In our previous posts, we’ve provided an overview, definitions, and explained how Bitcoin works. As a recap, this digital currency relies on cryptography (a secure system) to work. It was released to the public in 2009 and was designed by Satoshi Nakamoto. Thinking of becoming a bitcoin investor? Keep reading to learn the basics.
This digital money became really popular in 2013. Before this time, bitcoin had generated more than 300 percent, then to 400 percent. Its recent performance has really drawn the attention of investors. Although it has witnessed some ups and downs, the investment prospects are still juicy, which is why investors and capital firms from across the globe are still betting on this digital money.
What an Average Investor Should Know
Buying bitcoins outright is perhaps the simplest way that an average person can invest in cryptocurrency. Today, it has become easier to buy BTC, which is partly because many local established firms, as well as established firms abroad, are participating in the buying and selling of this digital currency.
Coinbase has been recommended as the simplest solution for Bitcoin investors in the United States. The markup at which the firm sells the cryptocurrency to investors is about 1 percent. The firm offers an option of linking your bank account to their platform. This way, it is easier to make payment transfers in the future.
Additional Ways to Buy Bitcoins
In addition to exchanges, you can also acquire bitcoins offline by purchasing from Local Bitcoins. Through the website, potential sellers and buyers are paired up. The operators lock the bitcoins from the seller through an escrow system when purchasing the digital money. After successfully processing the transaction, the bitcoins are released to the buyer. Generally, you should take proper precautions whether you’re buying bitcoins online or offline.
Indeed, Bitcoin is hot and trending right now. Therefore, it’s a smart decision to become a Bitcoin investor.
Crowdfunding – How Does It Work?
Crowdfunding refers to the practice of using monetary contributions from a crowd of people to fund a venture or product. This alternative finance is also a type of crowdsourcing. The estimated figure shows that from across the globe, more than 34 billion US dollars were raised in 2015 through this alternative finance.
Uses
The system has been leveraged to fund a variety of entrepreneurial ventures, including creative projects, artistic ventures, travel, medical expenses, as well as community-based social entrepreneurship projects.
Types
According to the report from Crowdfunding Centers in May 2014, there are two primary types of this project funding system, namely:
#1: Rewards Crowdfunding: For this type, users (usually entrepreneurs) engage in pre-selling a product or service as a way of launching a business concept in a debt-free manner. It also helps them not to sacrifice shares/equity.
#2: Equity Crowdfunding: Here, the backer or funder gets a company’s shares, usually at the early stages of the company, in exchange for the funds or money pledged.
How Does It Work?
As pointed out earlier, the system works by allowing participants to seek donations in return for certain rewards. The reward could be participation in the product’s development or a free product/service. Website platforms such as Kickstarter offer this project funding service.
The additional uses of crowdfunding include assembling loans and accomplishing royalty financing. Some of the providers enable participants to invest directly in, as well as borrow from, other participants. They justify the system with the claim that middlemen are eliminated, leading to win-win situations for both parties in the transaction.
The Pros
The system offers an alternative technique for startups or companies in their early stages to fund their projects or take their business concept to another level. This helps reduce the hitch that comes with traditional borrowing (from financial institutions), especially when startups and small businesses are involved.
