How can I buy bitcoin? And above all, why should you buy it?
Everyone’s talking about it, but they don’t really know what it is. Many people hear about it without taking the time to find out. That was probably the case for you before reading this article. But if you’re here, it means your curiosity has got the better of you. Believe it or not, you can be proud of having made the effort to find out more, because it could change your life. Despised by some, glorified by others, let’s take a look at how to buy bitcoin and, above all, why it makes sense to own it. Because, like any investment, it’s very important to know what you’re putting your money into. “Never invest in a business you can’t understand.” What Warren Buffett says here about companies (stocks) applies equally to crypto-currencies.
What’s a bitcoin?
Launched in 2009 by an individual or group of people calling themselves by the pseudonym Satoshi Nakamoto, bitcoin was created to take back control of money from financial institutions. The aim is to put it back in the hands of the people. Designed to operate on a decentralized infrastructure, guaranteeing a higher level of anonymity and affordability than traditional options thanks to Blockchain technology, Bitcoin is a digital currency offering an effective alternative to people who don’t want to rely on banks to manage their finances.
Why is bitcoin so bank-independent?
It’s no coincidence that bitcoin was launched in 2009. At the time of its birth, nations around the world were struggling to cope with the recession caused by the 2008 subprime crisis. This massive economic recession highlighted the unreasonable control of financial institutions over the world economy. All the more so as the regulations put in place before and after this disaster have not proved very useful. The various financial scandals involving the upper echelons of the financial world are a case in point (money laundering, tax fraud, corruption, price manipulation, etc.). The same can be said for the eye-watering decline in our purchasing power, following the high inflation caused by their personal interests.
An anti-inflationary model
To counter this, bitcoin follows what is known as a deflationary model. This means that, unlike traditional currencies (Euro, Dollar, Yen etc. ), its money supply is limited. For if you didn’t know, the money we use every day can be created ad infinitum by central banks. This ability to create unlimited amounts of money, supposedly to save the economy, explains the general rise in prices today. So, the more money is created at will in a period of inflation, the more money loses its value.
The benefits of deflation
In contrast, deflation is defined as a slowdown in money creation. As a result, the limited amount of money in circulation in the economy leads to an increase in the value of money, due to a scarcity effect. Increasing our purchasing power. Bitcoin seeks to reproduce this same phenomenon with a limited money supply of 21 million. The simple fact of owning bitcoin guarantees a long-term increase in capital. This makes it an ideal store of value in the event of a major crisis.
But in concrete terms, how does bitcoin make a secure store of value?
To guarantee an increase in its value, bitcoin aims to replicate the discovery of gold. Don’t worry, explanations are on the way. To carry out a transaction with bitcoin, from one user to another, a complex mathematical problem is imposed to make the network as secure as possible. The network refers to the place where the transaction takes place. In this case, that place is the bitcoin network, referring to the use of its technology to carry out any financial movement.
Miners
Since users don’t have the necessary computing power to solve the problem imposed on them, someone intervenes to solve the problem for them. Enabling users to carry out their transactions. Network members who validate a transaction using their computer’s computing power are called “miners”. We’ll see later why they’re called miners.
To find the solution to a mathematical problem, the miner will try out a multitude of possibilities until he finds the right result to validate the transaction. The more computing power a miner has at his disposal, the greater his chances of finding the right result before the others. In this case, a reward in crypto currency, say bitcoin, will be awarded. This is called a “Proof of work”.
This is where things get more interesting. Over time, the amount of reward paid to miners decreases, and resolving a transaction becomes more difficult with each validation. For Bitcoin, the reward given to the miner is halved every 210,000 transaction blocks, i.e. every four years or so. This division is called “halving”.
Gold 2.0
Why is this interesting? Remember, bitcoin has a limited money supply of 21 million. What happens if it becomes increasingly difficult to obtain bitcoin, while the chance of finding bitcoin decreases? You have the answer: its value increases. This explains why bitcoin is considered a reliable store of value. Hence its nickname, Gold 2.0. It’s also why members of the bitcoin network who validate a transaction are called miners. Because when they validate a transaction, they are said to be mining, by analogy with gold mining.
Is it wise to buy bitcoin?
Since the birth of Bitcoin, new crypto-currencies have appeared, proving to be more innovative than their predecessor. Known as Altcoins, most of these are high-potential projects. If you’re interested, we’ve dedicated an article to them: https://coinaute.com/pourquoi-investir-altcoins/. Nevertheless, bitcoin’s popularity with businesses and individuals over the years has given it an almost indisputable sovereignty. As a result, owning part of your assets in bitcoin is proving to be very attractive. So you can buy bitcoin if you like, but be careful. Even if bitcoin is a secure store of value, it is nonetheless volatile.
Intelligent investing
During the speculative bubble of 2017, many made money buying bitcoin, but many lost money too. So it’s better for you to invest with caution and moderation to limit risk, rather than gamble your entire capital, hoping to see prices rise and thus become a millionaire with the snap of a finger. Think of bitcoin as gold. If you buy bitcoin, you’re buying gold. But not just any gold. You’re buying gold 2.0. In other words, you’re buying a reliable, modern store of value, of which you alone are the sole owner.
How do I buy Bitcoin?
Using a platform
To buy Bitcoin, all you need to do is use an exchange platform dedicated to crypto-currencies. These platforms enable you to buy, sell and store crypto-currencies. The best-known on the market are Binance, Coinbase and Crypto.com. But if you’d like to find out more, don’t hesitate to take a look at a comparison https://finance-heros.fr/meilleures-plateformes-cryptomonnaie/. Once you’ve created an account on one of these platforms, you’ll need to make a deposit using your bank card or by bank transfer, in order to exchange your euros for Bitcoin. But don’t be fooled: this doesn’t mean you’ll be the sole owner. You’ll only be a partial owner.
Public and private keys
When you buy a crypto-currency, you are given two keys. The first is the public key. It enables you to receive and send crypto-currencies. Think of it as your personal e-mail address. Your e-mail address allows you to receive e-mails from others, because you’ve shared it with people. And these people have shared their e-mail addresses with you, so that you can send them e-mails. A public key uses the same principle, but replaces these famous e-mails with crypto-currencies. Then there’s the private key. This simply gives you access to your funds. In a way, it’s your password for accessing your mailbox. A password that, of course, you never share with anyone.
Decentralized Wallets
When you buy bitcoin via a platform, you entrust your private key to the platform you’ve gone to. As a result, the risk of losing your private key, and therefore access to your funds, is present in the event of a computer attack. Something which, in the history of crypto-currencies, has already happened. To solve this problem, there are wallets, i.e. wallets in which you hold your crypto-currencies, enabling you to keep your private key without entrusting it to a third party. We call them decentralized wallets. The best-known on the market are Trezor, Ledger and MetaMask.
You are your own bank
Once you’ve bought your bitcoin on Coinbase, for example, you can move it to Ledger for safekeeping. But remember, owning a decentralized wallet is like being your own bank. While this is an advantage, you’ll need to secure your private key as much as possible. Because if your codes are stolen or lost, no one will be able to help you recover your stolen assets, due to the decentralized nature of crypto-currencies. No central authority will be able to cancel transactions and return your funds.
