Going into an unpredictable business like cryptocurrency can be daunting.
Because there is no centralized authority and rumors get spread quickly
about digital currencies, it’s a volatile market to get into. However, if you
are willing to take the risk, there is money to be made. Below we discuss
five important tips that you must know if you are considering investing in
Bitcoin.

1. Do your research, due diligence, and homework

As far as Bitcoin is concerned, some people have experienced a certain
level of success while others have suffered loss. If you are entering into
this business, it is important that you know just what you are getting into
and invest only the amount that you can afford to lose. Being a Bitcoin
investor is quite exciting as well as confusing, so you should not enter
based on only what you have heard. Do your own homework and stay on
top of the ever-changing market.

2. Have an effective diversification strategy

Other than Bitcoin, there are lots of other cryptocurrencies that are
doing well and growing fast too. Try to diversify into any of these
alternative cryptocurrencies because, in times when Bitcoin drops, these
other cryptocurrencies tend to perform better. When you are waiting for
Bitcoin to increase in value, you can continue to trade in these
alternative cryptocurrencies.

3. Do not keep your Bitcoins in the exchanges

Hackers and scammers these days have devised means to get into the
crypto space and rip people off. You can save yourself from this menace
by using exchanges strictly for exchanging. Once you have bought a
currency, move the money into a Bitcoin wallet that only you can control.
It is even better if it is a hardware wallet.

4. Be ready for a bumpy ride

Bitcoin investing isn’t a get rich quick scheme. It’s something you should
plan on participating in over a longer-term. You may have to steel your
nerves sometimes because of its volatility, but it can be worth it. But it’s
going to take effort. Effective diversification can help, but that too
requires a bit of effort and work. The most well-known and effective
strategy thus far is to “HODL” which means to hold on to your investment
no matter how volatile the market gets. Getting into the crypto-space is
quite tricky which is why you must be able to understand how the market
works in order to tilt it in your favor and ultimately end in profit!

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Other than marmite, very few things divide opinion across the globe as
Bitcoin does. That’s mainly because only a small percentage of the
population truly understands what it is. Some view it as an item that
can only be utilized by the tech-savvy, while others believe it’s used for
the wrong purposes. But, in fact, Bitcoin is just a virtual currency that
creates anonymity.

It removes the need to use a bank to store money, it removes the need
to attach your name to transactions, and it removes some of the risks
of becoming a victim of fraudulent activity. More and more people are
beginning to realize the advantages of this digital currency, and the
increased popularity is correlated with the soaring prices amongst all
of the digital exchanges.

Bitcoin is an entirely decentralized payment network, meaning it’s only
maintained through a peer-to-peer network. Moreover, its currency –
bitcoin – is just a set of numbers and letters which are stored on the
Blockchain technology. This means it doesn’t actually represent as a
conventional currency. Although, the fact that millions of people still
purchase things with it, shows that it could become an everyday form
of money in the future.

If we use a more common example, it’s like PayPal enabling you to
send and receive money, and then allowing you to withdraw your
balance in a widespread currency such as the US dollar. However,
Bitcoin is unique and doesn’t operate in that way whatsoever. As it’s a
decentralized network, there’s no official method to determine what
value the bitcoin currency possesses.

Therefore, it tends to mirror that of the conventional currencies and is
influenced by the number of people who want it and the amount that
is available—otherwise known as supply and demand. But, another
difference is that it doesn’t give you the chance to withdraw it for use
in the real world. Why? Because in reality, it’s not actually a genuine
form of money, it’s software.

Bitcoin is just a line that has been recorded in the Blockchain ledger,
and a set of digital keys stored in an offline or online wallet. So, while
it’s advantageous to make payments online due to its strong security
measures and anonymity, the disadvantage is not being able to transfer
that into physical cash.

To put all of that into layman’s terms – the bitcoin currency is a digital
replica of money, which keeps your identity hidden and allows you to
make transactions on the web.

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As with everything in life, there is always evolvement as the years go
by, and the currency industry is certainly not excluded from that. You
see, with the fantastic advancement in technology, the idea of having
money in physical form just seems like a constant tie to the 17th
century.

Now, although physical money is still utilized heavily worldwide, and
will probably continue to be, there has been an attempt to bring the
use of currency into the modern era. It is known as Bitcoin, and
although people generally picture glistening coins on a screen in their
mind, it’s actually just an intelligent piece of software.

Essentially, it’s a virtual form of currency consisting of a multitude of
protocols, which allows you to make transactions on the web
anonymously. Most people are completely unaware of how it all works,
which is why we’re going to explain it to you.

Bitcoin does not operate individually; it works in harmony with the
renowned Blockchain technology. Despite Blockchain being incredibly
versatile in the way it stores information, and powers different
software, it focuses solely on transactions when used for Bitcoin. The
way transactions appear in the Blockchain is with numbers and letters,
and it can almost be considered as a never-ending list.

For instance, if you wanted to send some money to your mother safely,
quickly and anonymously, all you’d have to do is acquire her public key.
Once you’ve got that, you’d verify your identity and then send her the
desired amount of Bitcoin. Following that, the Bitcoin could be
accessed by using a wallet, which is basically a set of keys. Nowadays,
the majority of people use a Bitcoin exchange to host their wallet on a
convenient platform.

But, even though you and your mother would know you’re sending the
virtual currency, if someone was to look at the Blockchain, they might
see something like – ‘19Fir42eP8azO0sHH5tq8q91ia77sW2vG5 sent
1.10856330 to 15Jo3xz94Pd1Sb7rt01aW2qAa68m1h33Ez on December
5, 2017, at around 21:15′.

Moving on, a distinct feature of the way Blockchain works is that it is
extremely secure, and as you’re not displaying your identity, it’s very
hard for you to be targeted by a cyber attack. Also, the Blockchain
ledger that all transactions are directed to is completely accessible to
the public, which means that it’s immensely difficult for someone to
tamper with or alter it.

All in all, Bitcoin works through superbly-constructed software that
stores transactions on the Blockchain technology, and can then be
accessed through an encrypted virtual wallet. So, rather than sending
money, you’ll be sending multiple lines of code in place of it.

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