Bitcoin and other forms of cryptocurrency are perfectly legal to have and trade in the US. Bitcoin is treated as property for tax purposes and is not considered legal tender the same way that fiat currencies are. Bitcoin is the most well-known of the cryptocurrencies likely thanks to its rapidly surging and falling prices that see if frequently in the news.
Put simply, cryptocurrency is a virtual currency that’s paired with social platforms and sometimes content purchasing platforms. Their operations are based on blockchain technology, which is like an electronic ledger that records all crypto transactions.
Bitcoin Risks
The volatile price points are generally considered the biggest risks of cryptocurrencies, and skeptics of Bitcoin point out that the blockchain for Bitcoin has the maximum amount of Bitcoin set at 21 million. This means that there can never be more than 21 million Bitcoin in circulation, and the closer we get to that number, the harder it will be to mine or trade for it. There’s little to no regulation of Bitcoin, which scare away some potential investors, not to mention the complete reliance on technology.
Bitcoin Advantages
While the blockchain limitation is theoretically true, Bitcoin has an advantage over other cryptos. A single Bitcoin can be divided by however much the owner wants, even down to a single byte. In fact, it can go even further than that, breaking one byte of Bitcoin into individual bits.
A single Bitcoin consists of 250 bytes of information, and the current price for single Bitcoin sits at $10,226. Trading pieces of Bitcoin is already a common practice, and once the 21 million “limit” is reached, the prices for these small pieces may rise. Bitcoin, in theory, has near limitless trading potential, and there have already been plenty of Bitcoin millionaires to prove its value.
Acquiring Bitcoin
If you’re interested in getting some Bitcoin for yourself, there are a couple of ways you could go about it. It’s possible to mine Bitcoin yourself, although this process requires a great deal of computing power and dedication. Most cryptocurrency traders choose to either buy Bitcoin or trade for it. There are two main things you’ll need to do this.
Bitcoin wallet: Every trader needs a crypto wallet to store their currencies. This is basically a digital wallet that stores your Bitcoin and connects to trading platforms so you can use it. Most traders recommend having an online (hot) wallet that holds a percentage of your Bitcoin so you can make fast actions at opportune moments. The rest of your crypto should be kept in an offline (cold) wallet to protect it from threats and to allow you to still access your currency in case your trading platform goes down.
Bitcoin exchange: You’ll also need to find an exchange platform so you can buy or trade for more cryptocurrency. Signing up for these platforms generally requires a photo ID, and some platforms may have additional security measures. Certain platforms are much more popular than others, and there are a number of ways to acquire Bitcoin. Some platforms may pay Bitcoin in exchange for services, some allow you to win it, some let you buy it directly with fiat currency, and some only allow you to trade other cryptos. Cryptovantage is a good source to find a platform that works for you.
Like any form of trading, you’ll need to have a plan to be successful with Bitcoin. Many traders enjoy day trading because volatile crypto prices can make for quick profits. You can apply technical analysis to Bitcoin trading in a similar way to how it’s employed in stocks and other trades, but you’ll always need to be ready to move in an instant.