Bitcoin is a virtual digital currency, bitcoin has no physical form in the form of banknotes and coins.
Bitcoin is a record in a register, a blockchain, hosted on a computer network. The algorithm for the first virtual digital currency was developed in 2008 by an anonymous crypto enthusiast, Satoshi Nakomoto.
The bitcoin algorithm is based on two principles - bitcoin issuance is not controlled by anyone and the number of bitcoins is limited. Once 21 million bitcoins are in circulation, the issuance of new ones stops.
The basic principles allow Bitcoin to be compared to gold. Bitcoin, like gold, has value and is used as a means of payment. But unlike gold, bitcoin is easier to "mine" and easier to store. Bitcoin can be used to pay for a wide variety of services and goods, from software and gadgets to real estate.
Institutional involvement
Many large market participants invest in bitcoin, believing it to be digital gold. The best known among them are Tesla and Microstrategy.
In January 2021, electric car maker Tesla invested $1.5 billion in bitcoin, the largest single investment in the history of the market. With the BTC rate climbing to $65,000, the profits from cryptocurrency investments have passed the $1 billion mark. By comparison, car profits for the entire year 2020 were about $700 million for Elon Musk's company.
Analyst firm Microstrategy regularly injects large sums into bitcoin. Having funnelled more than $2 billion into the market, it is its biggest investor.
Microstrategy CEO Michael Saylor estimates that bitcoin's capitalization will rise from the current $1 trillion to $100 trillion, with global savings estimated at $500 trillion. The outer layer of the financial system at this stage is fiat currency. Deeper layers are securities, real estate, precious metals and cryptocurrency. In the first phase, bitcoin will absorb gold, absorbing its capitalisation of $10 trillion. As capitalisation increases, the cryptocurrency market will stabilise and bitcoin will begin to absorb various indices. At the same time, the BTC network's audience will continue to expand and reach 1 billion users in the next 5 years.
Retail investment
Interest in bitcoin has also been seen from retail investors. Looking at long periods of time, it is evident that the BTC exchange rate has been steadily rising. However, in short periods, the cryptocurrency often exhibits volatility.
According to stock market statistics, those who follow the "Buy and Hold" strategy are averaging 10% capital appreciation per year. For those who try to identify market lows and highs to make profitable deals, the result is only 2.5% per year.
In June 2020, the BTC exchange rate was around $9,500, and by June 2021 the figure reaches $40,000. This means that those who have held bitcoin for the last 12 months have increased their capital fourfold. In contrast, those who bought bitcoin in January 2021 at $35,000 and sold it during the May panic at $30,000 went negative.
All this suggests that a long-term investing strategy is a priority over trading and short-term investing.
An important advantage of bitcoin over traditional currencies is its convenience, the ability to pay vendors instantly and without intermediaries, even if they are on the other side of the world. More and more companies are paying attention to this aspect by accepting cryptocurrency payments - and this is an additional growth driver for BTC.
Finally, BTC is ready to introduce Taproot technology, which will allow the oldest digital asset to become part of the DeFi industry.
Investment platforms
The obvious choice for a newcomer looking to make money from cryptocurrency is specialist investment platforms.
Broex is an investment platform that provides a comfortable experience to its users. There are three dozen selected cryptocurrencies, a selection of assets for the portfolio, a market monitoring system, a mobile wallet application with a user-friendly interface.
The company is a licensed industry participant, complies with KYC standards, and applies a 3-circuit server security system.
Conclusion
Each of the ways to make money - be it trading or long-term investing - can bring returns. For beginners, the latter is recommended, as it is not only safer but also requires only a basic knowledge of cryptocurrency.
All you have to do is take the first step.
