What Is Bitcoin?
Bitcoin is a decentralised, peer-to-peer digital payment network that allows value to be transferred in the form of the world’s first cryptocurrency—BTC. It can be used to send money to anyone anywhere in the world, to facilitate online payments, and as a store of value for investors.
Bitcoin revolutionised finance through decentralisation, showing that central authorities that dictate what you can do and intermediaries like banks that charge you fees aren’t needed for a payment system to flourish.
Instead, Bitcoin can be transacted directly between people, regardless of geographical borders, bank opening hours, or the amount transferred. Nobody owns or controls Bitcoin—the code is open-source, anyone can contribute, and the network collectively manages transactions and issues bitcoins.
This is because Bitcoin transactions are stored on a shared public ledger—the blockchain. The network verifies the transactions, with the integrity and security of the system guaranteed by cryptography.
For a more detailed look at what Bitcoin is and its invention visit our main Bitcoin Page.
Ways to Invest in Bitcoin
You can buy Bitcoin for the short term or the long term. Both options have the potential to be profitable and it is simply a matter of personal goals and preferences which you choose. We’ll explore both in more detail below.
Buy and hold Bitcoin
This is the most straightforward of all strategies—you simply buy some Bitcoin and hold it in the hope that it will become more valuable over time.
There is no need to constantly monitor the market or learn technical analysis to succeed; hardly any time or effort is required to potentially make a profit from buying and holding.
Best Bitcoin wallets
When holding onto Bitcoin for the long term, it can be advantageous to transfer your coins to a private wallet. This means you have full control over your assets and it can provide a bit of extra security.
Hardware wallets like Trezor, BitBox, and Ledger are the most secure option, but they can be a bit expensive and may take some getting used to. Smaller investors may prefer the more user-friendly software wallets that can be downloaded for desktop or mobile for free.
Trade Bitcoin
The price of Bitcoin can be highly volatile. This is something that traders can take advantage of by buying and selling it much more frequently to generate regular profits. This requires more time and effort than investing, as well as skills such as technical analysis.
In addition to the analysis, there is a choice of what to trade for Bitcoin. As well as using traditional fiat currency, like USD, traders can also use other cryptocurrencies to swap for BTC. Popular coins to trade for bitcoin include Ethereum, Litecoin and, Bitcoin Cash.
Bitcoin Traders often choose to use web wallets, which are provided for free by exchanges. Although web wallets are less secure than the aforementioned private wallets, they are much more convenient for those making regular trades.
Mine Bitcoin
As well as being able to buy Bitcoin instantly with a credit or debit card on cryptocurrency exchanges you can also mine Bitcoin. This process is how all Bitcoins are added to the network and it involves using computer hardware to solve cryptographic problems; these problems increase in difficulty over time. Investment in hardware and electricity makes mining Bitcoin far more difficult than to just simply purchase Bitcoin. If you're still interested take a look at our How to Mine Bitcoin Guide.
Should I Buy Bitcoin Now?
You will have to make this decision for yourself based on the information available. One of the most attractive aspects of Bitcoin for investors is its capped supply of 21 million BTC. Once all of these coins have entered circulation, no more will ever be created, which could make Bitcoin a better store of value than fiat currencies which are subject to inflation.
Governments may have some impact on the price of Bitcoin. While stifling crypto legislation may have adverse effects on Bitcoin’s value in the short term, a better-regulated crypto market could ultimately inspire confidence in Bitcoin among more investors.
The actions of large companies could also be important. Companies choosing to accept BTC payments provide more utility for and awareness of Bitcoin. Meanwhile, institutional Bitcoin investment results in large purchases of BTC and can drive more retail investment, as we saw following Tesla’s Bitcoin investment.
As Bitcoin awareness grows, ever more companies are getting involved and even whole countries such as El Salvador. All this enthusiasm would appear to suggest that Bitcoin will keep its crown as the top cryptocurrency for a long time to come.
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