Many financial experts are still contemplating whether it is safe to invest in bitcoin or not. I am not a financial expert or analyst, but I can tell you that there’s a financial evolution going on in the world and cryptocurrency is here to stay.
Whatever I’ll be sharing here is from my personal experience and observations. I am not a financial expert or analyst. Keep an open mind and do your own research.
As it is with every business opportunities I share on My Income Ideas, I’ll be revealing everything you need to know about bitcoin as a digital asset, the future of cryptocurrency and how you can safely invest bitcoin without getting burnt in the process.
Cryptocurrency is a digital asset class of the future and bitcoin is leading this class. Early investors in bitcoin are already achieving great returns.
As of the time of writing this post, bitcoin is now the world’s 30th largest currency with a market cap that is increasing every day. With the current trend and projected value of bitcoin, I see it becoming the largest currency in the world soon.
According to a televised interview by Gatecoin’s marketing chief and head of business development for Asia Pacific Thomas Glucksmann, the value of one bitcoin, which is currently worth over 10,000 US dollars is said to be very highly undervalued.
The demand for bitcoin is on the increase as a result of increase in awareness and adoptions by several countries. And considering all other factors influencing the price of bitcoin, then you’ll agree with Thomas Glucksmann on this.
While there are many reasons why you shouldn’t invest in bitcoins. I wouldn’t be going into that. The aim of this post is to show you how you can safely invest in bitcoin and other digital assets now.
What you should know before you buy bitcoin with credit cards
Bitcoin is a cryptocurrency and also a digital asset. Like every fiat currency, you can buy and sell with bitcoin. But unlike with fiat currency, the purchasing power of bitcoin is on the increase. It’s not affected by inflation because it’s not controlled by the government.
It is the first decentralized peer-to-peer payment network powered by users.
There are several ways you can buy bitcoin with your credit cards. You can either use a bitcoin exchange (highly recommended), use a bitcoin ATM or buy from people selling in your community.
Just like with a regular bank that requires an account number to save your money, you need a digital wallet to store your bitcoins.
My intention is not to make this a long article. So, I’ll only explain the basic things you need to know. You can read more on how to get bitcoins and altcoins in your wallets here.
A wallet is just like a bank account where you keep your digital assets. There are wallets which are solely for a particular coin and there are other wallets which are meant for keeping multiple coins.
For example, a bitcoin wallet will not accept any other cryptocurrency in it. It follows the same logic for fiat currency. A US dollars account will never accept a British pounds or Euros in it.
There are basically two types of wallets: online and offline wallets. Online wallets are also called hot wallets and offline wallets are called cold wallets. Your hot wallets (online wallets) are like your Checking account. Your cold wallets (offline wallets) are like your Savings account.
The simplest way to differentiate a cold wallet and a hot wallet is that hot wallets are connected to the internet while cold wallets are not. Most people with digital assets have both cold and hot wallets because they are designed for different purposes.
People with digital assets keep small amount of money in their hot wallets for making immediate purchases and the remaining are stored in their cold wallets.
This security measure is highly encouraged because hackers cannot steal digital assets that are not connected to the internet.
The security of your hot wallets is dependent upon the security habits of individuals and third parties. They are vulnerable to online theft because they are constantly connected to the internet. A hacker probably won’t waste their resources trying to gain access to small amount of money.
You are not in full control of the funds in your hot wallets because the exchanges keep the private keys with them. Some examples of online wallets are Blockchain.info, Coinbase, Luno, Poloniex, Bittrex, Yobit etc.
If any of these exchanges is hacked (not that easy though but it can happen), there are two scenarios: it’s either your funds go missing totally or your funds are returned if the company have a good insurance.
Offline wallets are also known as paper wallets. Some examples of offline wallets are Coinomi, Copay, Jaxx, Mycelium, and others.
You have full control over your paper wallets with your private key or seed phrase or paraphrase. Keep these keys safe. You should also setup two factor authentication. Without these keys, password, and two factor authentication, no one will be able to access your account or funds even if you have millions of dollars in it.
Once you pass this stage, the vendor or wallet provider doesn’t have your funds on their cloud system. So, they don’t have any way to recover or have access to your funds.
For example, Coinomi does not know your passphrase. Coinomi is just an interface to access your funds which is sitting on the blockchain network (the technology of bitcoin).
So, if Coinomi as a company folds up today, you have nothing to fear or lose. You simply set up another network or software with your private and you’re set. You can then have access to your funds since it is on the blockchain.
Also, when you lose your private key, you can only use your wallet address to view your funds on the blockchain but you cannot have access to it.
Your offline wallets can be hacked if your private keys or pass phrase are saved online. A simple way to prevent this from happening is by writing down your keys on a piece of paper or in an offline cloud system. That’s why they are also called paper wallets.
These are the basic things you need to know before you invest in bitcoin.