Bitcoin is a notoriously volatile digital currency, yet a number of investors trying to exploit this currency keeps on growing each day. As with speculative market and extreme volatility, investing in Bitcoin can be a risky move and can cost you huge sums of real money. The best advice for those looking to invest in Bitcoin is to proceed with caution.
How Do Bitcoin Exchanges Work?
Bitcoin exchanges work the same way physical currency exchanges do. It’s like buying one currency with another.
The value of a country’s physical currency is a reflection of the economic and financial well-being of that country.
For example, the US dollar is worth more than that of Mexican peso due to disparities between the two economies. Therefore, a US dollar can buy plenty of Mexican pesos.
And same rules apply for Bitcoin. The only difference here is that the value of Bitcoin is not economy based but the work performed by your computer.
Bitcoin exchanges act as intermediaries for a transaction, converting bitcoins to dollars/other currencies, and then converting those currencies back to Bitcoin or dollars. These constantly shifting values provide savvy investors with the golden opportunity to capitalize on these trends. However, the money can be lost as easily as earned due to the extreme Bitcoin volatility.
How to Make Your Way into Bitcoin?
After knowing all the risks involved, if you still want to take a dive and make your way into Bitcoin, here are some of the ways to start your Bitcoin venture.
The easiest way into Bitcoin is mining, but it’s also the slowest. The miners are required to:
- Setup a computer that is dedicated to bitcoin decryption (Learn how to set up a Bitcoin miner)
- Install a bitcoin mining software like BitcoinCore
- Wait until it completes the decryption
All this can take up to a few weeks to more than a year to decrypt a single block. If you want the coins faster, you will be required to buy a purpose-built mining rig. But sadly, these rigs are unbelievably expensive. A 128 GHs rig costs around $2,400 and the prices only go up from there. The more advanced the rig, the costlier it is.
Join Mining Pools:
Another way to earn Bitcoin is by joining a mining pool. A mining pool is a cluster of internet-connected computers that breaks the work of a block into smaller blocks. These blocks are then shared among the participating computers.
As soon as the decryption completed, the coins are awarded to the miners based on their contribution.
Want Faster Coins? Play the Markets:
The quickest way to make Bitcoin is going straight to the markets. All you have to do is to sign up on a reputed Bitcoin exchange such as Mt. Gox and respond to a confirmation mail to verify your mail address.
The system then asks you to confirm your residence address of last six months and provide a photo ID.
Once you have gone through the verification process, then it’s just a matter of depositing money and waiting for the market to offer a perfect opportunity to make money.
Just like every other Bitcoin exchange Mt. Gox charges a fee of .25% to .60% per transaction.