Bitcoin is booming right now and it looks like we could pass $10,000.
This article will cover some of the most important positive and negative aspects of converting your money into Bitcoins so that there is no confusion and you can understand clearly whether the new Bitcoin digital currency is something you should consider.
With the growing popularity of the Bitcoin crypto-currency which is based on advanced public key cryptography for its security, more people are turning to the Bitcoin as a way to diversify a portion of their portfolio into a form of money that is essentially unregulated and decentralized.
The Risks Of Investing In Bitcoin
Let’s start by covering some of the potential negative consequences of investing in Bitcoin since it has been launched as an experimental digital currency based on advanced cryptography and peer-to-peer computing. A Bitcoin doesn’t have any physical value like gold or silver coin.
On the real sense, it exists as a small piece of software code which should be stored in a digital wallet. You can set up digital wallet software for free that will run on your computer or smart phone. The digital wallet software that is used for storing and transferring Bitcoins is based on using both a public security key and a private security key.
The public key is your Bitcoin address that you send to another person if you want to receive Bitcoins, and the private key is the one that you need to type in if you want to transfer Bitcoins out of your digital wallet. Not only is it possible for your digital wallet to get hacked if someone gains access to your private security passcode, but if you lose your passcode then there is no way for you to recover the lost Bitcoins.
The Benefits Of Investing In Bitcoin
Now that you are familiar the potential pitfalls of Bitcoin, let’s look at some of the benefits which have led to its massive popularity as a medium of exchange. Bitcoin transactions do not require a bank or automated clearing house the way that dollar transactions do, and therefore the exchange process is more anonymous and cannot be frozen by any financial institution. Because of this decentralized nature of Bitcoin transactions relying on a large global peer-to-peer computers, money can be transferred from anywhere in the world to anywhere else in a matter of minutes. Another key benefit of Bitcoins is that there is a fixed amount in existence and therefore it is not subject to the inflationary pressures of a central bank that continues to print money and erode the value of its currency. This is seen as a very positive benefit by many investors because it offers a solid protection against inflation over time.
By learning about the different aspects involved with investing in Bitcoins, you can decide if it is appropriate for you to diversify part of your money into Bitcoins.
The concept of the Bitcoin digital wallet is essential for you to understand if you are going to consider denominating a part of your money in the new currency called Bitcoins. A digital wallet is a software program that will run on your computer or smart phone that will store your Bitcoins, and this is the means by which you can send or receive Bitcoins in order to make purchases or be a merchant. In this article we are going to look at what the digital wallet really is and how you can keep your Bitcoin investment safe.
Defining The Bitcoin Digital Wallet
It is important to remember that Bitcoins are not physical currency the way that dollars, pounds, and euros are, but instead they are based on a highly complex mathematical algorithm and they exist literally as pieces of code on digital devices. For this reason, you will require a type of software called a digital wallet in order to hold your Bitcoins and to send or receive them from other people.
If you are storing Bitcoins then you should take care to protect your digital wallet with the same consideration that you would have for your physical wallet.
How To Keep Your Digital Wallet Safe
One of the potential risks associated with using Bitcoins is that it is possible to lose your digital wallet and your data if you have a hardware failure such as a hard drive crash, and it is also possible for hackers to steal your Bitcoins if your transactions are not confirmed in the block chain by the Bitcoin peer-to-peer computer network.
An important tip for keeping your digital wallet safe is to never post your Bitcoin address on the internet, and you should also make sure that you are running your digital wallet on a computer that is free of spyware or malware.
A better way to store bitcoin is actually using hardware such as a Ledger Nano device (see resources at bottom of this post).
There are a number of scams in the bitcoin world from investment opportunities to hacking and even MLM programs.
We have seen a huge rise in MLM’s over the past few years that are looking to cash in on the hype surrounding Bitcoin and other cryptocurrencies.
Ultimately these are nothing more than ponzi schemes. A good example of one of these is USI Tech which has gained a lot of popularity in recent months and is probably trying to replicate the success of other known frauds like BitConnect. I was actually invited to join USI Tech but after reading reviews I knew to stay clear (Read this review exposing USI Tech as a scam). There are plenty of these scams launching though, so you need to do proper research before you part with any money.
There are also ICO scams. I will get into this in depth in another blog post.
Keeping Bitcoins On Your Mobile Smart Phone
Since you need to have a computer of some kind in order to run the digital wallet software where your Bitcoins are contained, many Bitcoin users choose to run their digital wallet software on their mobile smart phone for ease of use and for making point-of-sale purchases.
The digital wallet software designed for smart phones tends to have a simpler and easier to use design which has made it popular with Bitcoin early adopters, and it is also required if you ever want to go into a physical store that accepts Bitcoins in order to make a purchase. By educating yourself about how to use the digital wallet and how to keep your money safe, you can be sure that you get the most out of using Bitcoin as a digital currency.
Here’s a list of useful resources for investing and learning about Bitcoin: