You have almost certainly already heard about Bitcoins, but you might not be fully aware of what they are. Bitcoins are a genuine current but instead of existing in the real world, it is a virtual currency. Bitcoins are traded using the bitcoin protocol and these coins have a real value. The value depends on the demand for the currency and this has been increasing since its launch. Currently one bitcoin is worth thousands of dollars.
Bitcoins are a new type of currency known as a cryptocurrency. These are also known as virtual currencies and this means that they exist on the Internet. The Bitcoin protocol is the method bitcoins are exchanged and this was designed by a Japanese Computer Science student (Satoshi Nakamoto). Bitcoins started very low in value but have since shot up, now bitcoins are worth thousands of dollars each.
Why Should I Care?
You might be perfectly happy using dollars to pay for things, but you should still find out more about Bitcoins. Although you might not want to use Bitcoins as a replacement for conventional money, it can be a good investment. Quite a few websites online are actually starting to accept payments in Bitcoin, it’s expected that this payment medium will become more popular in the future thanks to the convenience and security offered.
Investing in Bitcoins
Just like any other currency it is possible to buy bitcoins by exchanging your own currency for bitcoin. This is typically done through a bitcoin exchange website, although it is also possible to buy bitcoins privately and even on auction websites. Bitcoins are much more valuable than they ever used to be, and people are speculating that they will continue to increase in value. If you buy now and they do increase in value then you will be able to profit.
How to Buy Bitcoins
There are many different exchanges which allow users to purchase bitcoins using a number of different methods. Most people think that you can’t buy bitcoins with Paypal but this isn’t actually true. You can use Paypal as a payment method when buying bitcoins if you are careful and shop around. Make sure you take your time to find a trustworthy bitcoin exchange which accepts Paypal. There are quite a few scams out there, so read reviews before handing over any money.
Once you have bought bitcoins you will then need to keep a close eye on the exchange rates and the market. Once you see the value of the currency start to increase you might want to consider cashing in by selling your bitcoins for dollars or your domestic currency again. This way it is possible to profit from the chances in the exchange rates.
Generating Bitcoins
A lot of the information about bitcoins on the Internet will be about mining. This sounds like a great way to make money for free without having to invest anything. However, this isn’t actually true. Mining for bitcoins is very time consuming and can take years of computer time to uncover any bitcoin. You have to pay for the electricity to power your mining rig, which is why bitcoin investing and trading is often seen as a much easier solution.
Mining or Trading
If you search online for information about Bitcoins then most of these sites will simply tell you about mining for bitcoins. Mining is where you use your own computers processing power to solve complicated equations. Sometimes the processing power will be rewarded with a block of bitcoins. In the early days of the Bitcoin, it was relatively easy to mine for them using a standard desktop computer. Few people bothered though because the value of the bitcoin in those days was so low.
Mining has since become extremely difficult and unprofitable. If you have a standard desktop computer and are mining for bitcoins then it’s unlikely you will make it profitable. There are pools that you can join, but even so the returns are very low. Although it may be possible to mine for bitcoins using GPUs or ASIC hardware, these require significant investment which will put most people off.
A much easier way to profit from the value of bitcoins is to start trading in them. Bitcoin trading is the buying and selling of the currency in exactly the same way as any other foreign currency. You can use this to speculate when you think the value will increase and decrease by holding the currency at different times.
Bitcoin Exchanges
Just in the same way you can buy foreign currencies at a bureau de change, you can buy bitcoin from online exchanges. These work in exactly the same way as any other currency exchange by publishing the buy/sell spread. The value of bitcoins can change over time and this is how you can make money. The aim of the game will be to try and buy bitcoins when they are low in value, and sell them when they are high in value.
If you bought bitcoins when they were just a few dollars each, you would of made a fortune by now because they are worth thousands. While it is virtually impossible for the bitcoins to fall this low again, you can still make smaller returns by studying the market. The market, like any other, is affected by numerous external influences. Bitcoin trading software can be used to chart the changes in the market and try to identify any trends.
For example, when China forbid the use of the currency the value fell slightly due to the decreased demand and uncertainty. This would or provided you with a window to invest when the price was low and then simply waiting until the market price increased.
Easier Solution
Of course, manually tracking the value of the bitcoin over time can be very difficult and time consuming. It’s also impossible for you to spend 24 hours a day at your computer checking the value. That’s why many people are turning to bitcoin trading bots. These bitcoin trading robots are scripts designed to automatically buy and sell bitcoins when certain criteria is met.
Bitcoin robots allow you to sit back and let the computer do all the hard work for you. The currency will be bought when it falls below a certain level, and sold when it increases. As this also takes any emotion out of the equation you won’t suffer from getting too greedy. Instead, bitcoin trading bots should provide you with a steady investment.
Bitcoins and other virtual currencies are still relatively new. This means that nobody knows exactly how they will behave. They will be slightly more risky than conventional currencies because it would be possible that everyone loses confidence in them. For this reason, you should never invest more than you can afford to lose, if you do make any money from it then it’s a great bonus. Using the right bitcoin trading tool can maximize your chances of success while limiting your risk.
Automated Software
If you want to trade in bitcoins or other cryptocurrencies but don’t want to have to sit at your computer all the time then you might be interested in automated traders. These are automatic pieces of software which can buy and sell bitcoins depending on certain rules. This allows you to sit back and relax while your computer trades for you. Many of these systems use complex algorithms to ensure you make as much profit as possible.
Should I just Invest in BitCoin?
Just like the real world, the virtual currency market has many different options to invest in. Bitcoin may be the current market leader, but you should also consider investing in some others to diversify your portfolio. Other popular cryptocurrencies include Litecoin which is though to be the second most popular virtual currency.
Bitcoins may be a virtual currency but they have a real value and are worth investing in. Investing in Bitcoins is no different to investing in stocks and shares or other foreign currencies. The chances of success are huge because the Bitcoin seems to be continuing to increase in value.
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