How to Get Started with Bitcoin
Bitcoin is more popular than ever before. What is Bitcoin and how does it work? How can you buy Bitcoin? Does Bitcoin make a good investment? Let’s discuss these topics and lay a foundation for understanding one of the most popular investments around.
Bitcoin is an open-source, decentralized peer-to-peer technology that enables financial transactions without any centralized authority. The decentralized design of Bitcoin means that no central authority can intervene in the value of the coin arbitrarily—such as the interest rate hikes and quantitative easing that commonly affect the money supply in fiat currencies. Bitcoin was proposed in a 2008 white paper by the mysterious Satoshi Nakamoto. It was implemented in 2009.
Bitcoin uses a technology called the blockchain. Bitcoin's blockchain consists of a public ledger that contains every transaction that has ever been made. These transactions are blocks and they are all connected, with each block being chained to the ones before and after it. This is where the blockchain gets its name.
Transactions are digitally signed using cryptographic keys. A private key and public key work together to secure transactions on the blockchain. New blocks are created on the blockchain by what are called miners. These miners operate specialized hardware to confirm transactions and solve complex puzzles for the right to create new blocks on the blockchain in return for a block reward.
Coinbase is an extremely user-friendly way to buy Bitcoin. The first step will be to create an account if you don’t already have one. You will need to be at least 18 years old, possess a government-issued photo ID and have a computer or smartphone connected to the Internet. If you have a smartphone, it will need to have a phone number associated with it so you can receive SMS messages. Once you verify your e-mail and phone number, you will be asked to add some personal information. At this point, you will verify your identity by signing in to your Coinbase account and completing your ID verification.
Once you have linked a payment method, you can begin buying Bitcoin and many other cryptocurrencies. Simply click the Buy/Sell at the top of the page, select the amount of Bitcoin you want to buy, specify your payment method, click the “Preview Buy” button, confirm everything looks okay by clicking the “Buy now” button and you’re done. Your portfolio balance will almost immediately reflect the purchase, which you can view by clicking “Home” on the left side of the page.
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Get Free BitcoinIt is tricky to decide when the right time to buy Bitcoin is. Imagine being that guy who watched Bitcoin rise from $0.06 in 2009 to $1,000 in 2013 and figured he had missed the boat. FOMO (the fear of missing out) is often cited as a reason to buy Bitcoin, but don’t let the fear that you have already missed out work against you either.
From the long-term perspective, any time is a good time to buy Bitcoin. Someone would have looked like a fool buying Bitcoin at its then-all-time high of over $20,000 in early 2018. It certainly would not have been the best move, since it eventually fell as low as $6,000 after that. But in the long run, considering the rise to $60,000 in the first half of 2021, it would have been a winning move.
The best times to buy Bitcoin are when it is down in price. While conventional wisdom may say that something that is a lower in price is cheaper for a reason, it is actually a great buying opportunity—especially if you believe its value will go up.
Why invest in Bitcoin? There are a lot of great reasons.
Bitcoin is a highly liquid investment. That means that you can easily trade your Bitcoin for cash if you choose to do so, without a lot of delays such as waiting for a buyer to take the other side of your trade.
Bitcoin is a great hedge against inflation. Bitcoin was designed from the ground up to work against the currency manipulation and debasement that is common among fiat currencies. Bitcoin’s supply is strictly limited by the block reward that gets cut in half for every 210,000 blocks that are created. Furthermore, only 21,000,000 Bitcoins will ever exist. This ensures that the value of Bitcoin is not diluted through the creation of an excessive amount of the currency.
Bitcoin has been around for over ten years, which may seem like an eon depending on how old you are. But the fact remains that Bitcoin is not yet widely accepted as a method of payment or even completely as an investment. The potential for Bitcoin to increase in value hinges on its value in relation to fiat currencies and the growing demand for Bitcoin as an investment. Bitcoin is more popular than it has ever been and its practical use only continues to grow. That means that the practical value of Bitcoin will only increase in the future and who knows where its market value may go?
Bitcoin is a digital currency built on a technology called the blockchain. It is easy to purchase Bitcoin on a platform like Coinbase. It is difficult to tell when the right time to buy Bitcoin is, but if you have a long-term perspective there really is no wrong time. There are several reasons why Bitcoin makes for a great investment: it is young and full of potential, it is resistant to inflation and it is highly liquid so it doesn’t tie up your money.