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5 things to know before investing in Bitcoin

January 06, 2018 | posted in News | posted by : Manappuram Finance

Bitcoin is the new currency and Bitcoin mining and trading is the new passion for speculators. This crypto-currency has seen a large growth in demand in the past few years. Though the RBI has expressed some concern regarding the security of Bitcoin, this currency has generated curiosity resulting in more and more people jumping on to the bandwagon.

What is a Bitcoin?
Bitcoin is a decentralised digital currency that can be used for making payments and can be traded and converted into any white paper currency. Bitcoin is a virtual currency, encrypted with unique digital codes. Each Bitcoin is assigned a specific number or code to provide a distinctive identity. Each transaction is recorded in a digital ledger via blockchain technology.

Bitcoin in India
Though RBI has not provided licences to companies to trade in cryptocurrencies, many e-commercial companies like Amazon and Flipkart have started providing vouchers to Bitcoin holders. You can buy Bitcoin online and save it in your digital wallet. There are various Bitcoin exchanges available in India such as Zebplay, Unicorn, Bitxoxo, etc.

Things to know before investing in Bitcoin:

Bitcoin mining: Bitcoin mining is an activity through which you could mine a Bitcoin by solving a math problem. The complexity of the problem increases as more members join. Due to increasing popularity of Bitcoin mining, more and more members are joining. This growth has resulted into pool mining, wherein many independent miners join to form a group to solve a particular problem.

Expensive investment: The cost of acquiring even a single Bitcoin is now prettyhigh; it’s an expensive and a speculative investment. Of course, you can opt to buy a tiny portion of Bitcoin called Satoshi. 10 crore Satoshi forms a single Bitcoin.

Value of Bitcoin: The value of Bitcoin is notching up new heights every day. The current value of a single Bitcoin is approx. 10 Lakh Rupees.
Risky, but high returns: Due to the absence of a regulatory body for Bitcoin, investing in it is not much different from gambling. The risks are high, but the expected returns are huge as well.

Huge market capitalisation: Bitcoin's current market capitalisation is more than twice that of India's most valued companies. The increasing popularity of Bitcoin has expanded its global reach. Though some countries have criticised the use of this crypto-currency, investors in countries like the US and the UK have welcomed it with open arms.

Like every other avenue for investment, investing in a Bitcoin has its own set of pros and cons. Rather just being the part of the herd, invest wisely. Invest only if you understand the concept and fundamentals of the Bitcoin, because wise investing begins when you spend your money wisely.

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