It seems that most newbies assume that prices will go up no matter what, hoping to jump on the bandwagon of extreme price hikes. While in the long run, that could still be possible, in the short run Bitcoin is subject to extreme price volatilities. The danger is that if you don’t understand what moves and shakes the Bitcoin network, you might end up panic selling at some point because you didn’t get your facts straight in time. in this post we will cover:
Bitcoin Investment
Tips
Investing in Bitcoin
or any other cryptocurrency requires a little bit of research. You don’t need
to fully understand the technology behind BTC. You do however need to
understand how the community and the economy around the blockchain works. Look
back at Bitcoin’s history and understand what sparked previous price
volatilities. As a rule of thumb:
- Do not invest money you cannot afford to lose in
something you don’t understand!
- Never store your funds on an online exchange, except
for short term trading!
Spotting the Signs
- When mainstream media like CNBC starts writing multiple
articles about the Bitcoin price this is the time where you need to start
thinking about the crash.
- When major exchanges start going offline because of
user overload
Money without Banks
& Bank Managers
While Bitcoin was
designed to be a currency, it is also an economy run by a community of people
who do not know or trust each other, and who are distributed all over the
globe. This economy is automatically enforced by the governance rulesets
defined in the Bitcoin protocol. By collectively creating value in the physical
world Bitcoin gains in price and incentivizes the network stakeholders even
more.
All stakeholders of
the Bitcoin network provide services on the fly, just as they would for their
employer, supplier, or client. Providing IT infrastructure (Bitcoin Miners),
write code (Bitcoin Developers), provide value-added services (Bitcoin
Exchanges), do marketing (any stakeholder promoting the idea of Bitcoin through
blogs, social media channels, private communication, online or offline). They
perform actions in the physical world because Bitcoin’s incentive mechanism
makes it profitable for them to do so. Bitcoin, therefore, proved that economic
coordination on the global scale, traditionally requiring high transaction
costs of managing an organization, is now possible with simple auto enforceable
software.
We hope you have found
this article informative and interesting. For more information or queries
contact us to know more about this technology.
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