Bitcoins were launched in the midst of the 2008 financial crisis and have been around since then. In the last 12 years bitcoin have been through many ups and downs. They went through the price boom in 2017 when the price climbed up to almost $20,000 and then crashed down. That was definitely a very low point for bitcoins and the investors who had invested in bitcoin as an innovative future investment option. Many market experts were claiming the 2018 crash to be the end of bitcoin but in just 2 years bitcoin is back in a bull run and trading just over $11000 per BTC.
Bull and Bear Runs
Experts studying bitcoins over a decade are of the opinion that bitcoin will go through these phases of bull and bear runs and therefore there is nothing to worry about even if a crash occurs, as the market will recover. What this really means is that bitcoin is behaving very much like any other security for example company stock.
Bitcoin Behaves Like A Security But Isn’t One
This makes bitcoins a very profitable and interesting investment option because although it behaves like securities, it has got certain characteristics that make bitcoin more exciting and profitable. The value of crypto currencies in general is very volatile, which allows traders the margin to reap profits if they can time their trades properly. Furthermore since bitcoin trades more like a security over time but also tends to go to very high market values over short periods of time, this gives bitcoin a higher mean reversion than other securities and this makes bitcoins attractive for traders with a more long term outlook.
Bitcoin therefore behaves both like a currency and as an investment option. This however does not mean that bitcoin is a security, no as an investment option it is a crypto currency. Therefore you cannot get shares of bitcoin in a stock market. A stock market is where buyers and sellers of stocks of listed companies come together to trade shares.
How Can Bitcoins Be Purchased?
Bitcoins are a crypto currency and therefore if anyone wants to purchase bitcoins, they will need to use a crypto exchange, P2P platforms or bitcoin ATMs. When it comes to purchasing bitcoins, they are similar to currency as compared to stock of companies.
You can purchase currencies from a foreign exchange market and similarly bitcoins or any other crypto currency can be purchased from a crypto exchange. A crypto exchange is an online site where users can sign up and trade bitcoins. Users will need to fulfill all the prerequisites like having crypto wallets, bank accounts or credit cards for payment and a secure internet connection. With these prerequisites, a user can sign up on any crypto exchange of their choice and buy/sell bitcoins as soon as their account is approved.
Another way to purchase bitcoins is through P2P platforms. peer to peer platforms allow users to buy/sell bitcoins while remaining anonymous though it isn’t necessary. P2P platforms bring buyers and sellers of bitcoins in an online marketplace. Usually the prices on P2P platforms may be high but it is also possible to get a good deal by timing the trades correctly.
Bitcoins can also be purchased through Bitcoin ATMs. This is not a very accessible option as these ATM`s are not in as great numbers as they should be. CoinATMRadar.com is a good site to find out the nearest bitcoin ATM. Using bitcoin ATM`s people can buy bitcoins for cash, in the past anyone could buy bitcoins but now due to regulations people are being required to submit their ID details.
Although bitcoins aren`t shares as mentioned above, they do behave like one and this means that people can invest in bitcoins and liquidate their investments when they see a profit. For instance a couple of months ago bitcoin was trading around $9000 and since the last couple of days it is trading around $11000.
The reason why bitcoin behaves more like a security is because it isn’t a regulated currency. It`s value depends to a very great extent on market forces of demand and supply. The supply of bitcoins at any given point is limited and therefore when more people show their interest in bitcoins the prices rise up and when less people show interest the price drops.
Blockchain is the future of finance, de-fi applications are quickly gaining traction and therefore as more and more interest is generated in blockchain and de-fi, bitcoin value is expected to rise over time, going through boom and bust cycles.