Looking To Invest In Bitcoin in 2021? Here Are 5 Things You Should Know
January 18, 2021 (Investorideas.com Newswire) Cryptocurrencies have been a hot topic for quite some time. People all over the world have been making thousands, if not millions, of dollars by investing in these digital and highly volatile tokens. All the while, onlookers regret not participating.
But if there was ever a major FOMO(Fear of Missing Out) moment, it was last Thursday's when Bitcoin hit $40,000 and then just kept on going.
Ever since its inception in 2009, Bitcoin has been under intense fire and scrutiny with many critics ruling it as a fraud, a swindle scheme, a sucker's bet that is simply a vehicle for pure speculation similar to the tulip-mania in the Dutch Golden Age.
And yet, the cryptocurrency has been successful in obtaining a winning streak that translates into a growth of about 450% in just one year. Hence, FOMO is indeed running hot.
However, before you decide to sink your savings into an asset that very much is capable of dropping 10% in a morning without any warning, it would be wise to do your due diligence and warm yourself up to the basic elements of Bitcoin and the space surrounding it.
Therefore, here are 5 basic things you need to know before investing in Bitcoin in 2021:
What Is Bitcoin?
Now, even though many investors may consider themselves well-versed in this topic, here's a quick refresher for the uninitiated: Bitcoin is virtual money that allows people to make exchanges without the involvement of any third-parties.
It relies on a system called "Blockchain" and as a result offers a more transparent and efficient way of carrying out transactions. Also, it is identified as the online currency of the modern era.
With bitcoin, transactions can be carried out instantly. All that is needed is a smartphone and an internet connection which will easily get the job done.
Is Bitcoin Really Anonymous?
No, contrary to popular belief, bitcoin isn't anonymous. Well, at least not entirely.
Bitcoin is pseudo-anonymous which means that its users do not have to divulge some pieces of identifying information such as their address or bank account and social security numbers. However, a traceable trail of each and every transaction is left behind on a public log called the blockchain.
Such a measure helps prevent people from spending the same bitcoins more than once.
How Is Bitcoin Created?
Bitcoins are created through a process called "mining". Miners make use of pricey hardware and powerful computers to compete with one another to win Bitcoins. This consists of solving complex math puzzles that tend to get more difficult as more people compete to win.
There are only 21 Million Bitcoins in existence that can be mined and hence, the numbers of Bitcoins that can be extracted by miners decreases over time. Therefore, similar to gold, Bitcoin acts as a deflationary currency. And so as it becomes more scarce, the more valuable it will be.
Is It Controlled By A Central Authority?
Unlike modern fiat currencies the US dollar or Pound Sterling, Bitcoin has a decentralized system. No third parties, such as banks or the government, have the power to control Bitcoin. The entire transaction system is purely person-to-person.
As a result of its decentralized framework, investors don't have to worry about the possibility of it being devalued or having assets seized or frozen by a third party. Furthermore, having no such intermediaries can also minimize your transaction costs involved, saving you money.
What Are Trading Platforms And Why Are They So Popular?
Trading platforms offer trading programs that are used by traders and investors to trade Bitcoins and profit off of them. Advanced Artificial Intelligence (AI) algorithms are generally used by such programs to generate trading signals.
Ever since Bitcoin exploded in the market, such programs are the go-to for many novice crypto traders, proving to be a safe haven for them. Their use also means that you don't have to be an active trader to collect huge profits and instead, can keep it going as a side hustle.
An example of one such program is the Bitcoin Storm which is reputable and robot with global recognition. It makes Machine Learning (ML) algorithms, allowing traders to maintain their profitability in a highly volatile market space.
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