Investing in the $20 Billion dollar Bitcoin market
Bitcoin market gained 120% in 2016 and has been the top performing currency in each of the past two years. Investing in bitcoin is catching a lot of attention from people and corporations, and the drastic demand that the currency is facing is driving the bitcoin exchange rate nuts. Right now, the value of 1 bitcoin is being traded for $1100+.
The two most commonly used ways to invest in bitcoin are bitcoin trading and bitcoin mining.
What is bitcoin trading?
This is the easiest thing you can do to enter the bitcoin game. You can exchange certain currencies for bitcoin at one of many reputed cryptocurrency exchangers like coinbase or localbitcoins. You need to buy them at a low price and wait for the right time to sell it at a high price for making good profits and a good return on your initial investment. You can buy and make a long term investment in the currency by buying and holding it for the years to come.
The way bitcoin has thrived in the market in the recent years, crossing everybody’s expectations, has been incredible and it looks like bitcoin is not going down anytime soon. If bitcoin’s demand keeps growing the way it has been, you can get 100% to 200% return on investment over the next 6-12 months! If you have a lot of funds to invest, you can also try day trading which involves trading on a day to day basis. This kind of trading requires large amounts of capitals to take advantage of small price movements.
You can also try paper trading for a while. Paper trading involves trading real cryptocurrencies, but with fake money. You can do paper trading for a while, to practise your trading skills until you get the confidence to invest with real money into the bitcoin market.
what is bitcoin mining?
Bitcoin mining is sort of a computer solving a mathematical problem. Each solved problem is rewarded with a good amount of bitcoin currency. The bitcoin program is made in such a way that the difficulty of the puzzle increases with the competition to solve it, thus requiring more computational power to solve the problem. Nowadays, because of a lot of competition, bitcoin mining is done through expensive computers that are especially made for computing hashes required to solve the block puzzles.
How mining works is, when alice sends 1 bitcoin to bob, this info along with a secret signature that only alice can generate through the private key of her bitcoin wallet, is sent all over the bitcoin network through internet. The miners than include the transactions into a batch, called a block, with a few other transactions made by other bitcoin users. The miners then verify the transactions with the signatures and if the wallets have the money to do the transactions.
This is where the game begins. After that, they try to generate a code(hash) from the transaction block using random characters(a,b,c,1,2,3,5sd4f,6%$6d). The deal here is that they have to fulfil a certain requirement or rule, like the hash should start with thirteen zeros. The miners try every possible character to hash until they find a hash that starts with thirteen zeros. Remember that the difficulty of the puzzle increases with the competition there is to solve it. So, this difficulty requirement changes after every few blocks to regulate the amount of bitcoins being generated per 10 minutes. On an average, a dedicated miner computer generates trillions of hashes per second.
Once a miner finds a hash that starts with thirteen zeros, it then sends the block of transactions with the random solution found to other miners in the network. The other miners verify that the solution found works by hashing it to the block of transactions. If it works, the miner who found it gets rewarded 12.5 bitcoin for each block he solves. 12.5 bitcoines have a value of US $14585 by the current exchange rate. The solved transaction block than gets added to the whole database of transactions called blockchain.
The number of bitcoins rewarded for a block (12.5 right now) halves after every 210,000 transaction blocks, the next estimated day for this change is 25 jun 2020.
The bitcoin program is made to tackle all of the frauds and unethical practices. But it is, like any other computer program, open to future vulnerabilities.
Why invest in bitcoin market?
Bitcoin is one of the most hottest trading commodity right now. With Microsoft vouching for it, it has been the most profitable commodity and currency to buy and hold for the last two consecutive years.
Though we need to consider the fact that bitcoin has been unstable all the time. Its value has been providing the best returns in comparison to other currencies but it is also the the one that fluctuates extremely.
We also have the guide for How to earn Bitcoins fast.
Should you go for mining or trading?
If you are interested in investing in bitcoin market. As a starter, it would be better and easy for you to invest in trading bitcoins. As of now, there is already a huge amount of competition in bitcoin mining and most miners already have vast resource setups to solve the bitcoin blocks. What their systems can solve in 10 minutes would take a normal PC years to calculate and solve. You would need a factory full of dedicated bitcoin mining hardware for solving bitcoin block puzzles to compete with them or have a profitable bitcoin mining setup.