Hello, there! Most likely you’re here because you want to learn more about Bitcoin and cryptocurrency. And just like anything, learning starts with history. Knowing about the origins of Bitcoin and cryptocurrency can help you understand what it is and know if it’s worth investing in.
The Beginnings of Cryptocurrency
Cryptocurrency dates back to the late 1990s. Financial and technology enthusiasts were already toying with the idea of a usable digital currency, however, none of their efforts bore fruition. A reason for this may be because of the lack of advanced technologies. Around that time, Amazon had just started. The idea of making the digital currency work in a place that was new to e-commerce wasn’t feasible. But this did not stop them from building their vision.
Satoshi Nakamoto and the Birth of Bitcoin
In 2008, an individual who went by the name Satoshi Nakamoto published a paper called “Bitcoin – A Peer to Peer Electronic Cash System” in a mailing list. A year after, Bitcoin was born. Bitcoin is the first cryptocurrency brand, and it is only one of over a thousand types of digital currencies today.
During its early days, people didn’t know how to value Bitcoin. Over time, Bitcoins began to increase in value. But it was a slow and steady climb, and involved massive crashes. It took some time for Bitcoin to gain value again after the major crash in 2011. But with millions of people now investing in cryptocurrency, the value of Bitcoin skyrocketed in late 2017. As of this writing in 2020, Bitcoin has reached one of its highest valuation at over $12,000.
Cryptocurrency Mining and Trading
So what is cryptocurrency? Cryptocurrency is a type of digital asset or currency that is mined and created online, and can be used in trading and digital financial transactions. Cryptocurrency transactions are recorded publicly through the blockchain system and technology, where transactions are made public, transparent, and secure.
You can invest in cryptocurrency and allow it to grow, or use it to purchase goods and services. It doesn’t come in tangible form, but can be used to buy tangible items. You can buy and store cryptocurrency coins on cryptocurrency exchanges and digital wallets such as Binance.
As mentioned above, Bitcoin is the first and most popular cryptocurrency. However, more people began creating alternative cryptocurrency brands after learning more about the blockchain system and technology. Brands like Litecoin, Ethereum, Ether, and thousands more appeared on the market from 2011 onwards.
Cryptocurrency and Investing
Investing never seemed so cool, until Bitcoin and cryptocurrency came along. Prior to cryptocurrency, the investment options that were available were the stock market, real estate, and precious metals such as gold and silver. The options for the middle-class were few and far in between.
Then, the public started showing more interest in Bitcoin and cryptocurrency. People who were careful about investing in the stock market began putting their money in Bitcoin. One of the most enticing things about Bitcoin and cryptocurrency in general, is security. Transactions are made online and public so you and the world know where your money is going.
Bitcoin and cryptocurrency in general, made investing seem more doable. Cryptocurrency investments have no minimum, unlike other paper-based financial securities. There are cryptocurrency investors who started out with just a few dollars in their digital wallets.
The thing about cryptocurrency is that it has gone from obscure to a trendy buzzword. People spend hours online trying to find out learning about this system. After which, they invest their money – some in ridiculous amounts!
Is Cryptocurrency Worth Investing in?
Yes, it is. Despite the many ups and downs that Bitcoin and cryptocurrency has experienced, it is part of a growing financial technology sector that is poised to grow exponentially in the next few years. With a combined market cap of over trillions of dollars, it’s safe to say that investing in Bitcoin and other cryptocurrencies guarantees a payout, if you are careful and prudent in your investing tactics.
The potential gains – and most importantly – the learning and experience, are two things for you to consider. Investing isn’t just about the money, but the knowledge that you gain from it. In fact, investing in Bitcoin and cryptocurrency is a nice way of testing the waters of financial risk and gain. That’s because you don’t need tremendous amounts of money to make it work.
Investing in Bitcoin and cryptocurrency helps you learn about the basics of investing in general. The amount of money that you put in here and pull out will tell you about your appetite for risk. It tells you how safe or daring you are if you’re more of a mutual funds person or a stock market person.
It also helps you craft your financial plan for the future. Your Bitcoin investment will work for you if it’s oriented towards a certain goal, or goals. For example, you can use your Bitcoin investment in fulfilling short-term goals, like learning a new skill that requires a lot of money, like creating craft beer or a small business to help augment your budget for interiors in your new condominium unit. Not only will you learn to invest, but also manage your budget.
Sophistication and Diversification
Bitcoin and cryptocurrencies are used not only for monetary transactions and personal trading or investments but also in business financing, in the form of Initial Coin Offerings or ICOs.
ICOs are cryptocurrencies that are created by startups in order for investors to fund their venture through digital equity financing. So, instead of going to the stock market to set up an Initial Public Offering, startups simply create ICOs where investors invest in the startup’s own cryptocurrency. Once the startup gets the funding they need, they convert it into real money to use for business operations.
Since Bitcoin and cryptocurrency is still relatively new compared to the stock market (which has been with us for centuries now), the amount that you put in should be able to withstand the sharp rises and falls in the value of digital currency. That amount should not be too small, nor too big. Most importantly, DIVERSIFY! Yes, you read that right. Bitcoin and cryptocurrency in general is a volatile financial instrument, you need to balance it with something that’s safer, like mutual funds, and bank savings.
To date, cryptocurrency remains to be a significant rising force in financial technology. Who knows where it will head to? If you are interested to find out more about how to invest in Bitcoin and cryptocurrency, then check out Binance, the largest cryptocurrency exchange in terms of trading volume, to begin your cryptocurrency investment journey.