What is Bitcoin?
Bitcoin is a decentralized, peer-to-peer digital currency system designed to provide online users with the ability to process transactions using a digital unit of exchange known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in 2009 by an undisclosed programmer or programmers. Since then, Bitcoin has attracted a lot of attention and controversy as an alternative to the US dollar, euros and commodity currencies such as gold and silver.
Rise to popularity
Bitcoin had not gained much attention in the world of business and finance before the year 2009. It gained prominence during the period 2011-2012 when it gained more than 300%. Bitcoin has seen a 400% growth in value since August of last year. As a result, venture capital firms and investors around the world continue to attach importance to cryptocurrency.
In the first half of 2014, venture capital firms invested $57 million in Bitcoin in the first quarter, followed by another $73 million in the second quarter for a total of $130 million, which is 50% up from last year’s total of $88 million. This is a stark contrast to the 2012 scenario where Bitcoin companies amassed a relatively paltry sum of $2.2 billion.
These statistics prove beyond doubt that Bitcoin is worth your investment, which begs the question: How can you buy and invest in Bitcoin?
A Guideline for New Bitcoin Investors
The easiest and least complicated method to invest in Bitcoin is to buy bitcoins. There are many established companies, mainly in the US and abroad, that are involved in the business of buying and selling bitcoins, abbreviated as BTC.
Coinbase
If you live in the United States, Coinbase is the place you are looking for. Coinbase offers its customers BTC at an estimated 1% margin over the existing market price. US residents have the option to sync their Coinbase wallets with their bank accounts. As a result, future payment transfers are seamless. This company also gives you the option to buy bitcoins automatically from time to time. For example, if you’re interested in buying $50 worth of bitcoins at the beginning of each month, Coinbase lets you set up an automatic purchase for that amount.
Please note the terms and conditions before you start using this service. If you’ve subscribed to an automatic bitcoin service, you won’t be able to control the price at which BTC is purchased each month. Note that Coinbase does not operate as a Bitcoin exchange, meaning you buy and sell the coins directly from the company. Since the company must obtain the coins from other buyers, you may experience delays or interruptions in placing orders during rapid market movements.
BitStamp
BitStamp fits the requirements of a conventional bitcoin exchange. Bitcoin acts as an intermediary that allows you to trade with other users and not with the company itself. Liquidity is higher here and you always have a good chance of finding someone willing to trade with you. There is an initial fee of 0.5% which can be reduced to 0.2% if you trade $150,000 in a 30-day period.
Alternative ways to buy Bitcoins
Local Bitcoins
The exchange is not the only method of investing in bitcoins. Local bitcoins are often used to buy BTC offline. The website is designed to connect potential buyers and sellers. Bitcoins are a seller’s locker in an escrow and can only be delivered to buyers.
Buying bitcoins offline is not always very reliable or safe. So it’s best to meet with vendors during the day and have a friend tag you along in case things go south.
Bitcoin is not just a modern trend. Venture capital firms consider Bitcoin to be a decent substitute for conventional currency in the long term. There are many ways to enter the sphere of bitcoin investment. As mentioned before, Coinbase, BitStamp, and Local Bitcoins are the most popular channels for investing in bitcoins in the United States. Do your homework and find out which avenue ticks all your boxes.