Is Bitcoin luring the investors to its side- What you should know when buying and investing BTC

Is Bitcoin luring the investors to its side- What you should know when buying and investing BTC

Last year in 2017 the bitcoin price tripled, and many professional analysts and traders believe it will extend even further According to Harvard academic and bitcoin investor Dennis Porto believes that, given a few years, it will soar far higher than either of those predictions. In an interview with Business Insider UK, Porto explained that the bitcoin price could reach $100,000 per coin in February 2021 if it follows Moore’s Law, one of the so-called “golden rules of digital technology.”

According to Porto, rapidly growing technologies have a doubling time, meaning that their effectiveness doubles within a consistent, repeatable timeframe. Traditionally, Moore’s law has been applied to computing technology, but Porto believes that the bitcoin price has thus far followed the trend by more or less doubling every eight months throughout its history.

Assuming bitcoin continues to follow this golden rule in the near-term, Porto anticipates the bitcoin price will extend beyond $100,000 by February 2021. Using the current BTC supply for simplicity’s sake, this would give bitcoin a market cap of about $1.65 trillion. Needless to say, a $100,000 bitcoin price would thrill investors, assuming they have the fortitude to resist the temptation to sell them. But one investor John Mcafee, the eccentric software pioneer is not pleased and who famously promised to perform a shocking anatomical act on live television if the bitcoin price did not reach $500,000 by 2020.

BTC chart

2017 Bitcoin Price Chart from CoinMarketCap

 

The programmers, market-makers, traders and boosters behind Bitcoin have convinced many people that encryption keys have real value, that they’re not only money but better than money, because they’re not manipulated by government.

So if you are interested in purchasing and investing in BTC then you should understand few things

Purchase BTC through cryptocurrency exchanges

Interested in BTC then buy them directly through cryptocurrency exchanges, such as Coinbase, GDAX, Kraken, and Gemini. All you need is to sign up for an account online and then buy the bitcoins through a bank account transfer, credit card, wire transfer, or, in come cases, even a PayPal account. On Coinbase, you can withdraw money by transferring cash to a bank account or PayPal account. Trading and withdrawal fees vary from exchange to exchange, so it’s best to shop around. Keys to the bitcoins are stored in a digital wallet and if you want to go for Ether that can be purchased on exchanges such as Coinbase and GDAX.

Buy and sell BTC from local sellers

If you are more sensitive to your privacy then investors who prefer anonymity or don’t want to provide banking information, can purchase bitcoins directly from a local seller. You can find such sellers through LocalBitcoins.com, where transactions are arranged, prices negotiated and an escrow service provides protection for both parties. For those choosing this method, it’s best to meet in public places. There are also bitcoin groups that meet through meetup.com for local buyers and sellers.

Buy BTC at ATM

There are also BTC ATM machines. You can thus buy bitcoins through special ATM machines. Bitcoin Depot, for example, offers ATM machines in six states – Georgia, Florida, Tennessee, Texas, Massachusetts and Alabama. The investor signs up for an account with Airbitz bitcoin wallet, deposits cash into the ATM, scans a QR code with a special scanner attached to the ATM, and the bitcoins will be in the Airbitz account. However, the ATM method often comes with hefty fees – sometimes in excess of 20%.

You should invest indirectly with BTC

Investors can also cash in on the bitcoin craze indirectly by purchasing shares in companies that either invest in bitcoin or provide part of the underlying blockchain technology. The risk is that many are penny stocks. Like the First Bitcoin Capital Corp develops digital cryptocurrencies and blockchain technologies. It also owns and operates various digital assets, such as cryptocurrency exchange CoinQX.com and bitcoin news site, iCoiNEWS.com; Connexus Corp. operates bitcoin ATMs, BTCS Inc. hosts an ecommerce marketplace, where people can buy merchandise using digital currencies, like Bitcoin and litecoin, Bitcoin Services offers both bitcoin escrow services, where it acts as a third party between a buyer and seller when doing business online, and bitcoin mining services, where it validates bitcoin transactions. It also develops and sells blockchain software and Nvidia Corp. and Advanced Micro Devices Inc. (AMD), which trade on Nasdaq, provide graphics processing chips to cryptocurrency miners.

Invest through brokerage firms

If you want to avoid the risks and hassle of setting up digital wallets, you can invest in bitcoin indirectly through Bitcoin Investment Trust (GBTC) in the OTC market. GBTC is a bitcoin-based fund that acts like an ETF, whose shares can be bought and sold through traditional brokerage firms. Each share represents about one-tenth of a bitcoin. This convenience comes at a steep price: The fund has been wildly popular, which has caused shares to soar to the point where a share is now priced about 73% higher than the value of the underlying bitcoin. GBTC charges a 2% management fee on top of that.

Safeguard your Bitcoins

Now you have BTC but as an investor you need to take care of them and stay protected. Bitcoins in exchange accounts are not FDIC or SIPC protected. Leaving bitcoins in a digital account on an exchange could be risky if the site crashed, went bankrupt or got hacked.

In 2014, Mt. Gox bitcoin exchange filed for bankruptcy after claiming it had been hacked and that thieves made off with hundreds of thousands of bitcoins. A trial began in Tokyo in against the former head of Mt. Gox, Mark Karpeles, who faces charges of embezzlement and creating unauthorized records.

So never keep a large dollar amount at a bitcoin/ethereum exchange  as there are still high risks for hacks. Experts recommend investors move the bitcoin keys to a digital wallet on their computers, which involves installing a cryptocurrency wallet on their computer and making sure the computer is protected by anti-malware protection.

To be even safer, the investor could purchase “hardware wallets,” such as Trezor wallet or Ledger Nano wallet, which are USB-sized devices that safeguard the bitcoin private keys offline. Knowing that if an exchange is hacked or goes bankrupt, your funds will remain safe.

Should you invest in Bitcoin?

You want to invest in BTC and hope it will do the holding (appreciate in value). Before you start you should know that Bitcoin trading is different than buying and holding. When you are trading Bitcoins it means that you are actively trying to buy Bitcoins at a low price and sell them back at a higher price in relatively short time interval. Trading successfully requires knowledge and practice. The trading market is occupied by very large players who are just waiting for newbies to come in and throw their money away by trading aimlessly.

If you don’t trust the coins, or the traders, there is a stock you can buy that will give you a piece of the action and it is Overstock.com, Inc. Overstock is now making a play for the cryptocurrency market. It is now accepting over 40 alt-coins, or cryptocurrencies, on merchandise sales, making them legal tender in its marketplace through an interface called Shapeshift. More important, it says it will keep half that “money” as an investment. The company has a blockchain and Bitcoin trading unit called Medici Ventures.

Also the largest tech companies continue to gear up for the rise of blockchain technology in tracking assets. Microsoft announced its Coco Framework, running in its Azure cloud, giving companies the equivalent of a safety deposit box for their own blockchain code in August 2017. This Trusted Execution Environment, or TEE, can then be networked with business partners, so they can all agree on the ledger and code they are running.

So if you are interested to invest in BTC you need to decide for yourself if you think this is a good time to buy. Don’t take anyone’s advice about what will happen with the currency, do your homework, learn about Bitcoin and come to a conclusion.

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