Bitcoin was created in 2009 by a group of brilliant developers to have a payment option that enables the anonymity of the purchaser. As it is known today, this digital coin is the first cryptocurrency, the largest virtual coin by market capitalization, and the pioneer of every other crypto globally.
This digital asset operates by recording every transaction in a digital public ledger. It’s almost impossible to cheat this type of system because if a transaction is displayed in a single copy of the ledger, it’s simple to flag it.
There are differences between the methods to store this coin, and there are many advantages to using it, like anonymity and security. These features of Bitcoin are increasingly appealing to people as they understand this technology better. Keep reading this article not to be taken aback should this type of payment and investment surpass the traditional one someday.
The money took many forms to reach the paper and coin it is today. Bartering started from shells and rocks before trading precious metals like gold was popular. Then, governments regulated the banknotes and paper bills. Nowadays, digital currencies like Bitcoin are gaining traction, and the trend doesn’t seem to stop here because this type of currency is convenient and valuable thanks to its nature:
– Non-consumable. You can purchase and gamble with Bitcoin or invest and lose or make profits. However, this coin can only be consumed as an exchange of value.
– Divisible. Bitcoin can be broken down into smaller pieces for specific purposes, such as making micro-payments or paying specific amounts.
– Secure. Bitcoins can’t be counterfeited, and the intricacy of the blockchain and crypto wallets protects your money pretty well.
– Scarce. Bitcoin can’t be replicated and has a limit of 21 million coins that can be issued.
– Fungible. Every crypto of this kind shares the same value as its equivalent.
– Portable. You can easily carry Bitcoin around in cold or hot or cold wallets.
Investing in Bitcoin safely
Buying and trading Bitcoin isn’t hard, assuming you’re using the largest and most popular exchange in your country. You can also use a foreign exchange, but it might be a little more complicated to comply with new laws and regulations.
However, the first step to joining the Bitcoin adventure is obviously to check the Bitcoin price. The prices fluctuate a lot due to the volatile nature of digital coins and the fact that they’re not regulated.
In the chart, you’ll see if the value’s rising or decreasing. When you see the colour green under the Bitcoin price, you decide whether you will buy the currency and how much money you’ll invest. Similarly, once you possess BTC, you figure out the next moves depending on what type of investor you are (beginner, long-term investor, HODLer etc.).
You can go further and see how other popular coins are doing, like ETH, ADA, SOL etc. It’ll be easier for you to decide if you want to diversify your portfolio to reduce risk and volatility. Remember that if one investment turns unprofitable, you have others that can back you up, and vice-versa.
Choosing a hot wallet
Your private keys, which are required to access your funds on the blockchain, are securely stored in a crypto wallet. The hot and cold wallets are the only ones to choose from, and they differ in some aspects.
Investors who use hot wallets choose them because they’re easy to use. Some of the most popular and recommended types of hot wallets are the following:
– Desktop wallets. These use encryption to safeguard a Bitcoin owner’s private keys, which are securely saved on a hard drive. They’re easy to use, a go-to for small crypto transactions on computers, and no third party can have access to your private keys. The downs are that they’re potentially vulnerable to computer viruses, and most of them are online whenever your device is, making them accessible to anyone who uses your computer.
– Web wallets. These are provided by a third party, usually the crypto exchange you use, and can provide easy access to a user’s holdings via a web browser. They’re simple to use, and most crypto newcomers prefer them. They support a wide range of transactions, and their account security is delegated to an exchange or a reputable third party. Using such a wallet, you put your trust in those third parties, which means that hackers could exploit this vulnerability.
– Mobile wallets. These enable you to receive or transfer Bitcoin anywhere quickly and securely from a phone connected to the internet. They’re easy to use and highly convenient but subject to fraud if your phone device is stolen or lost. Similar to computers, your phone is potentially vulnerable to intrusive malware.
Choosing a cold wallet
Paper wallets are low-tech alternatives, whereas hardware wallets include complex high-tech components. Both are regarded as very safe methods of securing your cryptocurrency – but you get to decide which one suits your needs the best.
– Paper wallets. These are completely offline, which makes hacking impossible. They’re widely used because they prevent third parties from accessing your money and enable QR codes for easy access. The cons to these are the technical know-how they require, the fact that they take more time to move the assets between wallets, and the fact that they can be incinerated, stolen and destroyed.
– Hardware wallets. These are choices preferred by Bitcoin investors who fancy more high-tech solutions. They are physical devices which resemble the USB thumb drive, are one of the safest ways to store crypto and are available at many electronics retailers. However, if you’re a newbie, you might find them challenging and even pricey, as the price can exceed £30.
Consider your goals before you decide on the amount you invest in Bitcoin and what kind of wallet you use to store it. However, you should first decide how much you value features like advanced features, security, UI and the like before choosing an exchange and storing method, and don’t forget to check Bitcoin’s price regularly to decide on the best moves.