What should you know before investing in Bitcoins?
How much do you know about cryptocurrencies? Is it a safe investment? Virtual currencies have attracted the attention of millions of people who see them as an alternative for savings and a means of purchase. But what should you know before investing in Bitcoins? In this article by Hispanic Entrepreneurs we talk about this topic.
Advantages of Bitcoin
In a previous post we explained what are bitcoins and how do they work, this time we summarize the information you need before investing.
Bitcoin is a virtual currency, decentralized and without regulations from any State or central bank. It emerged as an alternative to traditional currencies and is used as an investment instrument and for the payment of goods and services.
Investing in this cryptocurrency has its advantages:
- Bitcoin has a global reach, you can make transactions from anywhere.
- It is a profitable investment, but you must know the right time to invest.
- The transactions are anonymous, which means that the rest of the users will not know your identity.
- It works under a system of encrypted codes and cannot be forged.
- You can buy and sell Bitcoins at any time because the market does not stop.
Disadvantages of Bitcoin
Among the risks it represents invest in Bitcoin 2021 we find:
- It is very volatile and can undergo different variations in the same day.
- It is a complex system that requires knowledge to make your investment worthwhile.
- It has no backup in other assets.
- Transactions are irreversible, you must be careful not to make mistakes.
- There are those who use it for illegal transactions, taking advantage of the anonymity.
What should you know before investing in Bitcoins?
The popularity around cryptocurrencies has given rise to a wealth of information on the subject. If you are thinking of investing, you should know what you will find, so here we leave you some information of interest.
Anonymous creators
About the creation of Bitcoin, it is known that it arose in 2009 when the first block of bitcoins was mined.
The previous year, its creator had published a document talking about the virtual currency and how it operated. That person is known by the pseudonym Satoshi Nakamoto, but it is not known whether he is an individual or an organization.
It has no regulation
Bitcoin is not regulated by any country or legal framework. Its operation is decentralized and operates under a series of rules that the entire community follows. In other words, control rests with the users themselves.
Any change or transaction must be approved by all users.
It's unpredictable
Among what you should know before investing in Bitcoins is that it is unpredictable. We already mentioned that it is volatile, this occurs due to the lack of regulation. So your quote can change at any time.
In the same day its value rises and falls several times and can have very wide variations in a short time.
Not yet an extended payment method
Although the number of users is counted by millions in the world, its acceptance is not very widespread. It is true that now it generates more trust because there are organizations investing in cryptocurrencies, but there are still few companies that accept it as a means of payment.
How to get Bitcoins?
You can acquire them through mining, which is the process by which new blocks of Bitcoins are created.
To mine bitcoins you need powerful equipment and a specific program to do it.
The equipment is expensive and a common computer does not have enough power to mine Bitcoins.
They are also achieved by buying virtual currency, or fractions of it, through the available platforms. These applications are known as Bitcoins wallets and that is where they are stored. They also allow you to receive and send to other users.
Lastly, you can sell products and services and receive payment in Bitcoin.
Invest wisely
Learn how to invest in Bitcoin safely, understanding that betting everything on cryptocurrencies is a risk due to its volatility. You can lose a lot of money if you don't understand how it works.
For the investment to be profitable you have to know when to buy and sell. Also, understand that this is a long-term investment.
You should not invest in cryptocurrencies your security money, but the amount that you can do without. Thus, if you lose, you do not put all your savings at risk.
Bitcoin security
Bitcoin transactions are safe; However, it must be borne in mind that many people have suffered theft or loss of cryptocurrencies.
How does this happen? When you open a virtual wallet you receive a private key with which you have access to your Bitcoins. If this key falls into the wrong hands, it can enter your account and steal them.
On the other hand, if the user loses his private key, he will not have a way to enter and thus loses his Bitcoins.
Pay taxes for Bitcoins
Lastly, you may have to pay taxes when handling virtual currencies. In the United States, for example, if you buy or receive any cryptocurrency, it is not necessary to include them in the declaration. However, if you use it (when selling them), you must.
Before making a decision, find out about everything you need to know before investing in Bitcoins. This way you will be more confident when taking the following steps. Have you already invested in virtual currencies?