Turning Small of $100 into $30,000
in a Single Year
Now is a very good time to take an interest in Bitcoin and invest in it. It has been going strong
for 10 years and its popularity has soared. In order to make the best returns on Bitcoin
investments you need to understand what it really is and how it works.
You also need to know the best way to obtain Bitcoins and the best investment strategies. This
guide will show you all of this and more. Many people think that Bitcoin is a scam but it certainly
isn’t. However there have been some scams in the cryptocurrency world and you will find out
how to avoid these and stay safe in this guide.
We have worked hard to ensure that everything in this guide is explained in the simplest ways.
Bitcoin and the underlying blockchain technology are fairly complex but you will be able to easily
understand by reading this guide.
Bitcoin started out with a value of zero and has hit highs of $10,000. It is a valuable commodity
and once you have your Bitcoins you need to keep them safe. You will learn exactly how to do
that. Although Bitcoin is a volatile commodity it should be possible for you to make a good return
on your investment if you follow the advice in this guide. While there are no guarantees with any
form of investing, the advice provided here has worked well for others in the past.
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What are Cryptocurrencies?
In basic terms a cryptocurrency is a medium for exchange online. A cryptocurrency has a
number of crypto graphical functions which are there to support financial transactions. Most
cryptocurrencies use the blockchain technology platform (more on this a little later) as it offers
immutability, transparency and decentralization. Cryptocurrencies are not controlled by any
central powers – not yet at least. This is deliberate because the whole idea of cryptocurrency
and Bitcoin is that they provide immunity from government interference and control.
A cryptocurrency can be transferred from one person to another by using public and private
keys.
There are minimal processing fees involved with cryptocurrency transactions which are part of
their appeal. Usually financial institutions have high charges for any monetary transaction.
Cryptocurrencies were invented by accident. The inventor of Bitcoin, Satoshi Nakamoto, created
a peer to peer electronic cash system and Bitcoin was a byproduct of this system. Before this
there had been numerous attempts to create a digital cash system but all had failed.
The key to the success of Nakamoto’s system was that it provided a decentralized financial
network rather than the established centralized system. If you wanted to set up your own digital
cash system you would need to create a payment network that provided three key things:
- Accounts
- Balances
- Transactions
A problem that all payment networks face is “double spending”. This is all about preventing
spending the same amount twice. Up until the creation of Nakamoto’s system this had always
been achieved using central server balance records (this is still in existence today).
With a decentralized payment network there is no central server. Instead every single network
entity or node has to perform its job properly. They all need to have a list of transactions so they
can monitor if future transactions are a “double spend” or valid. All of the peers of a
decentralized payment network have to agree on everything – there has to be
complete consensus. If this doesn’t happen then the transaction will not take place. The
problem was how to achieve this total consensus without a central server. Nakamoto figured this
out. The Transaction Properties of Cryptocurrencies In order for a cryptocurrency system to
work effectively there has to be a number of properties in place. These are: Immutable After a
cryptocurrency transaction is confirmed then it cannot be changed. Nobody in the world can
change a cryptocurrency transaction not even presidents or monarchs. It is an immutable
record. Basically if you send money to someone else that’s it. There is no turning back. So if you
make a mistake or get scammed then you are stuck with the situation. You do not have the
opportunity to reverse the transaction.
PseudonymousCryptocurrency accounts and transactions have no connection to real world
identities. You will receive a Bitcoin on an address which is a randomly seeming chain of about
30 characters. You can analyze the transaction flow but you can’t usually connect the
transaction to a real person through the address. Global Transactions at Speed It doesn’t take
long to propagate transactions and confirm them. Usually this all takes place in minutes. The
network for cryptocurrency transactions is global so it doesn’t matter where the transaction
originates and terminates. High Security The highest levels of transaction security are essential
for a cryptocurrency network and to this end all funds are locked in a public key cryptography
system. Only someone that has a private key can send cryptocurrency. This makes the system
extremely secure. No Permissions A cryptocurrency system is a “permissionless” system. You
do not require the permission of anyone or any authority to make a cryptocurrency transaction.
There is no gatekeeper with a cryptocurrency system.
The Monetary Properties of Cryptocurrency Now you know the transaction properties of
cryptocurrency you need to understand the monetary properties. These are:There is a
Controlled Supply
Most cryptocurrencies have a limit on the number of tokens supplied. Taking Bitcoin as an
example there will be a decrease of supply over time and experts estimate that the final number
of Bitcoin tokens will happen around 2140. Experts say that only 21 million Bitcoins will be the
limit. To control the supply of cryptocurrency tokens a schedule is written in the underlying code.
Using this code you can approximately calculate today the monetary supply of a cryptocurrency
for any given future date. Bearer not Debt With conventional or “fiat” money underwritten by a
government, the bank account you hold is created by debt. All of the entries in your account are
debts. It is really an IOU system. A cryptocurrency is not a debt. There has been a lot of
controversy over the launch of cryptocurrencies because they are a direct attack on the
monetary policy of most nations. Governments or central banks cannot change
cryptocurrencies. Therefore they are immune to inflation and deflation caused by the
manipulation of the monetary supply.
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What is Bitcoin?
Bitcoin is a cryptocurrency and a virtual type of money. It’s really like having an online version of
money or cash. You can use Bitcoin to purchase products and services and more and more
vendors are accepting Bitcoin as a form of payment these days. Some countries feel very
threatened by Bitcoin and have banned it completely. There are no physical Bitcoin tokens. You
may have seen pictures of Bitcoins but these are fabrications. The worth of a Bitcoin resides in
the private codes they have imprinted inside them. Every Bitcoin is just a computer file stored in
what’s called a digital wallet. We will discuss digital wallets in more detail in a later chapter. If
you have a digital wallet then other people can send you Bitcoins or fractions of them. You can
also send Bitcoins or fractions to others using your digital wallet. Every Bitcoin transaction is
recorded publicly using blockchain technology. This is a transparent network where anyone
can trace the history of Bitcoin transactions. All records in the blockchain are immutable
meaning that you cannot copy transactions, change the amount of Bitcoins owned or use
Bitcoins that you don’t own.
There are several ways that you can purchase Bitcoins including:
• You can purchase them using your native currency through a cryptocurrency exchange
• You can sell products and services in exchange for Bitcoins
• You can use a Bitcoin ATM
• You can “mine” Bitcoins
The practice of mining Bitcoins has been going on for a while. In order to do this you will need
high end computer equipment and lots of it. These computers perform complex algorithms to
guess secret codes. If your computers guess right you get Bitcoins as a reward. We will not be
recommending mining as a way of obtaining Bitcoins in this guide. There are only a limited
number of Bitcoins so the process of mining is now incredibly complex. You could spend years
mining for Bitcoin and spend a great deal of money on computer equipment and electricity costs
without earning any Bitcoins.
You may be wondering why Bitcoins are so valuable. When Bitcoin first started it had no value
but in five years a single Bitcoin was worth around $1,000. At the time of writing a Bitcoin is
worth around $8,000. Why this jump? Well there are a number of other things in life that have
value. Diamonds and gold are a good example. Bitcoins have value because people are willing
to trade them for real products and services and also buy them for cash. People like the idea
that any governments or central banks do not control Bitcoins. They also like the fact that
Bitcoin transactions are pretty anonymous. Yes there is a record of all Bitcoin transactions but
very few include real world identities.
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Why does Bitcoin enjoy Value Jumps?
So many people are reliant on the Internet these days. People get very frustrated if they are out
and about and cannot find a Wi-Fi connection to use the Internet with their mobile devices.
Whether this is a good or bad thing is of no consequence when it comes to Bitcoin investing.
The important thing is that growing use of the Internet is good for Bitcoin. Over the years since
the launch of Bitcoin it has attracted investors from all corners of the world. Being a true global
digital currency that is available to all (in theory) it is no surprise that it has generated a lot of
excitement.
Another good reason why the value of Bitcoin has risen so rapidly is because it is a scarce
resource that is actually useful. Most people know that there is only so much gold that we can
mine. Each year there is less and less gold left in the Earth. Therefore it has great value.
You can apply the same logic to Bitcoin. There will only ever be 21 million Bitcoin. As time
passes this number will dwindle and the value increases. It is now very hard to mine Bitcoin and
this is only going to get tougher. Investors really like the fact that Bitcoin represents predictable
and sound monetary policy that all can verify. At any time you can see how many Bitcoins are in
circulation and how many new ones have been created. You can easily trade Bitcoin for some
products and services. If you have a gold investment then this is not a liquid asset. You would
have to sell some of your gold stock for cash before you could purchase anything. It is very easy
to make cross border transactions using Bitcoin. There are no governments or banks involved.
You can send Bitcoin securely in minutes to anywhere in the world. Transaction fees are very
low compared to fiat currency transactions. We really have the Internet to thank for the rise in
popularity and value of Bitcoin. The Internet has made the sharing of information easy wherever
you are and this concept will underpin the success of Bitcoin as a global and verifiable currency.
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