An investment in Bitcoin often involves the term of just having a cryptocurrency. However, on the sole possession of cryptocurrency, investments in this market do not end there. There are several ways to invest in Bitcoin and other cryptocurrencies. It is used to carry out financial transactions to a much lesser extent, and in the case of payments only, the use of Bitcoin is practically marginalized. Due to the fact that BTC is basically used only for investment and speculation, Bitcoin is characterized by high price volatility, which brings new groups of speculators to this market. How to invest in Bitcoin?
Buying and selling Bitcoin
This is the most popular method of investing in Bitcoins. The best time to buy is when the value of the digital currency is low or its increase is expected. Then, we resell the coins when we think the time is right. Our investment does not have to be short-term, we can sell Bitcoins even in a few to several years. The advantage of this type of investment is that we are owners of purchased Bitcoins and we can use them as a means of payment. The disadvantage is the fact that if the value of coins decreases, we will have to wait for their value to rise again.
Bitcoin course – how is it different from forex trading?
You can check the bitcoin cryptocurrency exchange rate just like online stock quotes – by visiting the relevant website or through your broker’s mobile application. The difference in quotations on the bitcoin exchange and the traditional investment market is based on various factors that affect the value of exchange rates. In the case of forex, they can be influenced not only by various events (political, social, economic), but also by macroeconomic issues such as GDP dynamics, monetary policy and central bank reports. For the cryptocurrency exchange, the price is influenced by current events and supply and demand factors.
The amount of BTC on the market is closely linked to its extraction (the maximum supply of bitcoin is 21 million). This process is called “digging” and is done using computers and their graphic cards. Demand, however, depends on the attractiveness of cryptocurrencies as a means of payment.
Advice to increase investment effectiveness
- Digital currency investors should follow legal changes, political and economic events as well as technological developments around the world – they have a great impact on Bitcoin’s value.
- The most profitable investments are those that are well matched to our level of knowledge or experience. It is worth mentioning that quick-tempered or risk-taking people should avoid CFDs or binary options trading.
- It is worth remembering that digital currencies attract a lot of amateurs tempted by the desire for quick profit. They trade emotionally which affects Bitcoin’s overvaluation and undervaluation.
- Never invest all funds that you can’t afford to lose and diversify your money so that any loss is always as painless as possible.