Can i invest in bitcoin
We recommend Coinbase , which we discuss a bit more down below. If you're considering jumping into Bitcoin Cash, make sure you fully understand the risks. We break it down as much as possible, but realize that this is extremely, extremely risky to invest in.
Bitcoin Cash is a hard fork from the original Bitcoin blockchain. This split occurred on August 1, If you're new to cryptocurrency investing, a hard fork is essentially a split from the original blockchain. Some of the biggest include Protestantism splitting from Catholicism. This is very similar. Both Bitcoin and Bitcoin Cash use the same algorithm i. Bible , but they have different ways of interpreting it.
Once they split, Bitcoin Cash uses its protocol, while Bitcoin uses it's protocol. In technical terms, Bitcoin Cash wanted larger block sizes than Bitcoin — they increased the block size to 8MB. However, all else is pretty much the same. The last common block of Bitcoin and Bitcoin Cash was Block At that split, any owners of Bitcoin on the blockchain also received an equal value of Bitcoin Cash.
That's where the surprise came from this morning. Any holders of Bitcoin at that split received Bitcoin Cash. But that Bitcoin Cash wasn't easily available to non-tech savvy investors, until today when Coinbase put Bitcoin Cash onto it's wallet publicly. Bitcoin Cash is much cheaper than Bitcoin. If you're looking to invest in Bitcoin Cash, it's important to remember that Bitcoin Cash is a currency. This means it doesn't act like a stock or bond. Instead of buying shares of Bitcoin Cash, you are swapping your currency for Bitcoin Cash currency.
The goal is for the value of Bitcoin Cash to rise, in which case, you could exchange your coins back to dollars from someone willing to do the exchange. So, where can you do this? Sadly, you can't invest in Bitcoin Cash at your stock broker. There are two ways to obtain Bitcoins; you can buy them, or you can "make" them, through a process called mining.
Anyone can mine —investor Tom, mentioned above, mines for alt coins using a network in his garage — but as time goes by, the processing power required to mine continues to swell.
So most people obtain coins by buying them, usually on a Bitcoin exchange, where traditional currency, like dollars, can be traded for cryptocurrency. The largest bitcoin broker is called Coinbase, which says it now has 13 million accounts — more than stock brokerage Charles Schwab. To buy Bitcoin from Coinbase or another broker or exchange, you'll have to download software called a cryptocurrency wallet. The wallet will be used to store the cryptographic keys that are needed to unlock virtual currency value.
Coinbase, like other brokers and exchanges, also supports some alt coins, like Ethereum and Litecoin. People invest in alt coins because they are much cheaper, and theoretically offer a chance at greater investment returns, though they can also be more risky. Not all coins, or all exchanges, are supported by all wallets.
Selling coins simply requires reversing the process. Bitcoin holders use a broker or exchange to move transfer virtual currency back into traditional currency, like dollars. That money is then transferred back to a traditional bank account. Whether or not you can stomach that risk is a question only you can answer for yourself. Bitcoin comes with one big risk: If Bitcoins are lost or stolen, they are gone forever.
As a high volatility investment, impacted by hundreds of factors that create a calculus beyond the capacity of individual investors to compute, it really isn't much different from gambling.
A long list of investing titans, beginning with Warren Buffett , have warned consumers not to throw money at Bitcoin. Remember, fear of missing out can make you do dumb things.