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Some of the things to look into before you buy Bitcoin

Here are a few things that you must keep in mind when you are about to buy cryptocurrencies for the first time

Physical bitcoin on table
Image: Unsplash

Bitcoin was first thought of as an extremely risky venture and only a few people meddled with them. However, in today’s market, cryptocurrencies have started gathering a good name amidst the normal population and people have started taking interest in them.

While it was popular in a limited market, it has now reached into the wild and people have finally understood its long-term potential. However, like any insurance, there are some risks associated with investing in cryptocurrency and it is very important that you understand what it truly is before making your purchase.

Here are a few things that you must keep in mind when you are about to buy cryptocurrencies for the first time:

Bitcoin has been Described as a Bubble

A bubble is basically a rapid increase in the price of something followed by an abrupt crash. Bitcoin can sometimes be a bubble which makes it a little difficult to track its activities or understand it’s long term behaviour. This phenomenon has happened numerous times with bitcoin, be it in 2011 or even recently in 2017.

Sometimes the price of bitcoin reaches a peak because of advertising or some influential talk about its potential. However, this generally follows a sudden crash as people start to lose interest. Whether it is a bubble or not, the best way to deal with Bitcoins is to buy it when there is excess supply in the market and sell it when there is a bigger demand for it. 

Bitcoin is one of the Most Transperant Currencies

Bitcoin works under the mechanism of a blockchain which makes it one of the most transparent currencies all around the globe. Since bitcoin works using a blockchain mechanism, which is a public ledger system, everyone has access to it and can track its ups and downs at all times.

All the transactions are basically stored in the various blocks that form the blockchain which can be viewed and tracked by everyone no matter what technology they use. This means that, whenever you make any transaction with Bitcoins, whether buy or sell it, this is represented in the blocks that can be viewed by one and all.

This however does not mean that your personal security is in question because you are represented by a bitcoin wallet that is your part of the Bitcoin Community. 

Bitcoin is volatile in nature

One of the main reasons why people don’t seem to have trust in Bitcoin is because of how volatile it is. This is one of the most important aspects of bitcoin and something widely popular. Basically, the price of bitcoin rapidly grows and falls within very short periods of time which makes it a little unreliable in the long run.

However, you must understand that no matter where you invest, whether it be in Bitcoins or the stock market, your assets are always subject to some risk. However, when it comes to the stock market, economists have been trying hard to make the market more predictable, while similar efforts have not borne fruits when it comes to investing in cryptocurrency.

One of its prime importance is when the price of bitcoin had jumped to $19,000 in a matter of days but had dramatically fallen to a low price of $12,000 without any prediction of such an event. 

Bitcoin Does Not Make You Invisible

Many people believe that any transaction you make via bitcoin is completely anonymous in nature and that there is nothing that can link you to said transaction. However, this is far from the truth because bitcoin is not essentially anonymous if you do not take the appropriate steps to guarantee your anonymity.

Since every bitcoin transaction are stored in a public ledger, people from everywhere have the ability and capacity to get a history of this transaction and even view your balance. Bitcoin transactions are permanent and irreversible in nature. Once you make the transaction, there is no going back whatsoever.

While of course your address cannot be directly used to understand or disclose your identity, with the correct tools that are used by government agencies, they actually can track your identity based on your transaction. People generally operate through privacy coins to remain hidden. 

While bitcoins do come with a huge number of advantages, there are also some disadvantages that you must keep in mind before you get started in your bitcoin investment endeavor. It is always important to get a full understanding of what you are getting into before making a move in this direction.

With you will be able to get adequate information as well as guidance into buying and investing in Bitcoins in a safe and secure manner. Just make sure to get aid when you need and you are good to go! 

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Chris has been blogging since the early days of the internet. He primarily focuses on topics related to tech, business, marketing, and pretty much anything else that revolves around tech. When he's not writing, you can find him noodling around on a guitar or cooking up a mean storm for friends and family.

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