Bitcoin has been the talk of the internet town for some time now. Users have been talking about the ease of trading over the web using this cryptocurrency which is global and doesn’t require transfer fees. Those who haven’t bought Bitcoin yet will wonder what they could do with coins they cannot use in physical stores. Many have thought the currency will have its reign ended sooner than some people thought. However, Bitcoin is on its 8th year and the worth of one bitcoin is now a whopping $4,000 plus. While there is a big possibility for cryptocurency to stay, there are things you should know before diving in and buying Bitcoin: These include the following:
Bitcoin Jumps around but Fluctuations are not as Huge
Bitcoin prices can rocket or plummet because of many reasons. However, while the currency moves significantly, fluctuations are not as huge as they sound. The Bitcoin Volatility Index says over 6 months, bitcoin’s dollar price is 4.23% and 3.58% over a year.
Trading with Bitcoin Involves Some Fees
There have been many talks about bitcoin being an uncontrolled currency by laws and regulations and skipping around banks. However, for a free currency, there are expenses that you need to factor in. When you begin to buy bitcoin in cash, sell and move the currency, you will have to take care of some fees. When doing bitcoin transactions, you’ll have to pay a small tip for bitcoin miners so your transaction is placed in the blockchain. The blockchain is a ledger that contains all Bitcoin transactions. Also, using an exchange for deposits and withdrawals makes you pay their fees. This could run up to 3.5% and could let you spend $50 when depositing b your money back to your bank account.
Bitcoin is Less Anonymous than it Looks
The cryptocurrency is not associated with any local bank accounts so there’s no way for a government to demand information about the owner. However, because the blockchain is a public ledger, anybody can see it. Thus, people can see every bitcoin and who owns it.
Bitcoin Offers Many Investment Opportunities
Those who are trading currencies have all kinds of tools which let them make large investments and get great returns. Their investment options include buying futures, trading derivatives and using leverage. While risky, this is how they make money. Because of Bitcoin’s success, a lot of platforms are now providing the same service for cryptocurrencies.