Bitcoin explained: Should I invest in Bitcoin? How to buy cryptocurrencies
BITCOIN was created about 12 years ago and people across the globe have raved about the cryptocurrency for years… but what actually is it? Express.co.uk chatted to an expert to find out the basics about Bitcoin
By IZZIE DEIBE – Daily Express 30 January 2021
Nearly a third of Brits are curious about investing in cryptocurrency but more than 60 percent are too baffled by it to take the plunge, according to a new national survey by money app Ziglu. However, a huge 64 percent of these people think they would invest if they understood cryptocurrencies. Some claim cryptocurrency is a wiser investment than property, so it’s important that we keep up with the times and understand it. Express.co.uk chatted to Katharine Wooller from digital asset exchange Dacxi to find out everything you need to know about Bitcoin.
The internet is full of scams, so it’s easy to see why you’d be afraid to buy Bitcoin or another cryptocurrency.
Ziglu’s latest study found that while 31 percent of people would choose to invest £100 in gold and 19 percent would buy property, 30 percent said they’d use it to buy cryptocurrency.
The survey also revealed a gender divide on the reasons for buying crypto, with 53 percent of men mainly buying crypto to make money on it and 45 percent of women investing in cryptocurrency because they “heard good things about it and thought they would give it a go.”
Mark Hipperson, Founder and CEO of Ziglu, said: “Our survey highlights the importance of financial inclusion, and that is why we will continue to spread the word not just about how crypto works but also how easy and safe it can be now to buy and sell.”
These stats show cryptocurrency is gaining legitimacy in the eyes of the public, by more than 60 percent of the nation still don’t understand it.
What is cryptocurrency?
Bitcoin is a type of cryptocurrency and cryptocurrency is a technology that creates a digital asset.
Ms Wooller explained: “Many other financial products are already digitised, but crypto’s main difference is that the information is held on the blockchain across its users, which ensures that the ownership and transactions of the crypto asset are recorded in an open yet unchangeable way.
“Its fans say this makes it immune to outside interference by governments.
“In 2020 bitcoin went up by 270 percent, and is increasingly being purchased by large banks and asset managers.”
Bitcoin was created in 2009 by a mysterious and anonymous creator called Satoshi Nakamoto.
Ms Wooller explained: “Satoshi Nakamoto explicitly stated he wanted to create a digital system to transfer money, without a third party (i.e. a bank).
“The current banking industry charges a lot of fees, and crypto can achieve transfers faster and at a much lower cost.
“Satoshi was also concerned that central banks were manipulating economies by changing base rate; with crypto, there is no governing body that can interfere – the asset and the record of it is owned by the users.”
Bitcoin is the most famous crypto, but there are more than 8000 cryptocurrencies out there.
However, it is very unlikely this many will be needed in the future, so it is likely that most of them will fail.
Ms Wooller said: “Any digital assets chance of success, and potential future market, is called a “use case”.
“There is a small list of coins which the financial institutions are interested in: Bitcoin, Ethereum, and Litecoin.”
These three cryptos make up over 70 percent of the demand, so invest wisely.
In the early years of the bitcoin industry, most people purchasing bitcoin were millennials.
Today, those investing in Bitcoin range from young adults to a much older crowd.
Ms Wooller explained the crypto is now seen as a “credible investment” and it is backed by the world’s top banks, asset managers and hedge funds.
Ms Wooler said: “The FCA is now rightly more involved in supervising crypto companies trading in the UK.”
Bitcoin’s price soared 14 percent higher after the world’s richest man and CEO of Tesla, Elon Musk, added ‘#Bitcoin’ to his Twitter bio on Thursday – the cryptocurrency is becoming much more mainstream.
Many of the top banks, asset managers and hedge funds are purchasing crypto – it is estimated that around a third of financial institutions have purchased crypto.
How to buy Bitcoin
If you’re convinced Bitcoin is the way to go, the next step is purchasing it.
You can purchase crypto online from a number of digital asset exchanges, such as Dacxi, by changing your pounds to crypto.
Ms Wooller said the process is a bit like purchasing overseas currency for a holiday.
She added: “It is important to check the exchange you are using complies with the FCA’s requirements, and has permission to operate in the UK.
“Most people purchasing crypto today either trade it or are holding for the medium term.
“Whilst some retailers increasingly accept crypto, few people are using it for ‘day to day’ spending, although this may change in the future as the famous payment businesses Paypal, visa, and Mastercard all have crypto projects.”
Bitcoin doesn’t come without its risks, so you shouldn’t go into the crypto world blindly.
Ms Wooller explained: “As with any asset, ample homework must be done to make sure any purchaser fully understands the risks associated.
“Crypto is notoriously volatile, and whilst UK retail investors can purchase crypto in its own right, there has been a recent ban on crypto derivatives.”
So when is the right time to buy Bitcoin? You’ll never really know.
Ms Wooller said: “Hundreds of people think they know the best time to purchase!
“Prices last year were positive – bitcoin appreciated 270 percent whilst Ethereum delivered 450 percent growth, and Litecoin 191 percent.
“Regardless, crypto is volatile, and most retail investors are looking at a medium-term strategy.
“City analysts estimate that bitcoin may appreciate between 3 and 10 fold in 2021.
“There is a lot of education available online, from credible companies, which is a great place to start your research.”
One Bitcoin is worth around £27,000 today, but you don’t need to purchase a whole Bitcoin in one go.
Ms Wooller explained: “Many people wrongly think you need to purchase a whole bitcoin, but there are a number of exchanges with a low entry-level, including Dacxi, where users can open accounts with £100 to purchase some crypto.
“As with all asset classes, due diligence should be done based on the individual’s circumstance.”