Bitcoin is the oldest and most popular cryptocurrency. Many investors ask themselves how to get started and whether it is worth investing in Bitcoin. In this article, we present how to start your journey with Bitcoin. Bitcoin and other cryptocurrencies have become a permanent fixture in the minds of many and more and more people are wondering how to start their adventure with these assets. Bitcoin has often been associated with a very complicated process of “mining” or “mining” cryptocurrency, but the entire process leading to owning Bitcoin or using this market to earn money can be much simpler. In this article, we introduce ways to invest in Bitcoin, and also try to find the answer to whether it is worth investing in. We also present the advantages and disadvantages of individual methods of investing in Bitcoin and present the most important concepts related to this cryptocurrency.
Bitcoin – how to start?
There are actually several ways to start your adventure in the cryptocurrency market. The first and at the same time very interesting is, of course, “mining” Bitcoin. However, it requires not only patience, but also a lot of money for the equipment needed to carry out this operation. The second, much more popular method is to buy already “mined” Bitcoin – for example, on an exchange, in a specialized cryptocurrency exchange or by finding a person willing to sell. All of the above ways of obtaining Bitcoin have their advantages and disadvantages, which we briefly present in the following paragraphs.
Bitcoin mining – what is Bitcoin mining?
Bitcoin mining is the process of introducing new Bitcoins into circulation. This process is crucial in maintaining the entire blockchain (you can find more about blockchain in the Bitcoin Glossary section at the bottom of the page) and requires a huge amount of computing power. The goal of miners (people involved in Bitcoin mining) is to confirm and add more blocks to the chain by solving complex mathematical operations. Many miners can work on this task at the same time, but the reward in the form of Bitcoin will be given to the one who is the first to complete it by adding another block in the network. This reward used to be 50 BTC, but with the development of the network and subsequent halvings (see Bitcoin Glossary), its value dropped to 6.25 BTC (as of September 2021).
As you can see, despite the passage of time, the reward for mining the new Bitcoin (whose supply is fixed and amounts to 21 million units) is still very attractive. However, in reality, Bitcoin mining is time-consuming and expensive, and due to the huge competition in this field, profits occur sporadically. In the initial stage of the development of the Bitcoin network, mining was possible on ordinary personal computers, but now it requires the use of specialized devices designed exclusively for this task. Moreover, owning a single “Bitcoin miner” does not guarantee profits, so miners combine the computing power of multiple devices to create a so-called mining pool.
Cryptocurrency exchange – a quick way to buy Bitcoin
With the growing popularity of cryptocurrencies, specialized services – cryptocurrency exchanges – have also appeared to connect the parties to the transaction. At the most basic level, a cryptocurrency exchange is not much different from the Warsaw or New York stock exchange – the biggest difference is the assets being traded. Due to the specifics of the cryptocurrency market, exchanges operate seven days a week, and trading on them is possible around the clock.
To be able to make a transaction on a cryptocurrency exchange, prior registration and confirmation of your identity are required. Along with the user profile, an online wallet is also created in which the purchased cryptocurrencies can be stored. However, due to the relatively low regulation of cryptocurrency exchanges, keeping your funds on them is not recommended. In the past, there have been spectacular collapses of well-known stock exchanges. One such case was the bankruptcy of Mt. Gox – in 2013-2014, this exchange accounted for about 70% of all transactions on Bitcoin. As a result of the hacker attack and theft, 850,000 Bitcoins evaporated from the company’s servers, the market value of which was over $450 million at the time. Since then, there have been many equally serious bankruptcies and thefts – both on global and local cryptocurrency exchanges.