How to trade Bitcoin, meaning how to buy and sell Bitcoin and all the other cryptos is commonplace and increasingly popular topic of discussion.
There is increasing awareness of digital currency as an alternative investment vehicle – just like gold.
There is divided opinion on the long term outlook for crypto – read my post on Famous Bitcoin Quotes.
The company also revealed it would soon start accepting payments in bitcoin.
Elon Musk, the CEO of Tesla, is a big fan of Bitcoin.
Prices are volatile so if you are faint hearted, then stay away from cryptocurrencies.
Invest money you can afford to see lose significant value quite suddenly
I would look into Bitcoin in more detail.
Here is what we will cover:
What is Bitcoin?
Bitcoin is perhaps the best known of a group of digital currencies known as cryptocurrencies. These are decentralised stateless digital currencies created by computers without the involvement of governments or banks. Bitcoin and ethereum are the most popular. Others include litecoin, ripple and dash.
The origin of Bitcoin remains a mystery. It is believed to have been created by an anonymous coder known as Satoshi Nakamoto who has never been identified though some believe the name applies to a group of coders. The underlying technology is known as blockchain. Bitcoin debuted in January 2009.
Cryptocurrencies are viewed by many as the future of digital payments, described as “a peer-to -peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution”. Some companies and individuals are accepting Bitcoin for payment.
Some have likened Bitcoin to a commodity, a form of “digital gold.”
Bitcoins are created by a process called “mining.” There are about 16.7m in circulation out of a total of 21m. An estimated 3.7m bitcoins are estimated to be permanently lost due to forgotten or missing passwords. The supply is therefore very limited and this scarcity has contributed to the price momentum.
The myriads of cryptocurrencies would probably disappear with Bitcoin projected to be the strongest survivor.
Blockchain is a cryptographic decentralised public ledger that tracts credits and debits.Verified transactions are presented as chains in a sequence of blocks using complex mathematical functions.
Blockchain is already transforming and disrupting major industries from law, medicine, shipping, airlines to financial services in areas such as data integrity, record keeping and financial contracts. Some commentators are predicting that blockchain will be bigger than the internet.
The Bitcoin Big Bang is a guide to navigating the uncharted territory of digital currency written by CNBC contributor Brian Kelly.
What Is The Value of Bitcoin?
The value of bitcoin varies from those who believe it is a scam that should be banned and therefore worthless to those predicting it will go to 40,000 dollars by the end of 2018 and to $1m by the end of 2020.
Bitcoin is extremely volatile with wild swings in prices and so not for the faint hearted. You should certainly not commit any money you cannot afford to lose.
The current boom in bitcoins has been compared by some to stock market manias and bubbles destined to crash like the dotcom bubble of 2000 as people pile in driven by the fear of missing out.
How Do You Store Bitcoin?
A bitcoin is a string of computer code – a key consisting of a string of numbers and letters that looks like this 01QT23qtqt4q5qt678QT9qt
You need to download a bitcoin digital wallet to store your private keys.To avoid hacking and theft you should save your wallet outside the internet, known as “cold storage.” Some companies offer a free bitcoin wallet download service without trading bitcoin. Others provide an integrated service.
Where Can I Buy Bitcoin?
The easiest way to buy bitcoin is from an online exchange.
Coinbase is the leading and most popular US bitcoin brokerage with more than 30 million wallets.
Not all countries are supported. You can buy bitcoins, ethereum and litecoin from Coinbase and also get a wallet.
When you sign up with Coinbase, you go through a 4 step account set up to confirm your email, add a phone number to enable 2-factor authentication, upload your ID (photoID or passport) and add a payment method. You are ready to go!!
Other exchanges include Gemini (owned by the Winklevoss twins), Bitfinex, Bitstamp, BTCC, itBit, Kraken and OKcoin.
You can sell your bitcoin through any exchange.
The CoinDesk bitcoin price index tracks prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex.
You can also buy bitcoin through a crypto hedge fund like Blockchain Capital and BitSpread.
Some FX brokers offer trading in the digital currency with both spread betting and CFDs. Traders do not need a Bitcoin wallet to trade Bitcoin markets as they are simply speculating on the price movement of Bitcoin and so don’t need to own any.
Popular online brokers include Etoro and Avatrade.
Bitcoin futures started trading on the Chicago Cboe on 11th December to be followed by the Chicago Mercantile Exchange. Some believe this gives legitimacy to bitcoin.
You can invest indirectly through funds that track the value of bitcoin.
In future you will be able to make money when the price falls by “short selling.” It would also be possible to invest in cryptocurrencies through index funds and ETFs.
Bitcoin Trading Strategy
Bitcoin is very volatile and so you need a disciplined approach to your trading with a strategy in place to reduce your downside risk. it can certainly form part of a balanced portfolio. Like any investment, spend some time understanding the technology, and learn which strategy fits with your overall investment goals.
The Future - Zero Knowledge
Bitcoin transactions are stored on a public ledger which are not private. This lack of privacy is a barrier to adoption of cryptocurrencies for transactions especially for big corporations where protection of trade secrets is critical.
The future of digital transactions may therefore lie in technology derived from “zero knowledge proofs’ a concept developed at MIT and based on advanced mathematical techniques, which allows people to prove a statement without revealing any other details. This will allow parties to a transaction to be obscured by encryption while maintaining the credibility and auditability of the shared ledger.
Crypto808 Club , a closed FB group, is for cryptocurrency enthusiasts to share and learn strategies to trade bitcoin and other cryptocurrencies.
Members will get early notice of new and emerging opportunities in cryptocurrency trading including “zero knowledge” based digital currencies and the wider blockchain technology business field. These will only be available to club members within the group.
Membership is FREE for a limited period. JOIN HERE.
Do you want to learn how to invest in Bitcoin and other cryptocurrencies?
Do you want to learn different strategies to invest in bitcoin?
Register for our online course to equip you with the tools to invest in bitcoin.
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