A digital phenomenon that has set new rules for the game in the global economy — read a recent article about what is Bitcoin and whether it’s worth investing in it.
Introduction to Cryptocurrencies
In essence, cryptocurrency is digital finance, similar in principle to fiat (ordinary) money, but with its nuances:
- All cryptocurrencies are virtual (there are no coins or paper money).
- Peer-to-peer payment methods.
- Each cryptocurrency is encrypted.
- Banks and authorities do not regulate them.
- All cryptocurrencies use blockchain.
It is difficult to say what does a bitcoin look like or other cryptocurrencies. In short, this is decentralized electronic money. But before becoming such (receiving monetary value), they undergo a complex digital transformation.
What Is Bitcoin?
Bitcoin (BTC) is one of the most popular and sought-after cryptocurrencies. It launched in 2009 thanks to Satoshi Nakamoto for direct transactions without intermediaries such as banks and other financial institutions.
It is a real investment asset, digital gold, which can also be mined like a real one. This is the reason Bitcoin is the ultimate currency.
This is also the paradox: Bitcoin has no physical basis and is created, roughly speaking, out of thin air, and at the same time, it has an impressive value.
Bitcoin Value: Hype or Profitable Asset?
We are used to believing that the value of any money must be backed by something — for example, by gold, as in fiat money, or by some economic mechanisms.
But Bitcoin is considered a full-fledged asset and is even an alternative to gold without having a physical basis. What makes it so valuable:
- Deficit. As we said before, Bitcoin is limited. To be precise, there are currently 21,000,000 bitcoins in the world. Moreover, some of them are irretrievably lost, and the supply of bitcoin is much lower.
- Durability. Unlike fiat money, which can be lost or destroyed, bitcoin does not involve such risks.
- Scalability. Bitcoin allows users to make transactions of any size because each BTC equals 100,000,000 Satoshi.
- Popularity. It is already possible to pay with bitcoin for goods, and this trend will grow because the blockchain is gaining momentum and developing rapidly.
- Easy to move. All you need is the Internet and private keys to move bitcoin from one place to another.
- Interchangeability. You can use cryptocurrency to exchange values around the world.
All assets should adhere to all these factors, which can be a good store of value.
What Is Bitcoin Mining
If cryptocurrency is digital gold, then it must be mined somehow. And in this case, such “mines” for the extraction of BTC or any other cryptocurrency are special computing equipment.
Thanks to his work, a blockchain is created, such a continuous chain from a block of transaction data. Attaching each such block to the chain is a decision of a complex algorithm for which the miner receives a reward.
At the same time, the cost of a digital coin depends on the miners involved in this task and the complexity of the mathematical task itself. Mining itself can be of three types:
- Cloud mining. This is when a miner rents a certain amount of power to mine cryptocurrency (hash rate). Here the main indicator is the possibility of equipment: the higher it is — the better.
- Solo mining. In this case, the miner does everything himself: he assembles the equipment and solves the problem as well. This method, of course, is much more complicated and is not suitable for everyone.
- Pool mining. It's a way where hardware and miners come together to solve a math problem faster. The server distributes simpler tasks to all participants, on the basis of which the solution comes.
There are also alternative ways to get a crypto coin. For example, buy it on the exchange, get it as part of promotions (this is less common), and through passive investment (staking).
Evolution of the Value of Bitcoin
Initially, Bitcoin was not valued as highly as it is now. In the first year after the creation and start of mining, it generally costs $0. That is, in 2009 there was no trade at all, and there were no exchanges then.
Little by little, people began to understand what is BTC, and its price began to rise and already amounted to a whole dollar, and they were already able to conduct transactions.
Actually, then in 2010, this funny story happened with Laszlo Hanech and his purchase of pizza for 10,000 BTC (at that time, the bitcoin exchange rate did not even reach 50 cents).
In general, the price of Bitcoin and its popularity has experienced many inflection points over the past decade.
|
Year |
Bitcoin’s Price |
|
2011 |
Bitcoin hit $1 for the first time and then “jumped” to $32 and rose to $10. |
|
2012 |
The first cryptocurrency halving, when miners started getting 25 BTC instead of 50 BTC. In the same year, the price of Bitcoin reached $13.44. |
|
2013 |
The year when the value of Bitcoin significantly rises. The price rises to $1153. |
|
2014 |
The first "cryptocurrency winter" after the theft of 744 thousand Bitcoins by hackers from one of the largest exchanges, Mt.Gox. At that time, Bitcoin cost no more than $340. |
|
2015 |
The price of BTC slightly rose to $430. |
|
2016 |
The price gradually continues to rise to $1000. |
|
2017 |
Huge jumps in price, when Bitcoin was worth $960, then rose to $5,000, and by December it had risen to $19,483, after which there was a collapse. Also this year there were two hard forks. Then traders learned what is Bitcoin Cash (BCH) and Bitcoin Gold (BTG) are. |
|
2018 |
The second crypto winter, when the price of Bitcoin first dropped to $9800, and then completely collapsed to $3800. |
|
2019 |
Exchange rate fluctuations within $13,785, after which bitcoin fell to $10,000, and then to $6,600. |
|
2020 |
Another bitcoin halving, was accompanied by stabilization and growth of the exchange rate. By the end of the year, Bitcoin could already be sold for $19,000, and cryptocurrency transactions could already be made through PayPal. |
|
2021 |
The most successful and profitable year for BTC because the price marks periodically reached $40,000, $57,000, or even $63 thousand. |
|
2022 |
The period of the collapse of the cryptocurrency against the backdrop of geopolitical fractures, when the price fluctuated between $33,000 and $45,000. |
Now Bitcoin seems to be aiming for $52,000, and analysts from JPMorgan claim that it will cost $146,000 in the future.
American Racing in BTC Investments
Anyone who works with crypto money can attest to how dangerous and unstable it is to invest in it.
FIN Newsletter editor James Ledbetter said that BTC "represents a highly volatile and risky investment."
The fact is that any authorities do not regulate such currencies. The only place where banks and institutions can control them is through anti-money laundering measures. So what problems can bitcoin investors face:
- Hackers and scammers. Cybercrime is a real headache for millions of users, including cyberpolice. Thus, Atlas VPN indicated that hackers would steal about $10 million daily.
- Turns on the courses. BTC volatility is unpredictable and highly dependent on geopolitical and global economic factors.
- Memory. This may sound ridiculous, but it's true; Chainalisis estimates that about 20% of all cryptocurrencies are either forgotten or simply lost (that's about $140 million).
Also, many investors make the common mistake of pinning all their hopes on one thing (company or cryptocurrency), when it would be better if they spread their forces.
There are many different ways how do you buy Bitcoin. These are options, the purchase of shares in companies related to BTC, and funds. But the most popular and affordable way exchanges.
Top 20 Exchanges Where You Can Buy Bitcoin
Now about 600 exchanges are open for trading with different levels of security and commissions.
Forbes Digital Assets and CryptoVantage have created lists of the best exchanges with the most reliable and favorable conditions for traders. We will highlight the top 20 of them.
Binance
Let's start with one of the most popular, reliable, and authoritative exchanges for buying cryptocurrencies. Binance is considered to be the most convenient and comfortable.
Today it is not even just an exchange but a full-fledged ecosystem, with an online academy where you can learn everything about blockchain technologies and cryptocurrency trading.
Bitstamp
This was one of the first exchanges where you could buy Bitcoin. Right now, Bitstamp provides a somewhat limited selection, although it is enough to trade the main ones like BTC, ETH, etc.
Beaxy
Many crypto traders note this is a reasonably profitable crypto exchange for buying bitcoins for fiat.
The advantages of Beaxy include simple registration, the ability to pay with a bank card, bank payments, Wire Transfers, etc.
BitPanda
This exchange is interesting because it was created as an Australian startup but is only available to EU citizens. However, this small nuance is completely covered by comfortable conditions.
BitPanda allows you to buy Bitcoin and Ethereum through bank cards and e-wallets at relatively low fees.
bitFlyer
There are few possible cryptocurrencies to trade here, but there are another advantage — meager commissions.
bitFlyer is a fairly convenient exchange where you can trade different amounts of cryptocurrencies.
eToro
For newcomers to crypto trading, the platform must be friendly and comfortable. And at the same time, inspire confidence and reliability. This is exactly what eToro is.
Another plus of the exchange is that it is a reliable resource supporting credit cards for deposits and withdrawals.
Changelly
Unlike many crypto exchanges, Changelly sends Bitcoin directly to your wallet without storage.
On the exchange, you can conduct transactions with more than 150 cryptocurrencies, and if you complete transactions without a credit card, you do not even need to log in.
Coinbase
An authoritative exchange that was founded at the end of 2012. There are two ways to buy bitcoin here: through a Coinbase wallet and an exchange.
In the first case, you buy bitcoin directly from Coinbase; in the second, you interact with other exchanges.
CoinMama
If there's a place where can you buy bitcoin with a credit card with fast transaction processing — it's on CoinMama.
This is one of the reputable exchanges that has long been popular due to its comfortable user interface and transfers.
CoinSwitch
It is a pleasure to work with an exchange that is reliable, diverse in terms of the choice of cryptocurrencies, and easy to understand.
CoinSwitch is just a platform, with no registration required, 24/7 live chat, and a great support program.
Crypto.com Exchange
This is a profitable exchange for those who want to earn interest in holding assets. Crypto.com is available to residents in 80+ countries and can sell their tokens.
FTX
It is a popular place among crypto traders and is headquartered in Hong Kong. FTX offers a fairly large selection of cryptocurrencies (about 300) and is available to traders from hundreds of countries.
The platform is more suitable for experienced traders, but beginners can also feel comfortable here.
Gemini
This is one of the best crypto exchanges for 2022. Gemini may even resemble Coinbase in some ways: there is a transaction fee that depends on the purchase amount.
Guardian
Users who have registered with Guardarian can exchange over 250+ types of cryptocurrencies and make transactions with them worldwide.
At the same time, you also receive a virtual and physical crypto card on which your finances will be stored.
GDAX
Coinbase also created a subsidiary exchange, which gained millions of users thanks to such a network, and the same comfortable conditions.
GDAX has also maintained low fees while supporting altcoins and Ethereum.
Kraken
This is a global crypto exchange, which is also distinguished by its reliability. Kraken has strong cybersecurity practices and is available in 90+ currencies.
Of the minuses, one can perhaps single out the difficulty for beginners.
KuCoin
An easy-to-understand and easy-to-register exchange with a high level of security.
KuCoin is compatible with hundreds of different cryptocurrencies, including BTC.
Mexo
Here you can trade derivatives and withdraw funds without commission.
Mexo is also very convenient for beginners because you can practice on a demo account before trading.
Shakepay
This is not only one of the most comfortable but also one of the fastest crypto exchanges. Purchases can be made within a minute, and all assets are offline.
At the same time, Shakepay is a licensed platform that accepts credit cards and bank transfers.
Newton
If the level of security of a crypto exchange is in the first place for you, try Newton.
The platform works closely with Plaid, accepts even less common cryptocurrencies, and is very friendly to Canadian traders.
How to Save Your Bitcoins
In addition to the difficulties with rates and the instability of cryptocurrencies, there is another significant point.
The fact is that crypto wallets are the #1 target for hackers and scammers.
So it is advisable to protect them first. As a worthy alternative, you can use:
Cryptocurrency Exchange
This is an online BTC storage option. Third parties on crypto exchanges can be considered some of the safest, even if you store your coins online.
But before trusting this or that exchange, you should make sure that the platform is reliable and uses all measures to protect your data and coins, two-factor authentication, guarantees, etc.
Cold Storage
When we talk about cold storage as a way to protect your finances, we are talking about the use of storage media. You can save it via USB for example.
As a plus, you can be out of reach for hackers or system failures. But there is another danger: you can forget your password or lose your vault, so be careful.
5 Rules for Safe Investing
After all, bitcoin is a solid asset and, with a skillful approach, can seriously enrich a trader and even make him a millionaire.
But you need to understand that cryptocurrency is a capricious resource, and sometimes its behavior cannot be predicted.
However, you can avoid common trading mistakes by remembering five basic rules:
- Don't invest everything you have in cryptocurrencies.
- Treat it like gambling: don't take losses too seriously and know how to stop in time.
- Be sure that you will still succeed, even if you are not lucky this time.
- Remember that bitcoin is volatile, and you can easily run into crashes and bull runs.
- Don't treat this as a short-term investment — be patient.
And one more secret of a successful trader:
Invest in BTC or other cryptocurrencies invest not for the sake of money but for the sake of experience, formation, and development.
We wish you success and your investments — growth!
