A Beginner's Guide on Why and How to Invest in Bitcoin?

Shailesh  |  Mar 17, 2020

People all around the world still fancy whether it is a good time to invest in Bitcoin or any other cryptocurrency. Bitcoin is the most significant cryptocurrency in the market, and it has gained attention from several nations and people across the globe. These cryptocurrencies are virtual assets that do not exist like traditional currencies. They facilitate the way we can do a transaction without any involvement from the third party. At present, we, as a sender or receiver, have to deal with a third party which facilitates a transaction. The main goal of Bitcoin is to free transactions from any form of the mediator, and due to this particular feature, this cryptocurrency has gained the largest market capitalization. However, not, many people know how to invest in Bitcoin, which is why this blog is meant to help you.

Nowadays, the internet is loaded with a number of websites that offer crypto news and articles. In this article, I will discuss whether it is too late to buy Bitcoin or any other cryptocurrency.

A Brief Look At The History Of Bitcoin


Bitcoin was launched in 2009 by a group which described itself as Satoshi Nakamoto. A whitepaper was issued by this group, which gave some insight about this peer-to-peer digital cash system. The idea behind its launch was to introduce something which would eliminate the mediator who takes part in the transaction or a regulator who controls our money. Bitcoin started its journey with a price tag of $0.30 in 2011, and after some years, its value multiplied tremendously. At that time, about 10000 Bitcoins were used by someone to order just two pizzas. This transaction can now be regarded as the most expensive one, as the price of each Bitcoin has now reached more than $8000. It has become the only cryptocurrency which has seen such tremendous growth within a decade.

Blockchain, The Technology Behind Bitcoin


Blockchain is an underlying technology behind Bitcoin. It is a decentralized network which facilitates peer-to-peer transactions between the senders and receivers. In simple words, blockchain is a never-ending chain of blocks. These blocks could have any piece of information such as date, time, amount or any other thing that could be related to the transaction. Each block stores a unique code referred to as 'hash', which uniquely identifies a block within a blockchain system. Earlier, the size of a single block in the Bitcoin blockchain was 1 MB, but after some year, some people demanded to increase the size of the block so that larger transactions could be supported by the network. This resulted in a 'fork' which gave birth to a new cryptocurrency known as Bitcoin Cash(BCH). Although the size of each block increased, Bitcoin retained the top position due to its previous popularity. The blockchain system contained millions of computers to verify transactions, and each transaction could not be reversed within this system. Thus, a system was introduced, which eliminated the third party and which was completely decentralized.

Reasons Why Bitcoin Became a Bubble


Bitcoin Bubble


In a single year, this cryptocurrency saw a 28 times growth in its price before a drop of 60%, and this event became a main event in the crypto world which came to be known as 'Bitcoin Bubble'. Here, I have provided a price chart which can tell you why Bitcoin gained the status of a bubble.

  1. In 2011, Bitcoin started its journey with a price tag of 30 cents or $0.30, and within some months, the price reached $30. However, in the end, it again reached $5, which made Bitcoin the biggest bubble. 
  2. In 2013, Bitcoin started with $15, and by the middle of March the price reached $50, by next month one Bitcoin was valued $100, and within two weeks its value doubled making a Bitcoin worth approximately $230.
  3. In 2017, the value of Bitcoin reached $900, and at the year's end, it was at $20000(this was the second-largest bubble). 
  4. In 2018, the value dropped and reached $8000, and since then the cryptocurrency has not shown any sharp growth. 
  5. Thus here, it could be concluded that Bitcoin became a 'bubble' just because it showed huge growth in its price and a massive coverage from the media.

    Which Is The Best Place To Buy Bitcoin 


    Basically, the best place to sell and buy Bitcoin is LocalBitcoins, which is the most significant Bitcoin exchange platform that helps match Bitcoin buyers and sellers reside at a very close distance and could enable online transactions. Also, this exchange service offers an escrow service, which was introduced to bring fairness for the platform's users. Besides this, there are also other crypto exchange platforms such as Binance, BitMEX, Coinbase and many more.

    Why Is Cryptocurrency The Future?


    Almost every potential investor whom I've met has asked at some point the question- What is the future of cryptocurrency or Bitcoin? Digital currencies possibly will proceed to settle into stable products, niches, and uses, becoming a viable alternative to many fiat currencies. Unregulated crypto space is both undesirable and strange, as governments are willing to maintain their monetary policies and decrease the impacts of untamed crypto. Bitcoin, together with other cryptocurrencies, could see increased stability and general use, as less popular cryptos would gain adoption for specific purposes and industries.

    Although cryptocurrencies cannot be trusted at present, there are certain coins that have gained the status of Stablecoins. Stablecoins are coins which are backed by some fiat currency such as a dollar or a euro. Apart from this, they can also be backed with another cryptocurrency or some precious metal. The price of Stablecoin does not change, and they can be considered a safer investment. At present, the digital currencies that have gained the status of Stablecoin are TetherUSDT, USD CoinUSDC, Paxos StandardPAX, TrueUSDTUSD etc. The last three of them work in Ethereum blockchain. The future of these cryptos is bright, and from these examples, we can conclude that cryptocurrency is the future.

    How Much To Invest In Bitcoin


    Invest in Bitcoin


    The answer to how much to invest in Bitcoin depends on three factors which are as follows.

         1. Risk Tolerance


    It is the biggest factor. Wealthy people could spend a significant amount of money and take risks. However, people with small income could put a fraction of their savings to get some profits from Bitcoin.

         2. Timing


    Timing is a factor which plays an important role. Earlier, Bitcoin gained lots of attention within a short period of time, but now, this cryptocurrency has become expensive. Still, we can invest in its fraction, which is about $.

         3. Diversification 


    It is a system where an investor could reduce the value of luck. It indicates the investor will not only spend in cryptos but also allocate their resources to various investment vehicles which could be real estate, stocks or even gold.

    The investor can also leave some of their investment at their bank to make a little interest. Although it is a worse decision in terms of making a profit, it will somehow secure your investments.

    Why Invest In Bitcoin


    The potential massive gains from Bitcoin aren't the single thing making it such an interesting asset. The point that both the market and technology are so young indicates there is a lot of space for improvement and hence the growth in price. Bitcoin has spent a decade, and the quantity of work that is to be done blockchain is more massively every year. The developers of Bitcoin are always on duty, and the code is being worked on non-stop to improve privacy, scalability and other impressive features. The possible growth for this cryptocurrency is unthinkable. The more the market cap expands, the higher the charges increase due to more funds circulating. In future, Bitcoin could become the best cryptocurrency to invest in 2020.

    Final Thoughts


    In this article, we have discussed some important things, such as the best place to buy Bitcoin and how much to invest in Bitcoin. Besides this, we have also discussed on how to invest in Bitcoin. As mentioned above, this cryptocurrency has a huge potential to grow and could become the best investment in the coming years. There are several platforms that provide news on Bitcoin and other cryptocurrencies. From the above discussion, we can say that it is a very good time to spend money on cryptocurrencies.

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