5 Things You Should Know About Bitcoin Before Investing

There’s no doubt that Bitcoin has become a household name. But many people don’t understand how it works or what it is, and they’re afraid of investing in something they don’t know. If you’re interested in buying bitcoin but aren’t sure where to start, this guide will help clarify the basics.

Cozma Claudiu

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Photo by Art Rachen on Unsplash

Investing in Bitcoin is not a sure bet.

It’s important to understand the risks. Bitcoin is a high-risk investment, and its value can fluctuate dramatically within a short period of time.

There are several factors that could impact the price of bitcoin, including political events in countries where it is accepted as payment; regulatory changes in other countries that affect bitcoin’s status as an official currency or money transmitter; hacking attacks on cryptocurrency exchanges; changes in interest rates; inflation levels and more.

Because there is no central authority that issues bitcoins and new bitcoins are created at a predictable rate (currently 12.5 per 10 minutes), many experts view bitcoin as more stable than traditional currencies like the U.S. dollar or euro due to their finite supply — 21 million coins maximum if we ever reach that number — versus how many dollars or euros exist today (and how much may be printed).

Investing in Bitcoin is not like investing in the stock market.

When you invest in the stock market, you are essentially buying a piece of a company. The public company owns physical assets and has income streams that generate value for its shareholders.

In contrast, bitcoin is a decentralized digital currency that exists independent of any government or bank.

Bitcoin is created through a process called mining — a term that refers to the collective effort required by thousands of people around the world to solve complex mathematical problems on their computers at the same time.

These problems are called blocks and they are linked together into what’s known as…

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Cozma Claudiu

Full-Time YouTuber, I like writing and talking about money and marketing! Follow me if that's something that interests you.