What is Bitcoin and how to invest in it

The word bitcoin is a hot topic on the news right now. You might have seen prices skyrocketing and companies accepting it as a method of payment. You may also have noticed its memes on Elon Musk’s Twitter. Today’s article will give you a comprehensive understanding of what’s bitcoin and how to invest in it as a beginner.

How bitcoin and cryptocurrency work

Cryptocurrency: A virtual currency where transactions are managed by a de-centralized system using cryptography rather than a central financial authority
Bitcoin: The biggest and most mainstream form of cryptocurrency. Used widely throughout the world

The working principle of Bitcoin is a ledger(spreadsheet) that keeps a record of every single transaction that has happened on bitcoin since its launch. Transactions are managed by a de-centralized system run by millions of people(Bit Miners), who have a copy of that master ledger(spreadsheet). Hence it is hard to hack into bitcoin as millions of people have a copy of that master ledger, which has to be unanimous everywhere making the system very safe. On top of de-centralization, it also implements encryption to access the ledger and for user’s identity to add extra security. The Bit Miners solve different cryptocurrency transaction codes through computing power which in return gives them bitcoin tokens and also keeps the system verified.

Why Bitcoin is Controversial

1. People think it’s mainly driven by speculative people who invest in bitcoin mainly because they see it on the internet or through tweets. They criticize bitcoin for not having real value to it.
2. Some people criticize its security. Although the whole system is very secure your bitcoin is still stored at an exchange like at the New York stock exchange. If the exchange was somehow hacked you could lose all your crypto. Although the chances of that happening are very slim
3. Because Bitcoin is protected by encryption. Your name and details are not tied to transactions so it could be used as a medium of transferring illegal money or funding illegal activities without identity verification

How to invest in bitcoin

Investing in Bitcoin requires you to have a medium to store your crypto and a medium to buy and sell your crypto. Mostly Bitcoin storing mediums come included with the exchange medium on various exchanges in every country. For extra security, you can enable two-factor authentication on your account and you can store your crypto on an offline wallet. An offline wallet is a physical hard drive that stores your crypto offline.

Summary

If you are serious about investing bitcoin is a good commodity to hold but due to its volatile nature. I suggest beginner investors invest in stocks and shares first. You can find articles about stocks and shares on my website