Investing In Bitcoin: The ABCs and Things You Should Know
All fundraising activities through initial coin offerings are banned by Chinese government, also the government ordered to shutdown all bitcoin exchanges, which led to sharp drop in bitcoin prices at one point. After that bitcoin prices recovered and surpassed US$19,000 at one point on Thursday.
Here are some things to know about Bitcoin, a chief executive of Blockchain Solutions in Hong Kong Jason Leung shared his views on investing.
Is Bitcoin Wave a Bubble?
$5,000 U.S. is the real value of bitcoin, he thinks. Buying the asset above that price is a speculative business. Mainland China is determined to wage war on cryptocurrencies, rapidly dragging down its value at one point, which precisely shows bitcoin trading is largely driven by speculators.
Currently, the bitcoin market is indeed bubbly, after it crossed the mark of 10,000$, said Leung.
What is Bitcoin Mainly Used in Everyday Life?
The main purpose, for what is used bitcoin in daily life is money transferring. This process through banks is usually more expensive and takes longer.
That said, soaring bitcoin prices have somewhat stifled payment activities via bitcoin.
How Do We Keep Bitcoins?
The first step is to own a digital wallet, just like opening a bank account. Currently, it’s in Google Play Store in Android-supported smartphone or App Store in iPhone. One can have many options of e-wallet mobile apps to choose from, after typing in “bitcoin wallet”.
There is no one, who can keep your passcode for you, because the bitcoin is a decentralized currency. So when you get your own e-wallet, you should first copy the passcode, as a back-up. The passcode usually includes from 12 to 26 English letters.
There are two sets of passcode, that carry digital wallets: one is public, which is for collecting payment; the other is private, which is a user’s signature and needs to be kept secure like a bank passcode.
How do We Buy or Sell Bitcoins?
There are three ways to do it. The first one, also the most direct one, is to assign an appointment with a seller through the internet. The risk is that, as you don’t know the seller’s identity, there is a possibility that the seller may run away with your money.
There is another option to buy/sell bitcoins through automated teller machine. The great thing is you can complete the transaction on the spot, but the downside is such ATMs charge a higher fee.
The third option is through third-party trading platforms. Currently, more credible trading platforms require authentication of the customers’ identity to prevent money laundering, but there are no relevant laws in Hong Kong to monitor and regulate this. After authentication, a customer can deposit cash into the trading platforms via banks or other means, and begin buying and selling, much like how a stock trading account works.
You can also check the price of bitcoin through an order book. As a customer there is no need for you to buy a complete bitcoin in a single transaction, the minimum unit can be down to a hundredth of a bitcoin or even less.