Everything You Need to Know Before Investing in Bitcoin
What is Bitcoin?
Bitcoin is digital money that is not created or managed by institutions (like banks or governments). In a way it’s like the internet – separate from nations and institutions and open to anyone.
Bitcoin takes the best qualities of gold and makes it digital. It’s easy to send bitcoin around the world, it’s hard to fake and produce, it’s durable and it’s finite. In an ever-growing digital world, it’s becoming more important to hold digital assets like bitcoin.
The History of Bitcoin
Bitcoin is the first and most popular cryptocurrency that was created by Satoshi Nakamoto in 2008. Many things have served the role of money from seashells to gold, government money (CAD) to now bitcoin.
Related article: Seashells to Bitcoin: the Evolution of Money
How is Bitcoin valued?
Bitcoin’s price is set the same way as the price of real estate is set – through supply and demand. The market itself decides the value of bitcoin and its price. With governments printing more money as a result of COVID-19, people are valuing bitcoin at higher prices because of its unique characteristics that make it resemble to gold. There is a limited supply of bitcoin – there will only ever be 21 million in existence.
How do you use Bitcoin?
One group of people believe that bitcoin will be a global currency and will outperform the U.S. dollar as a reserve currency. Another group believes that bitcoin acts more like an asset (gold) and they invest in it. A third group believes it can be both. For now, you can use bitcoin as currency (where places accept them) or invest in them as a non-traditional form of investment.
How do you invest in Bitcoin?
The most common way is through an online exchange or brokerage that allows you to trade cryptocurrencies. At Netcoins.ca, you can deposit Canadian Dollars straight into your Netcoins account through something like an Interac e-Transfer, wire or online bill payment. You can then convert that CAD into Bitcoin with a click of a button. Once you have bitcoin, you can also convert it back to CAD in minutes simply by clicking a “sell” button in the platform. It’s similar to how you would exchange CAD for USD, but it’s all done online. You can also get amazing support from the Netcoins team via live chat, phone or email.
Related article: Why it’s not too late to invest in Bitcoin
How much do you need to invest in bitcoin?
A common misconception is that you need to buy 1 full bitcoin, but you can actually just buy a fraction of it. You can invest as little as $100 or allocate a percentage of your wealth into bitcoin, like 1%. It’s up to you. Many people start by dollar cost averaging in (buying a set amount each day, week, or month).
What are the risks?
Bitcoin is known to be volatile and the price fluctuates quite a bit on a day to day basis (but so do currencies around the world, like Venezuela).You should never invest more than you’re ready or willing to lose. As with most investing, it’s important to zoom out and look at the bigger picture. For example, in 2010, 1 Bitcoin was worth less than $0.10. Fast forward 10 years, as of the end of 2020, 1 Bitcoin was worth over $30,000 CAD.
How do I keep my Bitcoin safe?
For starters, you always want to enable Two Factor Authentication on your accounts. This means that instead of just being able to sign in with a password, you need a second level of verification as well. This helps to keep your accounts secure.
It’s also a best practice that you transfer your bitcoin to a Bitcoin wallet but you can also leave your bitcoin in the exchange where you bought them. Never share your wallet password or your Netcoins login details (like you would never share your banking details) with anyone as this can make your bitcoin unsafe.
Related article: How do I keep my cryptocurrencies safe?
Why should I trust Netcoins?
Netcoins is on a mission to make it easy for Canadians to buy, sell, and trade cryptocurrencies. They understand what you do with your money matters, that’s why they’ve built a secure, fast and easy-to-use crypto trading platform.
In 2020, Netcoins announced their application for registration from the British Columbia Securities Commission (BCSC) and the Canadian Securities Administrators’ (CSA) regulatory sandbox to be the first regulated open-loop crypto asset trading platform in Canada (if approved).
Related article: B.C. crypto exchange volunteers to be regulated, setting precedent