Everything You Need To Know Before Buying Bitcoin

1. Bitcoin is volatile

Okay. That one you probably already knew. Bitcoin, since its inception, has proven day after day that it is a very volatile asset. The price of Bitcoin can change rapidly and unpredictably, sometimes, in a very short space of time.

The price of Bitcoin can jump high and within a few hours, or days, fall dramatically. A perfect example is what happened in December 2017. The leading digital currency reached a high of more than $19,000 but within a week, the price had retreated to less than $12,000.

The price of Bitcoin is affected by supply and demand. When more people are buying the asset, the price goes up and when more people are selling, the price goes down.

Bitcoin also responds to market news. Positive news on cryptocurrency adoption, for example, tend to drive Bitcoin’s price higher while events concerning cryptocurrency regulation or bans have an opposite effect on Bitcoin’s valuation.

Bitcoin’s volatility is one of the major talking points for critics who argue that Bitcoin is not a store of value. Yet, an increasing number of people in Asia have been turning to Bitcoin to protect their investments in light of the recent US-China trade war.

2. Bitcoin is transparent

Bitcoin is perhaps the most transparent payment option in the world, mainly due to its underlying distributed ledger technology, blockchain.

All transactions on the network are public, traceable, immutable, and publicly stored on the Bitcoin blockchain. Every time you buy and sell Bitcoins, the information is updated and broadcast for everyone to see.

However, you don’t need to give away your personal information such as name and address. You only need a Bitcoin wallet address to send and receive BTC.

One of the biggest advantages of Bitcoin is its capacity to move peer to peer around the world instantly and for a very reduced cost. Unlike traditional fiat currencies, Bitcoin doesn’t rely on third parties to settle transactions. Instead, you only have to pay for the blockchain fee — a small fee that covers the energy cost of settling your transaction on the blockchain.