What is Bitcoin, How it Grew, and How to Buy it
Table of Contents
- Introduction
- The origins of crypto (currencies)
- Bitcoin is born
- Bitcoin vs Alts
- Can you make money with cryptocurrencies?
- What is cryptocurrency trading?
- How to read crypto charts?
- What is a crypto wallet and how does it work?
- What are the best cryptocurrencies to invest in?
- Which is the best cryptocurrency trading platform?
- Be in the know about crypto terms
- Video on demand: A Beginner's Guide to Cryptocurrencies
Introduction
When starting with a new thing, especially when it involves money, it is very important to do your research. Since we are meeting you here, we believe you need information about how to buy bitcoin, cryptocurrencies in general and online trading. We are aware that this blog is kind of long, but it does have all the information you need to get started with Bitcoin and other cryptocurrencies.
The origins of crypto(currencies)
Cryptography and its connection to the concept of ‘digital currency’.
From Ancient Egypt . . .
Do you remember those hieroglyphs we all learned about in school? Let’s hop on a time machine and travel back to Egypt 4000 B.C. There was a man, whose job was a scribe, and he was perhaps the first cypherpunk (more on this a bit later). As he drew the hieroglyphics of his master Khnumhotep’s life on a tomb he used a number of unusual symbols to obscure the meaning of the inscriptions. This is known as one of the first instances an encryption method, a substitution cipher, was used.
Useful insight: A cipher is a method for performing encryption and decryption, with a set of well-defined steps. The operation of a cipher usually depends largely on the use of an encryption key. It does sound a bit like blockchain, right?
. . . to modern times
A lot has happened between ancient history and now, but we would like to point out two: the internet happened, and a bit later a group of people started to debate the concept of ‘digital currency.’
They were called Cypherphunks (how cool is that? ) and they started a movement, which advocated the use of cryptography in order to achieve greater privacy and security. As a result, they talked about the need and possibility for a digital currency that was anonymous or could be anonymized using cryptography. There were a few projects, Bit Gold, HashCash, Digicash, for instance, that tried to achieve this. At the time, nobody was really ready for this, apart from cypherpunks themselves.
“Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world.” Eric Hughes in A Cypherpunk’s Manifesto
Why not check out the blog post dedicated only to origins of cryptocurrencies? Find it here.
Bitcoin is born
All you need to know about the “the grandfather” of cryptocurrency.
Bitcoin is a cryptocurrency – a decentralized digital currency, which doesn’t need a centralized institution such as a bank to be its backbone. It can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. A cryptographic encryption system acts as the mathematical authority required to organize and verify transactions. It’s the first official application of the blockchain technology.
“I do think Bitcoin is the first [encrypted money] that has the potential to do something like change the world.” Peter Thiel, Co-Founder of Paypal
In 2008 when there was the biggest financial crisis in decades, a person (or group of persons, since his/their identity still remains unknown) called “Satoshi Nakamoto,” published a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. So, Bitcoin came to life in the so-called genesis block on 3 January 2009. On 12 January 2009, the first Bitcoins were sent from one person to another. Not only that, the sender was none other than Satoshi Nakamoto, who sent 50 Bitcoins to Hal Finney, one of the most prominent cypherpunks.
Fun Fact: What does this encryption mean? “sknab rof tuoliab dnoces fo knirb no rollecnahC 9002/naJ/30 semiT ehT”. Find out here .
Bitcoin vs. Alts
What is a cryptocurrency?
Cryptocurrency is an internet-based medium of exchange which uses cryptographic functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization and transparency, and immutability.
Basically cryptocurrency is electronic money that uses technology to control how and when it is created, and lets users directly exchange it between themselves. You know, like you would give some cash to your friend directly, without a bank in between, you just do it via the internet.
What are Altcoins (or Alts)?
The term ‘altcoin’ describes any cryptocurrency alternative to Bitcoin. There are thousands of cryptocurrencies available today each with unique differences, functionalities, and purposes.
Useful insight: The top coins by market cap are usually your best bet, if you don’t want to or you don’t have time to go deep into the research. You can find the list of all cryptocurrencies on one of the popular sites, CoinMarketCap .
Can you make money with cryptocurrencies?
There are several ways for anyone to generate wealth in the cryptocurrency market. You can either be a:
- Miner
Mining is a technical process that requires a background knowledge and experience in setting up sophisticated computing software and equipment to mine new cryptocurrencies. Mining rewards are paid to the miner who discovers a solution to a complex hashing puzzle first, and the probability that a participant will be the one to discover the solution is related to the portion of the total mining power on the network. You can find more info on this in the article How Bitcoin Mining Works.
2. Investor or a Trader
We thought that the easiest way for you to learn what the difference is between being a trader or an investor can be shown in a comparison. Thus, we invite you to take a look at the picture below.
Useful insight: Don’t forget about the basic rule of smart investing: Only invest what you can afford to lose.
What is cryptocurrency trading?
... or How to Buy Bitcoin?
In 2009, when Bitcoin became the first cryptocurrency ever, it was alone on the market. Thus, with only one coin available, you couldn’t trade it with any other cryptocurrency. A few years later, more and more cryptocurrencies were created and investors started trading crypto.
The concept is almost the same as the real-world stock exchange. But so much better:
- You don’t need a broker
- There is no paperwork
- You don’t have to buy the whole cryptocurrency
- Everything happens online
Fiat to Crypto trading
(You will often hear about fiat, it is nothing other than any money declared by a government to be legal tender – euro, dollar, pound, etc.)
So, you have some money on the side, and you want to invest it. There are various asset classes to which you can invest in (stocks, real-estate, bonds, etc.), but today we will talk about crypto and how to buy bitcoin, of course. You can use your credit/debit card or deposit funds via bank transfer using SEPA, or popular apps such as Revolut, N26, Monzo, and others.
But, first you have to decide which cryptocurrency exchange/platform you will use. Here’s what to check before you make a decision (oh, and of course you can use all of them if you want, it just means a lot more work and time for you):
- Safety (Verification Requirements)
- Geographical Restrictions
- Fees and Exchange rates
- Payment methods
Useful Insight: What is the finest distinction between fiat currency and bitcoin? One of the main factors that distinguish bitcoin from fiat currency is the fact that it’s limited. Only 21 million bitcoins will ever be distributed, which makes it a scarce commodity.
Crypto to Crypto trading
It is pretty simple, you trade one cryptocurrency for another. Here is an example, you trade Bitcoin directly for Ethereum. Those trading pairs are available on many exchanges and allow you to trade crypto assets for one another without ever exiting the crypto market or trading assets for any fiat currency.
In terms of trading volume, Crypto to Crypto trading presents a very big percentage of global trading volume across exchanges. For smaller crypto currencies, this is usually also the only way to buy them. In other words, you cannot usually buy smaller or less popular cryptocurrencies with fiat money. In the case you want to buy them, you need to buy Bitcoin or Ethereum first and than trade those for it.
Useful Insight: Cryptocurrency trading is quite popular, with billions of dollar’s worth of coins being bought and sold every day.
How to read crypto charts?
When buying bitcoin or other cryptocurrencies it is inevitable to to come across crypto charts. We promise, it is not as complicated as it appears at first. We are here to break things down for you.
Although the world of finance uses many different kinds of charts, the terms ‘Line chart’ and ‘Candlestick’ should be enough to get you started. A line chart is one of the most basic charts you will come across in the crypto world since it represents a price progression over a certain period of time.
When it comes to candlesticks, every individual bar represents a battle between buyers – also known as bulls, and sellers – also known as bears. We’ve made extra effort and prepared a blog just on this subject, so we invite you to find more details here.
What is a crypto wallet and how does it work?
A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchains to enable users to send and receive digital currency and monitor their balance.
To make the start of your crypto trading journey even smoother, all the cryptocurrency trading platforms also offer a crypto wallet where you can safely store your cryptocurrencies after your purchase. That being said, if you want to be in control of your crypto, you can withdraw your assets anytime. Before you do that just make sure you have enough knowledge to avoid losing them while making a transaction.
What are the best cryptocurrencies to invest in?
Some of the cryptocurrencies that you can invest in are Bitcoin, Ethereum, Ripple, Litecoin, EOS, Stellar and so on. We cannot tell you in which cryptocurrencies to invest in, but we can give you some ideas on where to start and check, so that the decision will be easier for you.
Firstly , it would be really great for you to check out some sites with cryptocurrency lists , where you can find real-time crypto prices, graphs, market capitalization, and much more. Why not try the following:
Secondly , as in the traditional stocks world, also in cryptocurrency market there are ‘projects’ and ‘tokens’ which are more or less successful – you can always see which are at the top on the links above.
You will find Bitcoin (BTC) at the top, while altcoins (more on that below) are changing their positions on the list. Here are some of the most famous ones:
- Ethereum (ETH)
- Ripple (XRP)
- Litecoin (LT)
- EOS
- Bitcoin Cash (BSV)
- Tezos
- Cosmos
- and others, . . . .
Useful Insight: Did you know that you don’t have to buy the whole bitcoin? For example, you can start with your crypto investment with as little as €10 here.
Which is the best cryptocurrency trading platform?
We know, it’s not easy to buy shares online and therefore, many people think that buying cryptocurrencies is even harder. This is a common misconception, keep reading and learn why you can easily buy crypto in just a few clicks.
Trading platforms differ - some are more technical & complex (for professional traders) such as Binance, Kraken and BitStamp, some are more user friendly and are especially useful for beginners and long-term investors.
US Crypto Investors
If you are getting started with cryptocurrencies and are getting ready to make your first purchase, there are a few trading platforms to consider. If you are from the US, the crypto exchange we would recommend you to use is ‘Coinbase.’ They make it easy to buy cryptocurrencies and also offer credit card support.
Investors from Europe, Africa, South America, and others
When it comes to the rest of the world, one of the most user friendly cryptocurrency platform is ICONOMI. You can create a free account in just a few minutes, and invest in bitcoin or other cryptocurrencies with one-click. It's easy. It's intuitive. It's 24/7.
At ICONOMI, you can buy bitcoin, ethereum, ripple, litecoin, eos and other cryptocurrencies with your credit card, deposit euros (using SEPA transfer), or use bitcoin or ether. Moreover, you can also follow Crypto Strategies, which are created and managed by experienced traders.
When it comes to cryptocurrency prices, there is no big difference, both platforms mentioned above have enough liquidity to ensure stable prices and great rates.
What kind of crypto investor are you?
Are you a buy-and-holder or a trader? Choose the best way for you to go around trading cryptocurrency. Take a quiz and find out what type of investor you are.
HODL. Did you know you can be a Hodler?
Yes, we know it is not an actual word, but it has become synonymous with long-term investing in crypto. Is there a special story behind it? Of course it is – although it was just this legendary typo on the bitcointalk forum back in 2013, where a crypto investor wanted to use the word “hold,” as in – don’t sell.
Useful Insight: So if you hear some say they are a hodler, it simply means they are not selling their crypto investments but waiting for the price to go up.
Buy some well known cryptocurrencies like Bitcoin, Ethereum, Litecoin, Stellar, or others, stick them in the sock drawer and forget about them. Don’t read the news. Don’t panic. Hodl and forget. In a year or two, sell some of them and buy a little more with the proceeds.
Trade. Are you more of an adrenaline junkie, and up for the trading challenge?
If you are interested in trading cryptocurrencies, that means you’re looking to get in and out of the market. Moreover, you will also be tempted, and your mental strength, emotions and belief systems will be working against you. And it sure will be, both exciting and frustrating.
Useful Insight: The rules of the game are simple: Buy low, sell high. If you miss a trade, stay out. Get ’em next time.
We know, it is easier said than done, when that euphoria, despair, and other emotions are bubbling. But, do try to follow this rule. And why not try to go deeper into some trading rules and books, to improve your knowledge.
Be in the know about crypto terms
Do you know that feeling when you dive into a conversation, but people around you know sooo much more than you do? Well, we are here to save you! Get familiar with the most typical expressions and words such as, HODL, Private Key, Satoshi, Lambo, Cold Storage . . . etc.
Blockchain
It’s a distributed database maintained by thousands of computers worldwide. Check out this really cool 2-minute video to understand what we are talking about.
Lambo
Lamborghini, or “Lambo,” has become the status symbol to prove success in the crypto world.
HODL
The word itself emerged from a legendary typo on the bitcointalk forum back in 2013 (where a crypto investor wanted to use the word “hold”, as in – don’t sell).
Satoshi
The smallest unit of bitcoin – called a ‘satoshi’ after Bitcoin’s creator – is one hundred millionth of a bitcoin. You can actually own as little as 0.00000001 bitcoin.
Whale
A ‘bitcoin whale’ is a term in the cryptocurrency world used to refer to individuals or entities that hold large amounts of bitcoin.
Bullish vs Bearish
You will hear about the terms ‘bear market’ or ‘bull market,’ which describe whether a market is optimistic (rising or likely to rise) or pessimistic (dropping or likely to drop).
Mooning
‘Moon’ or ‘mooning’ is just an extreme spike in the price, as in “This altcoin is going to the moon!”
There are so many more expressions that are of great value for your knowledge, and you can find them in the blog post on “The Ultimate Guide to Basic Finance and Crypto Terms.”
Video on demand: A Beginner's Guide to Cryptocurrencies
We hope that this blog on "How to buy Bitcoin" gave you all the basic information you needed to start investing in cryptocurrencies.
If you are more of a auditory learner, we invite you to check out this really cool 30-minute video on demand, where Jure (ICONOMI) & Gregor (Solidum Capital), answer some basic questions:
- What is a cryptocurrency?
- Is it too late to invest?
- Is it better to invest in Bitcoin or in different cryptocurrencies?
- Do you need a lot of money to invest in Bitcoin?
- What is the easiest way to start your cryptocurrency journey?
You can register for free, and listen to it whenever you like.
Ready to start your journey with us?
Trusted by over 100,000 users from around the world.
Create Free Account
