If you had the chance to buy bitcoins when they first came out and passed on the opportunity, you’re likely kicking yourself right now.
The bitcoin digital currency has enjoyed a stratospheric rise over the past seven years, going from a value of nothing at all to a rate of $2,771.78 per bitcoin at the time of writing.
Most of that rise has taken place during the last few months, with bitcoin reaching a peak value of $2,851.07 in early June. It then dipped before heading back up towards its former peak. So is now the time to buy, in anticipation of further rises? Or should you avoid bitcoin for the moment, in the hope that its value will plunge back down again, making it more accessible?
The future is, of course, impossible to predict, but we can look at what may be in store for bitcoin. A key issue here is the blockchain. The blockchain is the technological backbone of the bitcoin system. It is a peer-to-peer digital ledger system that defies corruption due to its structure.
The only issue with the blockchain is that with every bitcoin transaction, it grows. Indeed, it is now so large that there is talk of having to implement a “hard fork” in order to prevent the blockchain from becoming so large it becomes unusable. Should the new blockchain resulting from this hard fork fail, investors could see their $43 billion worth of bitcoin plunge in value.
Thankfully, nothing immediate is going to happen in relation to the blockchain, so for now it’s just something to keep a close eye on. If you do feel the time is right to invest, then understanding the different ways to buy bitcoins is the first step. The easiest way is to sign up with a reputable company that sells bitcoins. You create an account, get a virtual wallet, then use your bank account to exchange your currency for bitcoin.
If you can’t afford to buy bitcoins, you could try your hand at mining them. This is how many people originally built up their stash of bitcoins. However, it’s a technical process that requires specific hardware and a serious time commitment. The hardware itself will set you back quite a bit, though not as much as buying a single bitcoin at today’s prices. Mining bitcoins is also hugely competitive, so don’t expect this to be a quick win way to fill your wallet with bitcoins!
As with any investment, the key is to keep a close eye on its value and on anything that may occur to affect that value. Cryptocurrencies are still an incredibly new asset class and, as such, research on their price fluctuations isn’t as widely available as it is for other investments. However, the body of information that’s available is growing swiftly, so take the time to educate yourself before you decide whether or not the time is right to buy bitcoin. And, as with any investment, whether currency or commodity, only put in what you can afford to lose.