A Beginner Guide – Is It Worth Buying Bitcoins in 2022?

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Bitcoins are a digital currency that can get used as real money. However, they’re not printed like rupees, dollars, or euros because they’re produced by computers using free software that gets people involved in the Bitcoin network. 

The history of this digital currency is fascinating! There are currently over 17 million bitcoins getting used worldwide. It’s also important to note that its supply is limited, with only 21 million coins available for use.

Why Do People Invest Money in Bitcoins?

They think it will go up in cryptocurrency value. Bitcoin’s price history has been volatile, but there have been more ups than downs. More importantly, it grew by over 10x from January 2017 to January 2018. Some believe that bitcoin is only going to continue growing, and so they want a piece of the action before it gets too expensive for them.

They want a hedge against the US dollar. The US dollar is the reserve currency of the world. It means countries all over the world hold large amounts of dollars as their foreign exchange reserves. 

It ensures that they can pay for imports and pay back international debt (and many other uses). However, countries that rely heavily on exporting like Japan or Germany may not be thrilled by how strong their currencies are relative to the US dollar since this makes their exports more expensive and hurts competitiveness. As an alternative store of value, bitcoin could protect against a weakening US dollar and inflation (assuming bitcoin continues to rise in price).

They want to diversify their portfolio. There is no asset class quite like cryptocurrencies, so adding some into an investment portfolio could help diversify risk, especially if you’re already invested in stocks and bonds.

They like that it is decentralized and not regulated by a country. Cryptocurrencies are attractive because they don’t fall under any one country’s jurisdiction (although some governments have begun imposing restrictions on exchanges). Some investors find this appealing because they fear government intervention with traditional currencies or assets.

The Future of Bitcoin

The future of Bitcoin and cryptocurrencies is uncertain. Some experts think that the price of Bitcoin may rise in the future, but they cannot predict whether it will become a global currency, get replaced by another cryptocurrency, or get used at all in 2022.

Can You Buy Fractions of Bitcoin?

Unless you have thousands of dollars lying around, you’ll likely want to buy less than one entire bitcoin. Fortunately, each bitcoin can get divided into 100,000,000 (100 million) units. We call each of those units a “satoshi,” after the pseudonymous inventor of bitcoin (more on that later). Each bitcoin is divisible by up to 8 decimal places, meaning you can buy as little as 0.00000001 BTC at a time if you want.

The Process of Buying Bitcoins

There are many ways that a person can purchase bitcoins. Let’s take a look at how this works:

Exchange cash for bitcoin. It is the most common way to buy bitcoins, and it is similar to purchasing foreign currency from your local bank or online exchange service. You open an account with the service, let them know how much you want to buy, confirm your identity, and then purchase with cash or a credit card. It means that you get actual bitcoin without having to deal with a third party like Coinbase or BitPay.

Exchange bitcoin for another cryptocurrency. It helps to diversify one’s portfolio into altcoins such as Ethereum and Litecoin. 

Because these currencies have smaller market caps than Bitcoin, they tend to have more volatility and lower cryptocurrency prices than Bitcoin. Thus, they are more likely to reach new highs during the bull run in cryptocurrency markets while still being cheap enough for entry-level investors who don’t want to spend a lot of money on their initial coin purchases.

Buying Bitcoins with Cash

You can buy bitcoins with cash at ATMs in various locations around the world. If you don’t already have a Bitcoin wallet, make sure you download one before purchasing.  

If you intend to remain anonymous when buying bitcoins, meet in a public place and go over all the details of your trade-in person before exchanging any pertinent information. It will give both parties time to decide if they are comfortable participating in the transaction without rushing into anything. 

How Do You Store Bitcoin?

To ensure your bitcoin does not get stolen, you should place them in a wallet. The wallet can be any of the following:

A cold storage wallet: Hardware wallets, paper wallets, or metal wallets are all cold storage options. Cold storage is safer than hot storage because it’s offline, which makes it virtually immune to hacks and theft.

A hot storage wallet: Hot storage wallets are more susceptible to hacking and theft because they’re connected to the internet. Software wallets are examples of hot storage options.

Is It Safe to Own Bitcoin?

If you’re thinking of storing your Bitcoin on an exchange, then don’t. It’s not wise to keep it on a platform that isn’t 100% secure and trustworthy and which potentially can get hacked.

Instead, you have these options to choose from:

  • A hardware wallet is the most secure way to store your coins. These are devices that you connect to your computer via USB port and where you can store your Bitcoins in offline mode only.
  • A paper wallet can be made by printing out the QR code for a specific Bitcoin address and putting it in a safe place. This is another offline method that lets you keep track of how much money is stored at a particular address without being connected to the Internet.

Conclusion

You might buy bitcoins because you think they’ll become more valuable. You hope that more people will want to use bitcoins instead of traditional currencies, and so the market value of bitcoin will rise. Unlike the stock exchange, there are no regulations on the bitcoin market, making it a very volatile market based on supply and demand.

Others invest in bitcoins because they have an interest in the technology behind it—namely blockchain technology. If this technology becomes widely adopted as a secure transaction ledger for transactions other than cryptocurrencies, it could come with major security benefits and increase its value.

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