If you are from Australia or New Zealand and want to invest in Bitcoin, it pays to know what Bitcoin really is and how it works.
Bitcoin or BTC is a system of decentralized cryptocurrency payment developed by Satoshi Nakamoto. Ever since its launch in 2009, it continues to receive constant updates and improvements by a team of developers that is funded in part by the BitcoinFoundation.
Bitcoin is, in fact,the oldest ever cryptocurrency, as well as the most popular. It is even accessible through many reputed Forex brokers like Plus500. Bitcoin buying/selling is completely legal in Australia and New Zealand.
At the time of its release in 2009, the world had not quite dug into the idea of virtual currency and so it would be another four years before Bitcoin began raising some eyebrows. Between 2011 and 2012, its value was magnified by as much as 300%. While in recent times the numbers have remained somewhat lax, Bitcoin remains a lucrative betting commodity for capital firms and traders alike.
How does Bitcoin work?
Bitcoin is becoming more and more popular in Australia and other countries.
Bitcoin was among the pioneering cryptocurrencies to adopt peer-to-peer technology that would allow payments to be virtually instant. The individuals/companies that manage the underlying operations are collectively known as miners.
They actively participate in the network as well. Whatever their incentives are, they depend on the release of new Bitcoin as well as any payments made in Bitcoin. They make up the so-called decentralized authority that is the signature characteristic of Bitcoin and keeps the network economically relevant.
Bitcoin mining refers to the process in which Bitcoins and released and circulated. The idea is to solve the complex computational puzzle that would yield a new block which could be added to the blockchain in exchange for a few Bitcoins.
Back in 2009, the reward was worth 50 Bitcoins but has been steadily decreasing every four years. As the amount of Bitcoins increase so does the difficulty level of the mining. In ’09, the difficulty level was a 1.0. Now it is past 4 billion. Of course, such a rate would warrant major upgrades in computer resources.
So the standard desktop computer was replaced by much faster Application-Specific Integrated Circuits (ASIC), and more advanced processing units like Graphics Processing Units (GPUs).
How valuable is Bitcoin?
In short, a lot. At present, a single Bitcoin is worth well over a thousand North American dollars. That price is not really correlated to the vastness of the mining network. The price of Bitcoin increases along with the cost of producing it.
To keep up, the mining network has had to triple its power in the last 12 months or so.
Who actually came up with Bitcoin?
There is no question that since its inception, Bitcoin has become a pioneer in ushering in cryptocurrencies and providing insanely profitable investment opportunities for traders. But for all the fuss it has been causing since debuting back in 2009, it is a tad bit embarrassing to realize that we still do not know which person or persons actually came up with it. Believe it or not, the world’s leading cryptocurrency network is shrouded in anonymity regarding its roots.
There is only one name that comes up when discussing the origins of Bitcoin, and that is Satoshi Nakamoto. But again, this could refer to an individual, or a group of individuals, we simply do not know for sure yet, and it does not look like we will know anytime soon.
How to invest in Bitcoin
Purchasing Bitcoin in Australia is not as complicated as it sounds. In fact, you can outright just buy some. At present it is terribly simple, thanks to several firms in the United States as well as internationally, that count the trading of Bitcoins among their operations.
For traders in the US, the best option is Coinbase, which sells BTC at a markup that is normally just 1% over the prevailing market price. For Australians a good options is via a forex platform like Plus500.
With Coinbase, American traders also have the option of linking their bank accounts with their Coinbase wallets, making for easier payment transfers in the future. Also on offer is automated Bitcoin purchasing at regular sessions.
For instance, if you intend to purchase $100 worth of Bitcoins on the first or second day of each month, you can simply set up an auto-buy for your desired amount with Coinbase.
However, do not just jump right in. Take the following considerations into account:
Issuing an automated buy order does not mean that you can also control the price at which Bitcoin is bought. Also, Coinbase is not exactly a Bitcoin exchange. You will be directly trading with them but the firm itself sources the coins from other traders. As a result, there is the risk of delay or other issues occurring with orders when the market moves rapidly.
If you are looking for a more conventional exchange of Bitcoin, BitStamp may prove to be a better choice. BitStamp allows you to exchange with other users rather than with the firm itself, which really only functions as an intermediary.
Liquidity is higher as well. Fees begin at only 0.5% and go down even further to 0.2% given that you have traded at least $150,000 within 30 days.
Exchanges, however, are not the sole option for acquiring Bitcoins. You can also buy them offline using Local Bitcoins. The website will set up pairs or prospective buyers and sellers. During purchases, the Bitcoins are locked away from the seller within the escrow.
Whenever you are purchasing Bitcoins offline, you should take the same precautions as you would when meeting a stranger. Make sure the meeting is during thedaytime, somewhere public, and if possible, bring a friend along.
Bitcoin might in some ways resemble a trend or product that came up suddenly, caught everyone’s attention and then disappeared almost as quickly as it came. But in the minds of many traders and venture capital firms, it is definitely here to stay.
And why not? In some ways, it represents the future of how we look at and manage currency. In some ways, it is the future.