How to Invest in Bitcoin In 2019
The world is increasingly becoming more dependent on the Internet. It is, therefore, no surprise that Bitcoin—a global, peer-to-peer (P2P), and digital currency—has gained traction among the internet community with recent studies it is primed to reclaim more than two-thirds of the entire cryptocurrency market capitalisation by the end of 2019.
As a new asset class, Bitcoin is open to anyone and therefore provides an exciting opportunity for investment. However, investing in Bitcoin may not be straightforward considering the misinformation swirling around and its steep learning curve. In “How to Invest in Bitcoin in 2019” we explore all the aspects of investing Bitcoin to help you understand the cryptocurrency marketplace.
Why invest in Bitcoin?
The crypto market is growing at an exponential rate, thanks to massive investments from tech-savvy investors. In 2019, Bitcoin marked its first anniversary after the unveiling. The intrinsic value of Bitcoin as an alternative for storage and transfer of economic value is steadily gaining acceptance by a critical mass of users, investors, and even governments.
As of this writing, the total market capitalisation of all cryptocurrencies is nearly $119 billion with Bitcoin controlling over 52 per cent of the market. This is more than just a bubble that we are witnessing. With new studies suggesting that more people will join the Bitcoin community this year, it is time to consider joining the bandwagon.
What to consider before investing in Bitcoin
Before making the decision, here are four things that you should consider before investing in Bitcoin:
#1: Bitcoin Price
There is no standard Bitcoin price. Bitcoin’s value is determined by forces of supply and demand—what users are willing to pay. You can use cryptocurrency exchanges permitted in your geographical region to give you an estimated value of Bitcoin price.
#2: What is the right time to buy Bitcoins?
As it is with all markets, nothing is for sure. Since its launch in 2009, Bitcoin has increased in value at an exponential pace (soaring from $ 1 in 2010 to as high as $20,000 in 2017). As of this writing, the price has stabilised, and 1 BTC is exchanging for $3,600. Use tools such as CoinMarket.com or Cryptowatch.com to analyse the charts and understand Bitcoin’s price history.
#3: Where to buy and sell Bitcoins
The first place to visit if you want to trade in Bitcoin is an Exchange. A cryptocurrency Exchange is an online system (website) that provides you with an opportunity to exchange fiat currency into Bitcoin and vice versa. The difficulty of buying and selling bitcoins depends on whether your country supports such exchanges.
Coinbase is the world’s largest cryptocurrency exchange available in the U.S., the UK, Singapore, Canada, and most European countries.
#4: Securing your Bitcoins
As with anything that is online and valuable, hackers and scammers will all always find ways of stealing your Bitcoins, so securing them is a must. If you are serious about investing in this currency system, then you should consider a wallet service that is secure. A cryptocurrency wallet is simply a software that keeps private and public keys which interacts with the Blockchain to allow users to transfer Bitcoins and monitor their balances.
There are two main types of wallets:
- Hot wallets; and
- Cold wallets
In hot wallets, your bitcoins are stored online while in cold wallets, bitcoins are completely stored offline. Because bitcoins are digital assets, keeping them online is extremely risky as a result of vulnerabilities in wallets or exchanges that can allow hackers to compromise them.
There are 3 types of cold wallets:
- Paper wallets;
- Hardware wallets; and
- Offline computers with software wallets
While most typical paper wallets are private and public keys printed on a piece of paper, other variations include plastic or any material that can durably hold printed keys. On the other hand, hardware wallets are smart cards or small offline PCs that automatically generates private keys while offline. Examples of this wallets are Ledger S Nano, Trezor; and KeepKey.
While these wallets are foolproof, they are costly and have to be protected from damage and physical theft. If you are considering a cost-effective and foolproof wallet, then an offline software wallet is one of its kind. These wallets are created on an offline PC using the public HD seed—just in the same way as the hardware wallets—and can provide you with the necessary security. An example of such a wallet is COINiD, with which you create a cold wallet on a separate offline mobile device (smartphone, tablet).
Before you jump into the Bitcoin bandwagon, it is important to understand how Bitcoin works. Bitcoin and other cryptocurrencies are still new and it may you months to understand how they work. Take some time to understand the Bitcoin, its Blockchain, and how to secure the bitcoins.