With almost everyone keen to dabble in cryptos, it becomes necessary to understand how the crypto market really works. The Bitcoin had been introduced by Satoshi Nakamoto in 2009, and since then, the crypto has undergone many spikes and crashes. This crypto was founded on a groundbreaking technology called the blockchain. This public ledger records all Bitcoin transactions once these have been verified by miners or computers in the network. To have trading experience in Bitcoins, it is imperative to understand how it started and what its unique features are.
Things you should know Before Trading Bitcoins:
- Unlike the USD, EUR, or any fiat currency for that matter, the Bitcoin is not under control or supervision by any bank or government. It depends on a P2P network that comprises of thousands of computers spread across the world. These computers are referred to s “nodes” which are responsible for verifying transactions.
- When these nodes can successfully solve complex cryptographic puzzles, new Bitcoins area generated. This is called mining; over the years, mining difficulty has increased steadily as Bitcoins have a finite supply. There can only be 21 million Bitcoins and not any more. This is why this crypto is held to be inflation-proof. Banks and governments cannot issue Bitcoins as they please, to cope with economic crises. This automatically means that those Bitcoins that are in circulation will not lose their value.
- Transactions in Bitcoins happen faster than if you were to transfer money through the bank. This is possible because miners confirm transactions through mining. Computers involved in this are located at different places on the globe; so verification is not dependent on location. Regardless of whether you send Bitcoins to a recipient in your city or abroad, it takes the same time.
- Cryptos are made secure through the private and public keys. The latter is the Bitcoin address which everyone can see while the private key is the PIN which lets you access your funds. The private key, therefore, should not be shared with anyone else and must be stored securely. The bitcoin online wallet is where you can store the bitcoins securely and using the private key you can access your stored bitcoins whenever needed.
- Transactions once made cannot be reversed. Once a recipient gets Bitcoins, you cannot get it back from him.
- To trade in cryptos you have to first learn how to buy the Bitcoin. You can sign up on cryptoexchanges to exchange your fiat money for Bitcoins. You can also exchange other cryptos for BTC and vice versa. Exchanges have different terms and conditions; some charge higher fees than others. So, it is advisable to review these first before trading in them.
- You can also buy or sell Bitcoins through online marketplaces. These enable independent trades where exchanges are not involved. Besides, there are Bitcoin ATM machines in different locations where you can buy BTC for fiat money or any other crypto. Private individuals often sell Bitcoins through sites like LocalBitcoins. But, this may not be a safe option as transacting large sums without knowing the buyer can be risky.
- Finally, you can get Bitcoins via mining. To do this, you must solve difficult mathematical problems. Once you can find a suitable hash, you get rewarded in Bitcoins and the data gets added to a block. But mining is energy-intensive and consumes a lot of power.
To trade Bitcoins, make sure you have a digital wallet for storing your cryptos. As a buyer, you must copy-paste the address into your wallet for payments to buy Bitcoins or exchange them.