Invest in Bitcoin: When Bitcoin went public on 12 January 2009, investors were skeptical. People thought the new cryptocurrency would not last long because it had no value and that it would be hard to use. In fact, Bitcoin crashed in early 2010 and was all but forgotten by people. But today, investors are investing in Bitcoin again after seeing its price rise from $792 to $2152 during this year’s first half, making it the best-performing currency of 2017 so far. You can track your bitcoin by using Bitcoin Mining App.
After Bitcoin’s history, the question remains: how can investors invest in Bitcoin and make money?
One of the simplest ways is through Coinbase. Coinbase is a platform that allows people to make transactions using cryptocurrencies like bitcoin, Ethereum, and Litecoin. Those who want to buy bitcoin or Ethereum on Coinbase must first create an account and then link it to a bank account or credit card. They can then purchase bitcoin or Ethereum with their linked bank account.
This means that investors do not have to purchase their own bitcoin or Ethereum, but they can buy the cryptocurrency through Coinbase. Once the investor has purchased his cryptocurrency, he can now hold it in Coinbase’s platform or transfer it to a separate wallet.
By holding it in Coinbase’s platform, the investor will at least be making a passive income because of their cryptocurrency holdings. But if the investor transfers it to his own wallet, he might be able to make even more money as long as he makes good trades.
If he makes good trades and buys or sells at the right time, he can possibly make large profits from just holding his cryptocurrency on Coinbase. Obviously, this is not the only way to invest in Bitcoin. Investors have many more investments strategies to choose from.
How Bitcoin works
It may sound complicated if you’ve never heard of bitcoin, but it just might change the way you think about the way we do transactions. In this post, we’ll explore the intricacies and complexities of an online currency.
Cryptocurrencies like bitcoin weren’t born with a fully-formed system; instead, they evolved and improved over time. Bitcoin isn’t technically an “online” currency: instead, it’s a decentralized network that stores all transaction information for anyone to see (but not who sent or received them).
The Bitcoin system has no third-party operator, which means that it is completely transparent and there is no central server to hack. On top of that, bitcoins are not physical coins – they are invisible pieces of data stored on a decentralized network. They can be traded for real goods and services, or simply used like other traditional currencies. The only catch is that you have to know the person you’re trading with and build trust with them first.
Let’s look at how it all works.
The Bitcoin Blueprint: Cryptography and Mathematics
Since bitcoins are so unique, we should start by explaining how they work. Over the years, bitcoin has evolved from a simple idea to a highly advanced currency. It is based on two major concepts: cryptography and mathematics. You can think of them as two sides of the same coin – or, more accurately, as complementary properties that together form a unique system.
As we mentioned before, because bitcoins are stored on a decentralized network, there is no single “bank” that has total control over the bitcoins (or any other currency for that matter). Instead, all the bitcoin network does is a store and send the transactions from one person to another.
The recipient of a bitcoin transaction extracts it from the network and is entitled to cash in the corresponding amount of bitcoins. However, this is only possible if he also has access to a bitcoin address (a unique identifier) associated with his wallet. This ensures that no one can collect multiple bitcoins from the network.
The reason why this is important is that it solves a problem called double-spending. Double spending occurs when you spend money twice to the same recipient. Since money is sent to an address, and not a person, it’s very easy to do – you just have to find out someone’s bitcoin address first! So how do you do that? Well, there are three ways:
They pay for something using bitcoins (e.g. they buy a pizza using bitcoins) They give you their address (e.g. if they want to receive money, they’ll write down the address on a piece of paper and give it to you.) You can find out someone’s address by asking them for it (e.g. ask them for their home address or phone number, or log in to PayPal and ask for their email).
This is where cryptography comes in. First, let’s look at bitcoin addresses and how they are actually used. See below for an example of why this information is important:
During the payment process, you provide the recipient of the transaction with an address (0x1407f6b32ba50d6900ac7e62f265ad04a7259e91). This way, you get paid even if your computer was hacked, the transaction wasn’t completed successfully and the bitcoins have been spent elsewhere.
To actually see a transaction, you need to include the data in the block. A block is a group of transactions that have been hex-coded and verified by other users on the network. So, when you send bitcoins to the recipient of an address, the bitcoins are sent to both you and your recipient’s address simultaneously. For this reason, bitcoin addresses are sometimes referred to as “pseudonyms”. This way, they aren’t tied directly to one person but to a bunch of people who share the same wallet (journal).