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Over a decade now, bitcoin has had one of the most volatile trading histories since its introduction in 2008. Despite the high volatility rate, bitcoin also faced numerous problems that made its environment unbearable, from having numerous scammers to the absence of a regulatory body that accelerates its volatility.
Investors have seen things change from worse to better, bitcoin prices rising and surpassing the usual volatility swings with massive gains. Bitcoin's first breakthrough was seen back in 2011, followed by another significant rise in 2015. These led to attracting more investors into exploring the cryptocurrency market.
It is a decentralized cryptocurrency. However, transactions are regulated with the help of computer nodes. Every transaction is recorded on an immutable public ledger called a blockchain. How can investors get a grip on bitcoins? Below is an insight into how investors can get access to bitcoin trading.
For the last eight months, bitcoin and other cryptocurrencies prices recorded up to a 300 percent raise. The high institutional interests and other market players have facilitated the increase in prices. Early March 2021, prices hovered around $57,000 -$61,000, which triggered more interest in cryptocurrency investment.
If you opt to buy and sell bitcoins, there are things to consider. It would be best if you got a reputable bitcoin exchange platform to engage within transactions.
Also, it is good to consider how effective it is for you to buy and sell cryptocurrencies on a platform. Does the platform accept regular fiat currencies like US Dollar, Japanese Yen, British Pound, or Euro?
Today, Coinbase, one of the largest bitcoin exchange platforms, converts 1BTC = $54,133.79 in USD. But can that outdo BTC mining in the long run? The answer to that question might not be easy, but since bitcoin mining depends on various variables, it might be more profitable than buying.
According to Warren Buffett, a prominent and influential investor claimed that investors buying bitcoin or any other digital currency is not a real investor. Bitcoin is a speculative game that is much equivalent to gambling. Nobody has the idea of its next move.
Bitcoin relies on what more other investors are paying to earn revenues. So what determines the bitcoin price in the market?
Price Determiners of Bitcoin In the Market
Unlike fiat currencies, bitcoin is decentralized, meaning it has no regulatory body like a Central Bank or federal governance. Several factors influence Bitcoin prices. They include:
1. Supply and demand of Bitcoin in the market
2. The mining cost of producing a bitcoin
3. Regulations governing bitcoin sale
4. Exchanges its trades on
5. Cryptocurrencies it competing within the market
6. Rewards are given to bitcoin miners for verifying a transaction on blockchain technology.
Mining bitcoins is one of the most straightforward jobs. You all need to set up a computer that will help you solve complex maths. On completion, you are rewarded with a fraction of a bitcoin, commonly known as (satoshi) or a coin.
Today, bitcoin mining is much more complex as compared to five years down the line. It is complex for miners to have built arrays and rewarded halves, making small mines struggle their way out. There are also options for new bitcoin miners. You can join a mining pool that is accessible at a fee.
There are things to consider when you decide to mine. One is the setup cost, basic rings cost for less popular cryptocurrencies, and power cost (highly depends on your location).
To minimize the cost of power and electricity, consider buying a less powerful rig mining. That will save you more money. Investors should understand that bitcoin mining can take you weeks or months to recoup back your investments and start earning gains.
Bitcoin is a high-risk investment, but on the other hand, it offers a high reward with very minimum consensus on economic roles in the future. When you consider bitcoin mining as a long-term investment, there are more rewards to expect in the long run. However, it holds more risks. For instance, numbers can change drastically with no notification of that happening. But for short-term winning, buying bitcoin will be the best option.