Buying Bitcoin for the First Time? 8 Things you Need to Know:
Elon Musk & Tesla, Amazon, Visa, Mastercard, and PayPal are all on the Bitcoin train, should you? The digital asset space was once a novel area, but 12 years on and Bitcoin is more prominent than ever.
- 8 things to know before buying your first BTC
- Know where and how to buy Bitcoin is key
- Bitcoin and everyday life
Since its inception in 2008 Bitcoin’s popularity has exploded. 2021 and what some are calling the year of the BTC bull, has brought quite the show for the king of crypto thus far, from new all-time highs surpassing $55k to increased adoption from major industry players. Now could be the right time to dip your feet into this growing industry. That said, doing your homework first will be key.
So, here is a list of 8 things every enthusiast or crypto novice should know before they buy their first Bitcoin.
1. Bitcoin Price is Volatile
This might be an obvious point, nevertheless, an important one to highlight. Bitcoin has proven time and time again that it is a very volatile asset. It is not unknown that the price of the crypto is unpredictable and can change rapidly. Over the years since gracing the world with its presence Bitcoin has kept us glued to our seats surging to new highs but within hours retreating. A perfect example of this was in 2017 when we saw a price hike to $19,000 but a dramatic fall back to $12,000 in less than a week. Since we have seen the crypto flirt with the $20k level, that was until the end of 2020 and the current rally which has brought about new exciting all-time highs.
Bitcoin has a limited supply of 21 million and in comparison, to fiat and other traditional assets adoption is relatively low. It is for this reason that supply and demand play a major role in the rise and fall of Bitcoin’s price. The more people that buy the digital asset the more the price drives up and vice versa, the more people that sell the more the price will drop.
BTC’s price is also heavily influenced by the media. Recent events and tweets from a certain mogul in support of the digital coin is testament to this. This has not only has caused a domino effect and seen increased adoption across industries but has also caused the price to increase daily, meaning the price has climbed approximately 350% in the last 6 months. Bitcoin’s volatility is a reason that drives discussion among critics, yet for many, it is what adds to its allure.
2. Decentralization & Transparency
One of the most defining characteristics of Bitcoin is its decentralized nature. No single authority owns BTC. What does this mean? For users it means more power because it reduces the need for a middleman when executing transactions.
Bitcoin transactions are stored on an underlying distributed ledger technology known as the Blockchain. This makes it one of the most transparent payment methods globally. All transactions are public, traceable, and immutable meaning that each time you buy, sell or exchange BTC the data is updated and present for everyone to see. However, this does not mean you have to share personal information, all you will need is a Bitcoin address to complete transactions.
Another big advantage of the decentralization nature of crypto is that it allows BTC to be sent anywhere around the world in an instant with very low costs. In fact, the only fee users will incur is a small network fee.
The downside of the blockchain and decentralization is if you fall victim to a scam or your wallet is hacked it is impossible to correct the issue. So, before you start buying Bitcoin be sure you choose an exchange you can trust. Zeply makes the process of buying BTC an easy and safe one – better still, do so with zero fees.
3. Bitcoin is not Completely Anonymous
Contrary to popular belief, anonymity is not entirely true with Bitcoin. While transactions do not require your personal information, they are stored on a public ledger and their record is visible to the public. The history of a BTC address on the blockchain is visible to anyone, so, it is not completely anonymous. For this reason, Bitcoin bull, Tim Draper thinks the crypto will ultimately play a crucial role in law enforcement. The way to counteract this and remain anonymous would be to create a new BTC address for every transaction, this way there will be no history.
4. Bitcoin can be a Bubble
We have already mentioned the element of volatility that circulates the crypto market. A bubble can be defined as a situation where the price of an asset increases rapidly but then witnesses an abrupt crash. We have seen a few Bitcoin bubbles since its inception. Notorious Bitcoin bubbles and ones that will forever be ingrained in the brain of many are 2011 and 2017/18.
2017 a year for BTC history and undoubtedly a very exciting one for the crypto community. The rise of BTC in 2017 was largely due to speculation and FOMO (Fear of Missing Out). However, the wave of optimism that existed at the end of the year was stumped by the “Great Crypto Crash” of 2018. By November 2018, the price had taken a nosedive to as low as $4,000. Fears that “Bitcoin was dead” spread across the marketplace, but the digital asset showed its resilience proving critics wrong and in the following year it almost tripled in value.
5. Tax Applies to BTC (in some jurisdictions)
We won’t get bogged down with the specifics because not every authority has the same rules. Nevertheless, it is important to mention. Although Bitcoin is a currency it is not considered legal tender for the simple reason no government sees it as an official currency. This however doesn’t mean its outside of the law. Since some countries view profits made on BTC as capital gains it is likely that you’ll have to pay for eventual profits. So, if you own Bitcoin you need to understand how your country treats Bitcoin how it affects your tax liability.
6. Bitcoin is Still Evolving
Bitcoin is still very much in its infancy that is based on a relatively new and still developing technology. The Blockchain is continually improving. As a result, over time BTC will become increasingly more secure and reliable than it already is.
7. Bitcoin is not just for the Elite
Some may believe that like other markets that the crypto industry is reserved for the rich or the technically advanced. However, the beauty of Bitcoin is that anyone can get involved. Better yet, it provides a myriad of opportunities to make modest gains external to buying and selling. Users can also participate in the creation through a process called mining.
8. Bitcoin as a Payment Method
For many Bitcoin is still seen as an investment or an asset that they can trade and make money on. Although this is true, the digital currency can also work as a great payment option. Spending BTC is now easier than ever. In the same way, we use traditional currencies to buy and pay for goods and services we can now use crypto. The rise and existence of BTC-backed debit cards have made it possible for thousands of holders to use digital assets as part of their everyday lives. As adoption increases, this will become more apparent and it won’t be long before spending BTC in the real world will become more widespread.
What is more, we have seen a spike in BTC ATMs in parallel with the assets surge in value. Over the last 12 months, the number of ATMs globally has increased by 129.48%, from 6,759 to 15,511.
To Buy or Not to Buy?
Now that you are armed with everything you need to know before embracing the Bitcoin sphere, the question is – Are you ready to buy your first BTC? The answer is completely up to you, but you do stand to gain a considerable amount by entering the digital asset space.
When you decide that this is something you are missing out on you must ask; How & where here to buy? There are several platforms or Bitcoin exchanges available to individuals. Now amongst all this choice, you need to ensure you pick the most reputed and reliable.