Unless you’ve been living off the grid for the past couple of years you’ve undoubtedly come across cryptocurrencies, such as bitcoin.
Despite their popularity, how bitcoin and other cryptos work may still be a mystery to many investors. After all, the entire concept of a digital currency is relatively new.
But as you’ve probably already seen, bitcoin has some potential to get you a great return on your investment, or just the opposite.
What has kept some investors away from bitcoin and other cryptos is their volatility and vulnerability to major shifts in confidence.
On top of that, some countries have gone as far as making trading crypto difficult or impossible. So, as an investor, what should you know about the bitcoin market before investing?
Learn how to invest in bitcoin, how bitcoin works, and how you can make money with cryptocurrency with this bitcoin market guide.
What Is Bitcoin?
Before we get into the bitcoin market guide, we must first answer the question “what is bitcoin?” The simple answer is that bitcoin is a digital currency that was created to have no central authority. In other words, no government can issue bitcoin nor is bitcoin backed by any bank.
Being a digital currency, you can’t physically own or hold bitcoin. So, where do people who own bitcoin keep it?
Bitcoin owners use digital keys which are a sequence of numbers/letters used to keep track of their balance. Think of these keys as a bank account number where people can find and send you bitcoin.
When a bitcoin owner wants to trade bitcoin, they’ll use their digital wallet, which can be a computer desktop, mobile phone, or similar device.
So long as you keep your private keys and digital wallet safe from cyber attacks or misplacement, bitcoin can be a valuable asset to own.
How Does Bitcoin Work
To begin your bitcoin market guide, you’ll first need to know some of the basics about bitcoin.
First off, bitcoin operates through a system of computers that run bitcoin’s code and is stored on a blockchain.
Think of a blockchain as a database, where new information is put into a block until that block is filled. Once the block is filled, it is attached to the previous block, and so forth.
Most of the data stored are from verified transactions, and no one person controls the chain of blocks, but rather it’s collectively accessible.
Once data has been stored into a block it can not be reversed and is viewable by the public. This makes the blockchain system transparent and keeps the concept of bitcoin decentralized.
The individuals and companies that verify and process these transactions are known as bitcoin miners and their job is to maintain the integrity of the blockchain.
In total, there is 21 million bitcoin in existence, which means eventually all bitcoin will be mined. What happens then is unknown, but as of June of this year, only 3 million bitcoin remain unmined.
How Do You Get/Buy Bitcoin
Interested in owning bitcoin but have no idea where to start? You have options!
If you have the technology and the time, you could join other bitcoin miners and access the cryptocurrency that way. Crypto investors are attracted to mining because they are sometimes rewarded for their efforts.
Those who mine bitcoin have early access to new bitcoin. However, most people don’t have access to resources that would make mining a viable option.
Instead, others have entered the bitcoin market by buying it on an exchange. Some popular exchanges out there right now are Coinbase, Binance, and more.
When deciding on which platform to buy your bitcoin on, you’ll want to consider any fees and any known security concerns.
Once you’ve decided on a platform, you’ll need to link funding to your account before purchasing any bitcoin. To do this you’ll need to transfer money from a bank, crypto wallet, credit, or debit card.
After funding your account it’s time to start building your crypto portfolio. Keep in mind that the money you put in is subject to fees, so picking the right platform means getting the most of each transaction.
Can You Convert Bitcoin To Cash?
Once you have bitcoin, you may be wondering what you should do with it? After all, few businesses actually accept bitcoin and other crypto transactions.
So what makes bitcoin ownership so popular? Well, just as you would invest and hold onto a stock that has a bright future, bitcoin can be held and sold off later for a profit.
You’ve probably heard or read about people who invested in bitcoin in its early days who’ve since cashed in for ridiculous ROIs.
They rode the crypto wave to a peak, sold their share, and transferred their value into a bank account, making it real money.
You can convert bitcoin to cash the way you would exchange foreign currency for American dollars. Essentially you are “selling” your bitcoin and “buying” its value in cash.
However, since bitcoin is under no central authority, the rate of exchange is determined by the demand for bitcoin and is done by private transactions.
Despite there being no central authority, bitcoin transactions are subject to taxes and fees. Third-party platforms where you may be making transactions will likely report them and most bank transfers will carry a fee.
Bitcoin Crash 2021
As an investor, you are likely familiar with the concept of market crashes. Market crashes can be caused by any number of predictable or unforeseen events and as you’ve seen with bitcoin, the crypto market is vulnerable to crashes.
It would be a disservice to talk about any cryptocurrency without mentioning the bitcoin crash 2021. Although we’re only about halfway through the year, bitcoin has seen some major pushback from several influential people and countries.
Let’s first start with the infamous bitcoin investor Elon Musk. Although he sometimes shows his love for cryptocurrency through various social media posts, mainly tweets, he has also shared disapproval for it.
A simple glance at his Twitter profile will show you cryptic tweets referencing certain cryptos and a public statement regarding his company TESLA no longer accepting bitcoin as a form of payment.
These conflicting messages have triggered major swings in the bitcoin market, which resulted in a major crash that lost many people a good deal of money.
On top of weird messaging from celebrity investors, China has put a halt to its financial institutions issuing cryptocurrency.
Although some have labeled it as a ban, any person in Chica could own bitcoin, however, it is nearly impossible to trade or exchange it.
With fears of other countries and financial institutions putting their own rules in place, some bitcoin investors began to sell their assets believing that the decentralized is losing its attractiveness.
Combining these events and what they can mean for the future has made more than a few investors skeptical of bitcoin’s future.
Finally, some much needed good news has arrived for bitcoin users. A deal between multiple parties including enterprise payment titan NCR and NYDIG, a digital asset management firm, and other financial institutions will allow 650 banks and credit unions to offer bitcoin purchases.
Through mobile apps created by these financial institutions, approximately 24 million of their customers will have the ability to trade bitcoin and other cryptocurrencies.
Basically, this is an effort by financial institutions to curb third-party exchange apps, which could mean good news for you.
Instead of funding your account on another platform, such as Coinbase, you could buy and trade crypto on the in-house app from your bank account, credit union, or wherever you hold your money
The hope is that users will be able to save on some of the transaction fees they would see from a third-party app. So, if you have an account that is participating in this breakthrough deal, you’ll have near-instant access to bitcoin.
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