Things you should know before buying Bitcoin

Are you wondering whether you should buy Bitcoin or not? With the growing popularity and demand, you can easily be tempted to invest in Bitcoin.

But wait a minute, you cant just throw yourself into an investment you have no idea about. In fact, you may think investing in Bitcoin is profitable since the price keeps flip-flopping.

Though several platforms are already accepting Bitcoin payments, you need to understand a few pitfalls before venturing into trading Bitcoin. Be that as it may, investing in BTC can be lucrative for people who know the ropes.

So, what do you need to understand before investing in bitcoin? We put all this into perspective.

Volatility

Most cryptocurrencies are highly volatile. This means the price of Bitcoin can be difficult to predict. It can change abruptly leading to either losses or profit. An example is in 2017 when the price of Bitcoin shot up to $19000 but then dropped within a week to $12, 000.

Typically, the price of bitcoin is determined by forces of demand and supply. When more people are selling the price goes down and when more people buy the price goes up.

The flip-flop in value is what makes critics believe that the value of Bitcoin is unpredictable. On the flip side, several investors are turning to bitcoin to protect their investment. The move is attributed to the ability to withstand the effects of inflation. For more information you can visit here.

Bitcoin is transparent

Unlike other platforms, bitcoin is one of the most transparent networks in the world. The distributed blockchain ledger technology ensures all transactions made on the network are traceable, public, and stored on the blockchain network. The appealing aspect of the blockchain network is that you do not have to provide personal details to operate on the network.

You simply use a bitcoin wallet address to send and receive BTC funds. Further, you can easily move large amounts of money from one person to another across the world at extremely low fees.

Opposed to bank transactions which take days to be processed, bitcoin transactions do not require any intermediaries to carry out transactions. All you need to do is pay a small fee and send money instantly to a recipient of your choice.

Bitcoin can be a bubble

Bubble refers to a sudden increase and drops in price. Though BTC may experience a sharp fall in price, the value keeps on flip-flopping which may make it difficult to predict how much it is likely to cost in the future.

Therefore in trading bitcoin, it is crucial to understand the timings to ensure you maximize profit. In this case, you can opt to buy when many people are selling and hold to sell out when demand shoots up.

Anyone can trade bitcoin

The best most appealing aspect of trading bitcoin is that it doesn’t have any restrictions against anyone interested in BTC investment. An example is that you do not need accreditation to invest in the crypto industry.

Unlike a typical business environment that is mostly dominated by the rich, the decentralized aspect makes it easier for anyone to access it.

Besides purchasing bitcoin, you can as well participate in the mining process. In case you are scared of the high cost of investing in heavy crypto mining equipment, you can opt to join a mining pool.

Bitcoin is taxable

The Us has established policies that guide how bitcoin users are subjected to tax. On the other hand, you need to understand the existing policies that govern bitcoin trading.

In some jurisdictions, you will be required to declare your earnings to be subjected to taxations. Ensure you consult with relevant professionals to guide you on how to subject your trades to tax.

BTC is an accepted   form of payment

Just like other fiat currencies, Bitcoin is an accepted form of payment on several platforms. Despite being used as an investment, they can work like any other traditional currencies. You can use Bitcoin to purchase goods and services just the way you use dollars.

An example of a perfect bitcoin payment method is through crypto debit cards. You can use the debit card to carry out any transaction including on physical stores that do not accept Bitcoin.

Conclusion

Gathering enough information about a particular market environment is important to help you understand the market. This makes it easier for you to navigate the market from an informed point of you. This helps reduce the chances of losing your investment due to a lack of sufficient knowledge about the market.