What is Bitcoin?

Although it was introduced little under a decade ago, Bitcoin has only recently made international headlines. This is mainly because of its rising value and the investors who have made a killing through Bitcoin mining. Despite all this, many people still don’t truly understand what Bitcoin is and how it works.

Simply put, Bitcoin is a digital currency. With this currency, you can make payments without having to rely on a bank. Transactions involve the transfer of digital tokens of a certain value. While no physical money is transferred, the transactions are recorded in a digital ledger. Bitcoin software keeps track of these transactions to ensure that they are correct, and also keeps track of the Bitcoin. This means that anyone who joins the network can actually trace transactions back to the introduction of Bitcoin.

There are thousands of cryptocurrencies available right now. However, many are still in the early stages of development, and some are based on how Bitcoin works.

Some Reasons Why People Choose to Invest in Bitcoin

Just like any other forms of investments, there will be risks involved. Success in investing in Bitcoin is dependent on various factors.

1. Lower inflation risk

All traditional world currencies are controlled by the governments of the country from which they originate. Their value therefore fluctuates based on the economic state of the country. These currencies can lose value, meaning that their purchasing power goes down. You will therefore need more money to purchase products.

However, when you invest in Bitcoin, you don’t have to worry about fluctuations due to inflation rates. You don’t have to worry about money printing limits set by governments.

2. Lower risk of falling value

One of the biggest fears people have when making an investment is their investment losing value. The risk is greatly reduced with Bitcoin. This is because Bitcoin is a decentralized currency. Central governments have little control over it. Your investment is safe from hyperinflation or complete economic collapse.

3. Offers a variety of uses

Bitcoin was initially introduced as a digital currency that people could use for financial transactions with the advantage of incurring fewer charges than other available forms of payment. However, this view has since changed. Various other uses of Bitcoin have since emerged. These include trading in digital securities, crowdfunding, store of value and many other digital transactions. Many other uses of Bitcoin are still under development including smart contracts on the Bitcoin network, and will soon become mainstream.

4. The potential gain is much more than the potential loss

Analysts have high hopes for Bitcoin. They predict that it will become a global currency in a few years. Although this is still hypothetical, if it becomes a reality, Bitcoin will be a major driving force in international trade. Economists speculate that the price of Bitcoin could rise by about 20,000 times. This means that if you bought $1 worth of Bitcoin today for example, it would be worth $20,000 when this happens.

While these are just predictions, the expected profits are much higher than trading in other ‘safer’ commodities.

5. You’ll earn interest

Bitcoin isn’t just a currency, it is also considered commodity money. This means if you buy Bitcoins, you can invest them in much the same way as you can use fiat money, which are world currencies to invest in a business. You can therefore generate interest on your investment when you hold Bitcoins. You’ll get great returns as the prices increase over time.

6. Ease of access

Unlike many other investments that require you to tie up your money for the long term in order to earn interest, Bitcoin offers you the opportunity to make a profit in the short term too. You can therefore invest in Bitcoin and make use of the interest generated for your day to day use. This is because you can gain instant access to your profits.

In short, Bitcoin is increasing in value and popularity. It is therefore a worthwhile investment opportunity.

How do People Purchase Bitcoin

How to Buy in Bitcoin in Singapore

The price of Bitcoin has risen to over S$8000 in the past few months. Economists predict that Bitcoin will continue to grow in value as it gains popularity amongst investors, and the demand for it grows. It is also gaining ground as an internationally accepted currency.

Despite the increased interest in Bitcoin, not many people know how they can purchase it. The first step in purchasing Bitcoin is to get a digital wallet where you will store your Bitcoin after buying it. There are various platforms (known as cryptocurrency exchanges) that allow you to buy and sell Bitcoin including Coinbase, LocalBitcoin, Binance, Bitthumb, Upbit, etc.

The next step is to actually purchase the Bitcoin. There are three main methods that you can use:

1. Purchase directly from a seller

This involves meeting a seller near you in person. You can buy Bitcoin from the seller with cash or their preferred payment method. There are various platforms you can use to find Bitcoin sellers including LocalBitcoin.

2. Purchasing from a Bitcoin ATM

This is one of the easiest ways to purchase Bitcoin. You simply deposit cash into a Bitcoin ATM, and the Bitcoins will be deposited into your digital wallet. It is a convenient and safe way of purchasing Bitcoin. However, the fees associated with the transaction can be high.

3. Purchasing at a money transfer service

Various money transfer services also facilitate the purchase of Bitcoin. These include Moneygram and Western Union. Visit your local branch and pay the cash equivalent to the Bitcoins you want to purchase. The cash will be transferred to the recipient you specify. Many service providers use this payment method.

4. You can also buy from an exchange

As mentioned above there are many exchanges that offer cryptocurrency trading services. You just need to fund your account with fiat money on the given exchange and then proceed to buy Bitcoin.

Bitcoin Mining

Another way of getting Bitcoin is through Bitcoin mining. This is similar to digging for gold. Paper money is regulated by governments; they decide when to print it, and how much should be printed. There is no central regulator for Bitcoin however. This means that anyone can mine Bitcoin.

Miners make use of powerful computers (known as ASIC miners) that have software that solves complex math problems. The software provides the miners with a specified number of Bitcoins in return for solving the problems correctly. Not many people can solve these problems using their miners. They require the assistance of other miners in order to pool hashing power. In fact, mining pools, which consist of groups that split computing power to solve a single puzzle are common place in cryptocurrency mining. Once the puzzle is successfully solved, the winnings are divided based on the computing power each of the people in the group contributed.

This isn’t the easiest way to get Bitcoin. In fact, you may end up spending a lot more on specialized computer equipment, maintenance and electricity costs than you would earn mining.

Top 20 Tips to keep in mind should you decide to invest in Bitcoin

While there is no formula of assured success with Bitcoin (or any investment for that matter), applying the following tips will help to increase your chances of success.

1. Knowledge is power, do not invest blindly. Truly understand what you are investing in. 

The problem with many people today is that they are quick to follow a trend even without fully understanding the risks and benefits involved. If you’re just getting started with investing in Bitcoin, it’s important that you do your homework. Research on how Bitcoin and other cryptocurrencies work. Learn about how to invest, and the risks involved. Learn about the underlying technology, and how you can trade Bitcoin for success.

There are various books and websites that provide information about Bitcoin and advice on how to trade/invest in Bitcoins for success. It is important to read available material with an open mind. Seek out authors that have had proven success with Bitcoin, and read about how they did it. Learn from the mistakes of those who have failed too.

Some great books to consider include:

Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond

This book offers a comprehensive guide to investing in Bitcoin. It is on the top 10 list of titles of books in Amazon dealing with digital currencies. That should tell you something about how popular it is. It is great for those who want to dive deep into strategies for building their portfolio. It offers insights into the future of Bitcoin, stocks and prospects.

Mastering Bitcoin: Programming the Open Blockchain

In this book, Andreas Antonopoulos provides prospective investors with an overview of how Bitcoin works. This volume explains the mechanics behind Bitcoin without being overly technical. It’s perfect for those who aren’t computer nerds but want to know what’s under the hood.

Bonus tip: If you want to dive even deeper into making a killing with cryptocurrencies, read Antonopoulos’ other book, The Internet of Money.

2. Choose your exchange and wallet carefully as they play a great role in profit-making

The exchange and wallet you choose play a major role in determining whether you’ll achieve your goals or not. Each platform comes with different benefits as well as terms and conditions. It’s important to research the different wallets and exchanges to determine which will best suit your needs. The following are some great options to get you started:

Coinbase

This is probably one of the most popular exchanges amongst Singaporean Bitcoin investors. It is simple to use making it a great choice for beginners. It offers investors the opportunity to purchase a wide variety of cryptocurrencies including Bitcoin, Ehtereum, Bitcoin Cash and Litecoin. It’s the perfect exchange if you’re hoping to diversify your investments.

Kucoin.com

This is also an easy to use exchange and is beginner friendly. It gives investors the ability to trade cryptocurrency. There are also lots of bonuses and great giveaways that you can take advantage of.

Trezor

This is a highly secured hardware wallet. It is a great option for those who plan to hold their Bitcoin longterm.

Changelly

To use this exchange, you must already have cryptocurrency. It is therefore not ideal for anyone who is just starting out in investing in Bitcoin. However, it is an option worth considering once you have become familiar with trading Bitcoin. This exchange will allow you to exchange currency pairs that you probably wouldn’t be able to trade elsewhere. It is easy to use and offers great exchange rates. It partners with Coinomi Wallet to provide a safe way to store your crypto assets.

3. Diversify your investments wisely

You don’t have to research deeply to know the great gains that Bitcoin investors have had over the past few years. There are stories of Bitcoin millionaires all over the Internet. While it can be tempting to invest solely in Bitcoin, it isn’t a good idea to have all your eggs in one basket.

One of the keys to success is diversifying your portfolio. This means investing in a variety of cryptocurrencies. The idea behind diversification of your portfolio is to ensure that a decline in one component will correspond to an equivalent gain in another i.e. if one cryptocurrency falls by 5%, you will ideally experience a 20% rise in one of the other cryptocurrencies you invested in.

4. Avoid diversifying for the sake of it

This isn’t a contradiction of the previous point. Diversifying your investment portfolio will help to reduce your exposure. However, it is even more important to diversify in order to make more money. Diversifying with this in mind will help to increase your returns in the long term.

If you choose to diversify simply because you’ve heard that this is the right thing to do, you are likely to spread your investments too thin. You won’t become a Bitcoin millionaire this way. You should instead go for the best value. Decide on the maximum amount of money you’re willing to lose, and invest this in a single asset. For the sake of diversifying, you may choose to buy another coin with as much money as you can spare thereafter.

5. Be cautious and only invest with the amount you can afford 

This brings us to the next point: proceed with caution. Investments that yield high returns often come with great risks. Bitcoin is no different. Digital currency is still in the early stages of development compared to other assets available in the market such as stocks and bonds. It is therefore a high risk investment. You should therefore invest money that you don’t mind losing.

Start out small. Invest only a small portion of your capital. You can reinvest the returns to increase your capital later. It’s also important to avoid chasing Bitcoin prices. You should instead decide on your point of entry and stick to this. Invest in a little at a time even when the price seems right.

6. Don’t let the price put you off (very important for first time Bitcoin investors)

One of the most common mistakes newbies make when investing in cryptocurrencies is purchasing coins based on the price. However, it is more important to consider the market cap of the coins among other fundamental aspects of the project as a whole. Market cap is the price of the coins multiplied by the number of coins in circulation. A good project with a low market cap has great potential of growing in value once the team delivers what is on their roadmap/vision in both the short and long-terms.

For example, some newbies are put off by the cost of one Bitcoin. They assume that if they can’t afford to purchase one coin it is not worth even bothering with it. However, if you invest S$ 5000 and the price of Bitcoin increases by 20%, you will have made S$1000 from the investment. It doesn’t matter that you couldn’t afford to buy a full coin.

It’s important to note that some coins such as Bitcoin increase more easily in price as a result of their popularity–many people have heard of Bitcoin.

7. Store your coins in your wallet to avoid unnecessary risks

Many people opt to purchase Bitcoin on exchanges. However, these aren’t the best place to store your coins. Exchanges have a history of being hacked. You may therefore lose your assets if you choose to store them here.

You can further manage risk by using both hot (online) and cold (offline) wallets. Just as you would keep some money in your wallet, more in your bank account, and the most precious items in a safe, so should you with your digital assets.

8. Use paper or hardware wallets, keep your coins and particulars safe

To further increase the security of your wallet, consider using a paper or hardware wallet. Hardware wallets allow the user to store their private key on a device that is similar to a USB. The key is stored offline but can be used to make transactions online. This limits the exposure of the private key, and therefore increases your security. These wallets support a wide variety of currencies and can be used on your phone or computer. You simply need to enter a pin in order to trade, and unplug when you’re done to keep your coins safe.

Contrary to popular belief, paper wallets don’t have to be printed on paper. Paper wallets refer to software that can be used to generate private or public keys that you can then print or write down.

9. Understand the importance of timing, only take your profits if your circumstances change

Many newbies are anxious to take out the profits they’ve made sooner rather than later. If you really want to make a killing with Bitcoin, you should avoid taking profits too early. That is unless your circumstances have changed e.g. your net worth has shifted or the prospects of the cryptocurrency have taken a turn for the worse. In this case, you may find that your money would do better if invested somewhere else. You would therefore be justified in reallocating these funds.

10. Don’t aim to be right, profits and returns are the bottom line

Your primary goal when investing in Bitcoin isn’t to be right. It is to make as much money as you possibly can. You’d rather be wrong 90% of the time, and still make 100 times in returns when you are right 10% of the time. While being right may be comforting, it is only great when it comes with a payoff.

11. Compare the value of Bitcoin with other cryptocurrencies

It’s important to note that increasing your Bitcoin value doesn’t mean that you will only buy and hold Bitcoin. If you want to know the true worth of your investment, don’t just consider the amount of money you have. You should also consider the value of the Bitcoin compared to other cryptocurrencies. This will help you make trades that will increase your Bitcoin value.

12. Buy and hold, don’t get thrown off course by the sudden highs or lows in the market

One of the best strategies to use when it comes to investing in Bitcoin is to buy and hold onto your investment. Don’t get thrown off course by the sudden highs or lows in the market. If there is one thing that you should know about the cryptocurrency market is that it is very volatile. In fact, many investors in traditional assets are terrified of Bitcoin for precisely this reason.

A massive drop in the price of Bitcoin doesn’t spell doom. The price could go up in a matter of days or even hours. Hold onto your investment and you are likely to see greater returns in the long term.

13. Just buy when you feel that it is the right time and price 

If you look around for advice on buying Bitcoin, you’ll probably come across many people saying that you should buy when the price is low. The problem with this advice is that it is difficult to recognize the dips when they occur.

As mentioned earlier, the cryptocurrency market is volatile. However, if you believe it is a good investment, don’t wait. Just go ahead and buy as much as you can afford at the moment. You can purchase more when you get more money in future. You can’t afford to waste time watching a market that changes so unpredictably.

What if you miscalculate the timing of your purchase? If you buy when the price is high, don’t fret. There will be dips and gains in the future. You will still come away with some money. However, don’t sell at a lower price than you bought.

14. Buy coins early and sell them early, learn to maximize your profits

Most Bitcoin investors buy with the intention of holding for the long term. However, if you’re actively trading the coins, you won’t want to hold them forever. You will therefore need a strategy for buying and selling to maximize your profits.

The cryptocurrency market is volatile. This can’t be repeated enough. There will be dips and gains almost daily when you get started. However, you can’t afford to be distracted by these short-term fluctuations. You need to look at the big picture.

The most effective strategy for those interested in trading Bitcoin is to buy early and sell early. Buying early will allow you to take advantage of the gains. Selling early may seem counterproductive but it is actually a great strategy in the cryptocurrency market. It is better to unload coins early rather than too late. The markets can shift in a matter of hours. You may not see the gain that you hoped for if you decide to wait. Selling early allows you to avoid risk and walk away with some money.

15. There’s no portfolio allocation that is right for everyone

There are many Bitcoin millionaires, and we’d all like to enjoy similar success. It can be tempting to do exactly what they did in the hope of making a fortune. However, this may not work for everyone. There’s no magical portfolio allocation that will guarantee success for everyone. Your portfolio will be dictated by the amount of money you’re willing to invest, your risk tolerance, as well as the time you have available to really study the market and learn how to buy and trade coins for increased profits.

It is best to do your research and approach the market with the knowledge of what others have done for success. However, determine your own path based on your unique circumstances.

16. Familiarize yourself with Bitcoin correlations

After getting your feet wet, you may notice that when the price of Bitcoin rises or falls, several other coins experience the same fate. There are several cryptocurrencies whose value is tied to that of Bitcoin. The value of some will move incredibly close to Bitcoin value or even act to cushion falling prices.

Correlations tell you whether two currencies move in the opposite, same or random direction over a specified period. This type of information is vital if you want to trade more than just one type of currency at a time.

This information will help you to know which currency to trade to maximize your profits and diversify your portfolio. It also helps to reduce your risk.

17. Trade with good reason and set clear goals (this is a zero-sum game)

Don’t start a trade if you’re not sure or simply because you feel like. You should have a reason for each trade you make. Have a clear strategy and objective.

It is worth remembering that cryptocurrency trading is a zero-sum game. This means that when someone benefits, there is someone on the other side making a loss. These markets are driven by large sharks that are waiting patiently for the little fish to make a mistake and pounce on them. Even if your aim is to trade on a daily basis, you may be better off doing nothing and earning nothing, instead of rushing in and exposing your assets to risk and losing them in the process.

18. Keep your ear on the ground

The right time to buy is when you hear rumors of great opportunities. However, once that news hits major news sites, this is the time to sell. Follow the rule of ‘buy the rumor and sell the news.’

19. Keep logs and observe trends and patterns

Keeping logs of your investments is vital for the long term. Review your investments from time to time. Observe price charts and study trends. This will help you in making investments in the future.

20. Always keep calm and get a hold of your emotions

Lastly, it’s easy to get excited and overly confident when you make a good trade. It’s also easy to get disheartened and feel like a complete failure when a trade goes wrong. This is all natural. Just don’t let it take over you. Don’t let your emotions affect the decisions you make. There will be ups and downs when trading. Many times they won’t make any sense. You simply need to keep on keeping on.

5 Bitcoin Investment Mistakes People Tend to Make 

Once you get your feet wet in the cryptocurrency market, carrying out transactions becomes second nature. However, even the most experienced traders make mistakes every now and then. The good news is that you can learn from the mistakes others have made and how to avoid them. This will help you have a stress-free experience.

1. Entering a wrong address

It can be exciting to find that you’ve made a profit with Bitcoin. It can be even more thrilling having the profits in your wallet. One of the benefits of investing in Bitcoin is that you can withdraw your gains at any time. However, this is also one of the most common areas that both newbies and experienced investors fumble.

It’s easy to make mistakes when receiving your funds. One of the most common is entering the wrong address. This results in the money being sent to the wrong address. The same thing can happen when purchasing Bitcoin. If you enter the wrong wallet address, the Bitcoin will be sent to that wallet.

While it may seem like a small mistake, it actually has big consequences. Bitcoin is designed in such a way that transactions cannot be reversed. Therefore your money or Bitcoin will be lost forever. It doesn’t matter how much you beg, cry or threaten. Once you hit send, it isn’t coming back. Considering that Bitcoin transactions often involve a lot of money, these are mistakes you don’t want to make.

The most obvious way to avoid this mistake is double check the address you enter before hitting the send button. Another way to avoid the mistake is to check the first and last three characters you’ve entered to ensure a match. Use your browser’s find function to check the address. Being overly cautious will help save you a very expensive mistake.

2. Relying on services that have an exchange for everything

There are several services that have been designed to make the whole cryptocurrency trading experience easier e.g. Coinbase. These services make it easy to access and trade Bitcoin and other cryptocurrencies all in one place.

The problem with relying on these services is that you may be forced to pay a premium for the convenience they provide. You would pay much less if you simply traded on a Bitcoin exchange.

Another problem with these services is that they are not as secure as they would have you believe. These services are often hacked, government crackdowns, are subject to bankruptcy and other woes. Storing your Bitcoin on these services could cost you all your assets. That is a gamble you don’t want to take. Store your Bitcoin in your digital wallet instead for greater security.

3. Losing their key, there isn’t a locksmith to help

People lose their private keys all the time. It shouldn’t be a big deal, right? When you lose your house keys, all you have to do is get in touch with your landlord and have your keys replaced. Losing your key doesn’t mean that you will be locked out for life.

This isn’t the case when it comes to Bitcoin. Amongst the many security features included in Bitcoin is its decentralized nature and the private key that is required to gain access to the Bitcoin you have purchased and stored. The private key is designed to be impossible to hack. Both of these features not only mean that your Bitcoin is secure in your wallet, but also that once you have lost the key, recovering your Bitcoin will be impossible.

If you lose your private key, you will never be able to gain access to your Bitcoin ever again. There is no person or company that you can call to help. It is also impossible to hack your way back into your wallet. Your Bitcoin will be gone for good.

If it’s any consolation, you won’t be alone in having lost your Bitcoin. There’s over 4 million Bitcoin lost forever, and many investors who’ve suffered the consequences.

If you don’t want to add your precious Bitcoin to this large number of lost coins, ensure that you keep your private key safe. Implement a backup and recovery strategy to ensure that you can always get your private keys. All the effort will be well worth it. You will have peace of mind of being able to access your Bitcoin at any time.

4. PayPal or Credit Cards transactions come with their set of risks 

Who doesn’t like fast and easy? There’s nothing wrong with taking advantage of convenience. However, in the world of Bitcoin, fast and easy often means a higher fee.

Many newbies depend on convenient methods of payment such as credit cards and PayPal to buy Bitcoin. While these payment methods may be easy to use for the buyer, they come with risks for the seller. This is because there is no way to reverse a Bitcoin transaction. However, PayPal and credit card transactions can easily be reversed.

This leaves sellers of Bitcoin vulnerable. Once they send the Bitcoin, there is no way to get it back. However, buyers can easily reverse the charge. For this reason, the risk that sellers are exposed to is factored in the fees. This results in high fees being charged to the buyer when they use these payment methods.

For example, if you use credit cards to purchase Bitcoin on CEX.IO, you will be charged a transaction fee of 3.5% plus 0.25. Coinbase charges 3.99% transaction fees for credit card purchases and Coinmama charges 10.5% for each purchase. Is the convenience of using your credit card worth the high fees?

5. Dumping Bitcoin for new altcoins

There are new coins popping up everywhere. Many people are being sucked into purchasing these coins by the hype that surrounds their introduction in the market.

There’s nothing wrong with investing in alternative coins. In fact, the market is expanding to accommodate these altcoins. However, there is no denying the advantage of Bitcoin. It has the longest history and largest community. It is the cryptocurrency that drives the market.

Before you dump your Bitcoin to invest in an altcoin, be sure that you do your due diligence. Don’t invest in an altcoin for the sake of it, or simply based on the hype. Pick a coin that you truly believe in and invest in it.

Be careful when investing in altcoins. People often rush into investing in these coins without truly examining the merits or risks involved. There are many people who have made fortunes from investing in altcoins. There are many more who have lost fortunes through these investments.

A summary on Bitcoin Investments

Are you still wondering whether or not you should invest in Bitcoin? There’s no other way to put it: Bitcoin/cryptocurrencies and blockchain technology in general are the inevitable future. Although predictions are varied and some are fuzzy, one thing is certain; cryptocurrencies will be adopted internationally soon. Many economists predict that this will occur in mid 2020s. It is worth noting that cryptocurrencies have already been adopted by more than 100 financial institutions. However, several obstacles still have to be overcome in order to see the full adoption of these digital currencies. These include acceptance by governments that foresee huge consequences of the adoption of these currencies to their respective economies. The adoption of cryptocurrencies takes a lot of power out of the hands of governments. This is one of the biggest hurdles that the digital currencies have to overcome.

However, the resistance shouldn’t be viewed as a mountain that will probably never be surmounted. It should instead be viewed as evidence that cryptocurrencies are here to stay. And that you are an early adopter of this technology and therefore stand to gain much more in future if you invest in it now!

Cryptocurrencies, including Bitcoin, are still in their infancy. As technology improves, improvements will be made in how these currencies are transacted.

Nonetheless, one must be careful and cautious when making investments. Always make sure that you are well-informed and that you only invest an amount that you can afford. If you have decided to invest but is unsure about your finances, fret not. Consult these reliable and certified money lending firms for more information today.

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