Bitcoin or cryptocurrency is not an unknown term now, nor is it an unfamiliar concept. Many people are coming forward and accepting this as an excellent financial investment. Even though Bitcoin has remained volatile and unstable in its journey to date, people are ready to take risks.
One simple reason can be said Bitcoin has made many people millionaire overnight. There are some instances that some very well-known people had bitcoin possession but had completely forgotten about it, which made them rich overnight.
What is bitcoin?
Bitcoin is a digital currency that transfers peer to peer. It is operated by a decentralized unit, without the control of the government. It is a transparent system where anyone can access and see the status. Though it is prevalent, it is not legal because banks and government do not support it.
In 2009 some banks were exposed to using the borrower’s money for rigging the system. The trust was broken, but people, having no option, had to rely on banks. Bitcoins are invented for people to control their money in a decentralized, independent, and transparent system.
Bitcoin is not a physical currency, so it cannot be exchanged by hand like other conventional currencies. The transactions are conducted by ‘miners.’ Miners are the decentralized authority to carry out the transactions and maintain the Bitcoin network’s credibility.
Miners have a capping of 21 million coins beyond which Bitcoin is not available. Because of this limitation, the value of Bitcoin varies and depends on demand. Bitcoins are circulated within the network using Bitcoin mining.
How are bitcoins used for buying and selling?
Bitcoin, being a digital currency, reflects only in online transactions. You can see the transactions record online between you and another address. The status of Bitcoin in your address can be seen in a public record stored in a blockchain and regulated by miners.
If you are looking to purchase some item from a specific supplier, you need to send Bitcoin to that supplier’s public address and sign off the transaction using your private key. It will indicate that ‘you’ have done that transaction. The miners will confirm the transaction, and then it forwards to the supplier, who can unlock it with his private key. All these are noticeable by other participants called ‘nodes’ in the blockchain network. The supplier will get an option to accept or not. The mining ideally completes in 10 minutes.
Why bitcoin price fluctuates?
Some factors impact the price of the Bitcoin, such as
- Limited Supply – The supply of Bitcoin is limited to 21 million currently. It is expected to get over by the year 2140. The rise in demand and shortage in supply will increase the price of Bitcoin.
- Impact of Media – Any news in media related to the security, value, or life term of Bitcoin directly impacts its overall market price; to date, the idea of Bitcoin trading is still unconventional to a large mass.
- Integration – Whenever Bitcoin transactions into local and banking format integrate, the price subsequently goes higher.
- Essential Events – The changes in regulations, announcements regarding the economy, or security breaches happen it impacts the price of Bitcoin.
Mining or trading of bitcoin
How many people have become rich by working in cryptocurrency? They have either done mining or trading. Mining is a bit complicated process, and not only do you need to be talented, but it also eats up a lot of your energy. You need an almost super-built computer, and it consumes a lot of electricity. You can adopt mining only if you have access to excellent computing power and don’t need to pay the bills.
The other one, trading, is a much better option for you to become a millionaire by doing some solemn work day in day out. You can trade Bitcoins through exchanges like Coinbase. Those who have done trading of Bitcoin back in 2011 have bought it at $10 per Bitcoin. As of date, it could be sold at, say, $1000, meaning that they had made $990 per Bitcoin. Think about those who had bought around 1000 bitcoins are already millionaires today.
Being a millionaire out of Bitcoin today is still possible if you have some capital. You can adopt a long-term stance and see how it goes forward. If you feel the price will drop, you can short your Bitcoins, which will still give you good returns.
Who became millionaires overnight?
Some famous people went millionaires overnight. We will see who they are –
- Rapper 50 Cent – His album called ‘Animal Ambition,’ released in 2014, and fans’ opportunity to buy from his website with Bitcoin. Thus he had 700 Bitcoins from the sales. He forgot about them. Bitcoin at the time was trading with a value of a few hundred dollars, and those 700 Bitcoins had a deal worth $400000. He was already a millionaire then and did not cash out these Bitcoins.
When in 2015, he had to file Chapter 11 bankruptcy, he discovered that its worth $8.5 million.
- Bitcoin Booster Andreas Antonopoulos – A strong promoter of Bitcoin had to cash out his Bitcoins to pay up his needs. In 2017, a critic asked on Twitter why fans should support Andreas on the Patreon platform if he is already wealthy. Antonopoulos responded he is not rich but in debt. This is when his fans came forward and helped him by donating Bitcoins, and subsequently, he had 100 Bitcoins that made him a millionaire overnight.
These are just two stories out of many that include a 20-year boy Erik Finman, who bought Bitcoins as early as 2011 and became a millionaire at such a young age.
The best way to gain from Bitcoin trading is to go for Day trading. The session will be limited only for that day and not overnight. You can make quick profit from this volatile Bitcoin market. You can follow the below tips –
- Be fluent in technical analysis
- Adopt a sustainable speed
- Do not allow the news to impact on your trading
- Implement a stop-loss to protect yourself
- Apply a 3% formula to your trading
These tips can help you out to gain maximum benefit from Bitcoin trading.