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Investing in Bitcoin – What You Need to Know

One of the most unique things about Bitcoin is the fact that you can generate it by the process of mining, or farming (depending on who you are talking to). This is something that anyone who has a computer and internet access can do. This makes Bitcoin different from flat currencies, which are only allowed to be printed by the government. Bitcoin, for this reason, is a bit akin to gold and some other precious metals, because they can only be mined, as opposed to being printed on demand. Mining for Bitcoin is extremely different from extracting precious metals from the earth, though. What it takes is a computer that has the capabilities of solving fantastically complex equations. These equations that are associated with Bitcoin mining are known as cryptographic hashing functions, or hashes.

With the beginning of 2017, the price of Bitcoins shot through the roof and has shown no signs of dropping. People all over the world are wondering if they should make the choice to invest in the commodity. They might not have a good understanding of it though.

This is because Bitcoin is not a stock or a company. It is a type of currency that is known as a cryptocurrency. Therefore, when you want to invest in it, basically, you are purchasing the currency. That being said, there are other ways to invest in Bitcoin, and that is what we will be talking about.

What Does Investing in Bitcoin Actually Mean?

Investing in Bitcoin can take many forms. Some people prefer to buy the currency outright and hope that the value of it will appreciate. Some people might want to invest in companies that are related to Bitcoin. Others might be interested in day trading with it. Still others might want to have a Bitcoin farm; in other words, they want to mine for it.

Whichever way you decide to go, and we will talk more about the different types in a minute, one of the best tips for investing in cryptocurrencies like Bitcoin is to remember that you always have the option to trade any cryptocurrency you have for real, traditional money. That means that you always have an exit strategy if you feel like you are getting in over your head.

Mining Bitcoins vs. Buying Them

Let’s say that you have $10,000 to invest in Bitcoin. Now, you can choose to mine (or farm) for them, or you can buy them outright. How far will you get either way? You can get the current price for a single Bitcoin here. As of June 2017, it’s around $2700, which means that to buy them outright with $10,000, you would be able to purchase 3 and have a bit of money left over. Now that you know that, we can take a look at how many you can get for the same amount by mining for them.

In all honesty, in the long run, you can get more Bitcoins by mining for them, but it is also a riskier investment (as most investments with high yields are). Mining for them means that you have to pay for mining, such as with a company like Genesis Mining. That is where the investment funds will go… to the actual mining of them. While they can give you a bigger payoff in the long run, if you are looking to turn a quick profit, buying them outright might be the better option.

Facts About Bitcoin

If you are interested in getting into the Bitcoin trade, here are just a few facts that you need to know.

  • The prices of Bitcoin can be highly volatile. Depending on which way they fluctuate you might lose your investment or make a killing.
  • Bitcoin is still in the experimental phase.
  • Even though Bitcoin isn’t seen as an official currency, that doesn’t stop the government from wanting their share. You still have to pay taxes on it, just as you would with any other earnings or investments.
  • Investments in Bitcoin are not reversible, but you can trade them for cash at any time.
  • Bitcoin is not something you should get into if you want your investment to be anonymous. Each transaction is recorded on the Blockchain.
  • You have to put an effort into securing your virtual Bitcoin wallet to keep it safe from being hacked.

If you keep these tips in mind, you can invest, buy or mine for Bitcoin at your discretion.

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