What You Should Know About Bitcoin

The following is a guest post

All of a sudden, Bitcoin seems to be one of the hottest topics in investing. It’s not exactly new because it first emerged several years ago and has been gaining attention and influence ever since. But in the last 12 to 18 months people certainly seem to be starting to take it more seriously. Specifically, some are starting to address the idea of buying Bitcoin to fund retirement.

Whether or not this is a good idea isn’t a question you can answer by reading one article. Like most any other type of investment, buying Bitcoin carries some risk, and it shouldn’t be done lightly. But Bitcoin should be evaluated at least, given its growing significance both as a currency and a commodity. Given that, here are a few things you should know about it.

What Is It?

If you’re not sure about the answer to this question, don’t worry. A lot of people are still a little unclear on the details. Bitcoin is a complex concept, but not one that’s necessarily difficult to grasp. Basically, it’s a brand new currency that exists solely in digital form. There’s a finite amount of Bitcoin that can be generated (only 21 million), and it’s initially acquired via a mathematical “mining” process. But most people don’t really need to know about that part. What you need to know is that once it’s been mined, Bitcoin is out in the world and can be traded and stored as digital wealth. You can literally buy it with your own currency and use it to purchase goods and services at participating merchants. Or, if you wish, store it away on a safe digital platform as an investment to be sold later.

How Do You Buy & Store It?

We covered that you can buy and store Bitcoin, but how do you actually do it? There are several answers. Assuming you’re not mining Bitcoin on your own, you can buy it with your own money either through an online Bitcoin exchange or via a “BTM” which, as you might guess, is a Bitcoin ATM. There were once limited options for how and where to buy Bitcoin, but these days it’s fairly easy to find a convenient option. As for storage, part of understanding Bitcoin is to learn that technically, it isn’t stored anywhere. You don’t physically possess your Bitcoin. Rather, you’re storing secure digital keys, which allow you to access your stash and sign off on transactions using it. You can store these keys on desktop or mobile apps, as well as via online wallets.

How Much Is It Worth?

Naturally this question doesn’t have a concrete answer, as the value of any sort of currency fluctuates, sometimes on a minute-to-minute basis. You can monitor the price, however, and at the time of this writing it’s worth a little over $4,000, which is fairly close to its all-time high. However, you don’t need to spend $4,000 to acquire a Bitcoin if you’re interested in investing. You can buy fractions of these coins as well. It’s almost worth thinking about it as buying a quantity of Bitcoin, rather than a number of Bitcoins.

Is It A Wise Investment?

This is the big question, and it’s one no one can answer for you. What we can say is that it is a form of investment, with more and more people treating it like a valuable commodity rather than a usable currency (though it is still the latter as well). As for whether or not it’s wise, projections and predictions are split. Lately, Bitcoin has performed extraordinarily well, soaring to highs many once believed were impossible. Some see this as the beginning of a sustained period of growth en route to Bitcoin becoming a truly mainstream alternative currency. Others, however, see a bubble bursting and still believe that Bitcoin will flounder once early investors decide they’ve gotten enough out of it and sell off.

At the very least, it’s something worth looking into if you’re hoping to diversify your retirement fund. However, you should approach Bitcoin with care and with an eye toward further educating yourself on the subject, as with any other investment.

6 thoughts on “What You Should Know About Bitcoin

    • Fred M. says:

      Everytime I start to think like that, I wonder if I would really have watched it grow from 1.00$ to 4000$ without ever selling some. Maybe I would have unload some at 25$ after 25x return. Maybe I would have unloaded some more at 100$, then at 400$ and 1000$. I would have been wealth but maybe not retirement wealthy.

      It would have been a nice ride though 😉

      • Bingo. Its easy to get carried away from all the hypotheticals that if you invested $1000 so many years ago, it would be $4M today, but how many would actually hold thru the ups and downs. Its really hard to know what the future brings. Theres no way anyone couldve predicted the future of these crypto assets back in the day.

        R2R

  1. Andy says:

    Just my opinion, but I think Bitcoing, Ethereum, and Litecoin are MUST owns. Not saying invest 20% of your money in these, but I still feel like we are in the very nascent stages with crypto-currency. In 2030, I am willing to bit anyone who bought today and held the entire team will be richly rewarded. We shall see though…I am not willing to miss out on this though…

    • Hi Andy,
      The crypto currencies will have long term repurcussions on the monetary system, one way or another. Its still early to see how things will play out — and who knows if these cryptos will last or some other crypto will come up that will take over the industry. For now, I hold ETH and LTC, a very small nominal amount, just to get my feet wet. BTC seems to have a lot of overhead, but still interesting to follow the animal spirits of the crowds.

      Thanks for sharing your thoughts

      Best
      R2R

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