Knowing more about Bitcoin, as well as crypto's function, storage, time commitment and education … [+]
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Bitcoin (BTC) and the cryptocurrency industry have gained popularity in recent months, in tandem with Bitcoin’s price journey up to $50,000 and beyond. Given the likely influx of new market participants, here are five things I would have liked to know when I became interested in the industry years ago.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin Can Be A Currency Or A Store of Value
Essentially, Bitcoin is a way to send value from one person to another, without needing to provide sensitive details, such as banking information and credit card numbers. Although it began as a transactional currency, as detailed in its original description published in 2008, Bitcoin has become known more as of a store of value asset similar to gold in recent years.
Bitcoin is easy to move, borderless and is not tied to any specific entity or region. Its value is similar to that of gold, based on aspects such as supply and demand. Only 21 million Bitcoin will ever exist, making it scarce compared to the global population.
In addition to Bitcoin, thousands of other cryptocurrencies exist pertaining to various use cases.
Crypto Never Closes
Unlike aspects of the traditional financial system, such as banks and the stock market, crypto markets never close. Crypto assets trade every day, at all hours, even on holidays.
Crypto can also be transacted at all hours of the day, with transactions settling through the blockchain. Banks on the other hand take days to settle transactions on their backend systems, and only operate on certain days, during certain hours.
Moving money in and out of the crypto ecosystem, however, can sometimes require interaction with bank accounts, depending on the user and his or her approach, so traditional hours of operation may apply on some level.
Even Though It’s Digital, Crypto Still Needs A Storage Location
Bitcoin and other cryptocurrencies can be stored on exchanges or other web-based platforms, but doing so is arguably not the best route, based on hacking and other risks.
Storing coins or tokens in personal crypto wallets gives the user more control of their funds, away from third party interaction, as well as letting the asset holder manage their own security. Multiple wallet types exist, including software wallets, although hardware wallets are viewed in the industry as one of the comparatively safer storage methods.
Twitter, YouTube And Podcasts Can Be Great Resources
Getting involved in crypto took a lot of learning and self-teaching. Fortunately, a bevy of resources exist on YouTube to help newcomers and experts alike. Looking up various crypto topics on YouTube proved beneficial in my early days. Nicholas Merten’s DataDash YouTube channel was helpful for learning the industry ropes, as well as staying up to date on information. Brian Krogsgard’s podcast, Ledger Cast, also provided some great insights on the industry.
Additionally, Twitter is one of the most common places to find crypto conversations and information, although exercising skepticism and caution, as well as conducting research, has served me well in navigating the industry.
Crypto Can Be Time Consuming
Learning about proper security practices and how to transact crypto, as well as learning about the assets themselves, was a time consuming process. Keeping up with the fast-paced industry also takes a good chunk of time, although it can be fun as well.
Crypto includes a vast array of other topics, although knowing these five things would have given me a head start on some key parts of the industry.
Disclaimer: I actively trade cryptocurrencies, as well as hold varying amounts of BTC, ETH, LTC, ZEC, BCH, LINK, VGX, and UNI.
