoin and crypto is the right thing to do or not? Let’s find out.
Is Investing In Cryptocurrency, Particularly Bitcoin, Worth It?
There is no full-proof answer to this because, as mentioned previously, bitcoin and other cryptocurrencies function in an almost unpredictable manner. They fluctuate regularly and can sometimes get extreme in terms of profit and loss. To gain fruitful results, you need to be updated with its value every day to know when to buy and sell. More importantly, you need to have a high-risk tolerance in terms of finance and investment. Buying bitcoin or any other cryptocurrency for that matter can prove to be a good investment only if you are knowledgeable and well-informed each day.
Now, let’s assume that you have managed to get the hang of trading cryptocurrency and profit from it; what can you do with it? Keep reading to find out.
How Can You Use Bitcoin And Other Cryptocurrencies?
Considering the popularity of Bitcoin, many companies and businesses have started accepting Bitcoin as a valid method of payment. Some of the most significant companies that accept Bitcoin are Home Depot, Microsoft, Starbucks, etc. Moreover, both- Apple and Android smartphones enable you to make transactions by simply converting your Bitcoin to fiat cash. Apart from that, other cryptocurrencies are also trying to make their way to becoming a payment method, but not many businesses are accepting them.
Can You Turn Bitcoin Into Cash?
The answer is yes. As mentioned above- smartphones have enabled making transactions by instant converting Bitcoin to cash; however, this is mainly while booking airline tickets. There are trading platforms such as Krake, Coinbase, and so on that allow you to convert the value of your Bitcoin into actual cash.
Now that we have come to the end of this discussion let’s answer one of the most commonly asked questions regarding bitcoin and crypto trading.
Are Bitcoin And Other Cryptocurrencies Legal And Safe?
Legality-wise, it ultimately depends on your country. Bitcoin and other cryptocurrencies are legal in the developed and progressive nations such as the USA, Japan, U.K, etc. Besides, specific taxation guidelines are also in these countries for crypto exchange. Other than that, in most countries, this trading system is not banned. Since cryptocurrencies come under a decentralized control, a single government cannot impose a ban. However, some governments collectively have worked to create stricter restrictions and jurisdiction policies in exchanging cryptocurrency.
Safety-wise, there are possibilities of your account being hacked, considering that everything about the concept is on digital platforms. However, by taking specific measures to guarantee that your profile is safe and free from cyber attacks, you can ensure safe and secure crypto trading.
All in all, like any other kind of investment, there is a fair share of risks involved in cryptocurrencies, and likewise, Bitcoin. However, they continue to be some of the hottest commodities in the world of digital trading, as they have outperformed almost all other assets, including digital gold, the stock market, etc. Make sure that you are well informed about your country’s policies and guidelines regarding cryptocurrency, ensure the safety of your digital wallet, and you are good to go.