You would certainly love to make a profit by investing in cryptocurrencies because of their volatile market. But before you invest in bitcoin or any other cryptocurrency, it is important to learn a few things about bitcoin. So before making your first purchase, here are a few things that you should know about bitcoin. You can get started with bitcoin trading through this software.
Purchasing bitcoin
Crypto enthusiasts can buy bitcoin from various platforms that include crypto exchanges, brokerage platforms, peer-to-peer platforms, and more. But not all exchanges and other platforms are reliable. Buyers must be cautious while choosing the crypto exchange for use. It is crucial to do proper research, find the best, licensed, regulated, reliable exchanges, and have an excellent reputation online. Also, not all crypto exchanges offer the same bitcoin rates; therefore, you must compare all the exchanges. Know about the deposit and withdrawal fee that exchange charges from its users.
Decentralized nature
Bitcoin is a decentralized technology, and its underlying technology also has decentralized nature. Decentralized means the cryptocurrencies have no control of the government or banks over it like fiat currencies have. But as no one controls the bitcoin network, users are responsible for controlling and securing their coins. So, for example, if hackers hack your account, you cannot hold any higher authority for it as they have no control over your coins.
Digital wallet security
Like traditional currencies are stored in physical wallets and bank accounts, digital currencies like bitcoins are kept safe in a digital wallet. Therefore, it is crucial to secure a digital wallet and take all safety measures to protect your wallet from getting hacked. In addition, you must consider best practices like encryption, backup, secure store of passwords, two-factor authentication, and more.
Volatile price
Bitcoin’s supply is finite, and no individual or central authority can change the supply or demand of bitcoin and other cryptocurrencies. It is one of the main reasons behind the volatile nature of bitcoin. Its supply is finite, but its price increases or decreases according to its demand in the market. As a result, Bitcoin’s price fluctuates a lot and can even change dramatically in a few minutes or hours. Therefore, it is crucial to be cautious about fluctuations in bitcoin’s price and invest only money you can afford to lose.
Halving reward
The founder of bitcoin, Satoshi Nakamoto, set the halving reward of bitcoin. The process of halving reward occurs every four years until all the bitcoins come into circulation in the market. Overall, there are 21 million bitcoins, and the halving reward is 6.25 BTC for each block.
Pseudonymous
Bitcoin is partially anonymous, and that is known as pseudonymous. The Bitcoin transactions don’t involve any personal information of sender or buyer, but only bitcoin addresses are involved and public. Therefore, no one can know the person’s real identity behind any bitcoin address, which prevents your information from scams or hacks.
Still Evolving
Though bitcoin has been in the market for 12 years, and thousands of other cryptocurrencies exist in the crypto world, the crypto market is still in its developing stage. There have been many issues with bitcoin, but it is for sure that it has become a stable coin over time.
Not accepted ubiquitously
Though bitcoin is one of the best and largest cryptocurrencies, it is still not accepted worldwide for all products and services. As a result, there are only limited options where users can make bitcoin payments. But when bitcoin is acceptable, it is better to make payment with it as it allows fast and easy transactions without charging any high transaction fees.
Minimal insurance options
Bitcoin and other cryptocurrencies have either minimal or no insurance options. The Security Investor Protection Act (SIPA) doesn’t cover cryptocurrencies, making it difficult to invest in them. There are only a few companies that offer crypto-insurance, but it is not sure whether they are reliable or not.
Taxable
Bitcoin is the largest cryptocurrency, but it is not legal like all other investments or fiat currencies. Bitcoin is taxable, but all countries have different taxation rules for cryptocurrencies, and you must learn about it before investing in it.
