Today, many people continue to turn their attention towards investment opportunities to retain the value of their money and potentially grow that value significantly. With a bit of luck and smart decisions, you can essentially get to a stage where you can survive solely on investment income, although that is still a rarity for many of us. However, we can take steps to increase those chances of getting a good return on our investment, and one of these steps is to continue to diversify those investments. One popular portfolio addition is Bitcoin and other cryptocurrencies. But first, you may be wondering how investing in Bitcoin has become so popular and how you can get involved. This blog post aims to answer just that.
What Is Bitcoin?
This is what is known as a cryptocurrency and is essentially a digital currency that nobody has any direct control over. Bitcoin is decentralized, meaning that no banks or governments have authority over the currency. Instead, everyone who owns Bitcoins automatically has a hand in controlling the currency. It basically regulates itself, too, due to its very nature. While many people choose to simply trade Bitcoin, it can actually be used to pay for goods and services in some places. Once these transactions are completed, the move is logged on something known as the blockchain, as with Bitcoin trades. Because it is logged and this information is shared globally with everyone, it doesn’t require direct regulation and interference from external forces as it’s impossible to create fraudulent Bitcoins.
Being A First Mover
Bitcoin became so popular, even after the failed attempts of others to create cryptocurrencies before, such as Hashcash and e-Gold, partly because of its decentralized use of its blockchain technology. But it’s also due to having what is known as a first-mover advantage. This is basically where a breakout, innovative product or service is released on the market ahead of anyone else, making it the foundation for future innovations in this area. This is a huge contributor to its success, and Bitcoin now even impacts the value of all other cryptocurrencies. If the value of Bitcoin rises or falls, you’ll see similar moves from others, but usually not vice versa.
What Is The Blockchain?
This is a giant database, or ledger, which holds a fully encrypted list of every Bitcoin balance. There are no ways to hide Bitcoins as they all have a unique signature, and each transaction is tracked to maintain the value and number of Bitcoins in existence. The blockchain consists of blocks, which are simply the updates to these accounts’ balances, or in other words, transactions. This helps to keep track of each Bitcoin, and this transparency can make some uncomfortable. After all, every transaction is public and traceable. However, the benefit of this is that it seriously hinders the efforts of criminals who may have been interested in using it to support their endeavors, adding to the security of the cryptocurrency.
How To Trade Bitcoin
It’s quite straightforward to buy Bitcoin and, in contrast, convert Bitcoin to debit card funds too. There are countless trading platforms out there, such as trading apps that will allow you to trade Bitcoins, and stocks and shares at the click of a button. You can also leave this to a financial advisor who can manage your portfolio for you, but make sure that it’s a company or individual you trust as investing can be fairly high risk, especially cryptocurrencies. However, remember that the higher the risk, the higher the potential rewards. Just be wary not to invest anything you cannot afford to lose.
Other Crypto Options
There is no reason not to look into other potential cryptocurrencies, as it’s always wise to consider your options. Just remember that, as mentioned earlier, Bitcoin will always benefit from that first-mover advantage. Not only that but the chances of investing in another cryptocurrency and experiencing the same outstanding profits that many lucky individuals experienced during the unprecedented rise of Bitcoin are extremely low. That’s not to say that you can’t make amazing profits from new cryptocurrencies in a similar fashion, but it’s still unlikely. There are many other cryptocurrencies to consider investing in, such as Ethereum and Tether, but make sure that you always do your research beforehand.
Should I Invest In Anything Else?
The short answer to this is: yes. While we cannot specifically tell you what to invest in, it’s always worthwhile diversifying your portfolio across many different types of investments and specific stocks or cryptocurrencies. It all comes down to the adage of not putting all of your eggs in one basket. If you were to invest solely in one company, for example, and then that company folded, you’d lose your investment and be left with nothing in your portfolio. Whereas, if you spread your money around and that same company folded, it may sting a little bit, but you’ll have your other investments to fall back on.