bitcoin is not only the first cryptocurrency, but it is also the best known of the more than 20 thousand digital assets that exist today.
While the wild volatility can produce big headlines, it hardly makes bitcoin the best option for novice investors or people looking for a stable store of value.
Reading: Cuanto es lo mínimo para invertir en bitcoin
let’s take a closer look at how it works and answer the question: what is bitcoin and how much can be invested?
Although the media represents it as a physical currency, bitcoin is a 100% digital asset.
what is bitcoin and how does it work?
Bitcoin is a decentralized digital currency that you can buy, sell and trade directly, without an intermediary such as a bank. Bitcoin’s creator, satoshi nakamoto, originally described the need for “an electronic payment system based on cryptographic evidence rather than trust.”
every bitcoin transaction ever made exists in a public ledger accessible to all, making transactions difficult to reverse and falsify.
That’s by design: Due to its decentralized nature, bitcoins are not backed by the government or any issuing institution, and there is nothing to guarantee their value other than the proof baked into it. the heart of the system.
the price of bitcoin is very volatile.
how much is the minimum that can be invested in bitcoin?
Investing in 1 bitcoin would be very expensive given the levels reached by the cryptocurrency, of approximately 20 thousand dollars each unit, depending on the moment of listing.
however, because bitcoin has the ability to be divided into 100 million parts, known as “satoshi”, it is possible to allocate very small amounts for this asset, below one thousand Argentine pesos. Of course, the more resources allocated, the more profitability is obtained when it is generated, and the greater the risk.
Bitcoin is not backed by a state, company or regulatory entity.
what is the value of 1 bitcoin?
See also: The 50 Richest People in Crypto
Since its public launch in 2009, the value of bitcoin has increased substantially. Though once sold for less than $150 per coin, today one BTC is worth around $20,000, down 70 percent from the all-time high of $68,789.
Because its supply is limited to 21 million coins, many expect its price to continue to rise as time goes on, especially as larger institutional investors start trading it as a kind of digital gold to hedge against market volatility and inflation.
Bitcoin purchases are not instant like many other stock purchases.
how to buy bitcoins
Most people buy bitcoin through cryptocurrency exchanges (“exchanges“). exchanges allow you to buy, sell and hold cryptocurrencies.
Setting up an account is similar to opening a brokerage account: you’ll need to verify your identity and provide some funding source, such as a bank account or debit card.
exchanges include companies like coinbase, kraken, bitso, ripio and decrypto. Regardless of where you compress your bitcoin, use a bitcoin wallet to store it. this could be called “hot wallet” or “cold wallet”.
A hot wallet (also called an online wallet) is held by an exchange or cloud provider. online wallet providers include exodus, electrum, and mycelium.
A cold wallet (or mobile wallet) is an offline device used to store bitcoin and is not connected to the internet. some mobile wallet options are trezor and ledger.
Although bitcoin is expensive, you can buy fractional bitcoin from some providers. You’ll also keep an eye out for fees, which are typically small percentages of your crypto transaction amount, but can add up on small purchases.
Bitcoin purchases are not instant like many other stock purchases. Because miners must verify bitcoin transactions, it can take at least 10-20 minutes to see your bitcoin purchase in your account.
See also: How does bitcoin exchange work | How Do Bitcoin and Crypto Work? | Get Started with Bitcoin.com
cold ledger wallet to store bitcoin.
is bitcoin legal?
Regarding the regulation of cryptocurrencies in Argentina, two projects were presented in the national congresson the subject. one for the ruling party and the other for the opposition. however, in the absence of a law that comprehensively addresses the issue, cryptocurrency operations are affected by some taxes.
The tax reform of 2017was the one that raised the flag by introducing the concept of “digital currencies”. From then on, the operations and holding of cryptocurrencies were equal to those of any financial asset.
what did it mean in fact? simple: those who made purchases or sales began to pay income tax, while those who hoarded crypto remained in the orbit of personal assets.
We must also take into account the tax on bank credits and debits, which in 2019 was added to the list through decree 796, which eliminated an old loss and began to tax transfers made to and from local exchanges.
The provincial treasuries also put the magnifying glass on these assets and some jurisdictions (córdoba, neuquén, catamarca, tucumán and buenos aires) modified the tax code to reach operations with gross crypto income.
through general resolution 4,164/2019, the afip forced local exchanges to present monthly the information regime on their transactions.
El Salvador gave bitcoin legal tender.
should you buy bitcoin?
Many financial experts support their customers’ desire to buy cryptocurrencies, but do not recommend them unless customers express an interest. the speculative nature of cryptocurrency leads some planners to recommend it for “secondary” investments by clients.
You better keep it away from your real long-term perspective. make sure it doesn’t become too big a part of your portfolio. bitcoin is like a single stock, and advisers would not recommend putting a significant portion of your portfolio into a single company.
At best, planners suggest putting no more than 1% to 10% into bitcoin if you’re passionate about it. if it were a stock, you would never allocate a significant portion of your portfolio to it.
See also: Bitcoin: why the price has exploded – and where it goes from here
