Can ordinary people afford to play with Bitcoin｜Newcomer Tutorial
Hello, I'm Mike, and today we're going to talk about Bitcoin. To many people, Bitcoin may sound far-fetched and even a little hard to understand. In fact, as cryptocurrencies become more popular, more and more people are getting into Bitcoin and wondering if they can afford to play with the virtual currency. Today, I'm going to introduce you to the basic concepts of Bitcoin, how to start buying Bitcoin, and some trading tips from a newbie's perspective, hoping to help you better understand and start your Bitcoin investment journey.
What is Bitcoin?
Bitcoin is a decentralized cryptocurrency founded in 2009 by an anonymous figure named Satoshi Nakamoto. Unlike traditional currencies, Bitcoin is not issued by a government or bank and does not require an intermediary in the transaction process. The digital currency relies on blockchain technology to ensure the security and transparency of transactions.
For the average person, the appeal of Bitcoin lies in its decentralized nature, which makes it less susceptible to government policies or inflation. Moreover, the total amount of Bitcoin is limited, with a maximum of 21 million units to be mined, which increases its scarcity and investment potential.
Can the average person afford to play with Bitcoin?
Many people wonder if ordinary people can really afford to play with Bitcoin when the price is so high. The answer is yes! Even novice traders can get started with Bitcoin with a small amount of money. Bitcoin does not have a denomination limit like traditional stocks, so you can buy a small amount of Bitcoin according to your budget.
For example, if the current price of a Bitcoin is NT$1,000,000, you can choose to buy 0.01 Bitcoin, which will only cost you about NT$10,000, and still be able to participate in Bitcoin investment and trading. Over time, if the price of Bitcoin rises, your assets will increase in value accordingly.
How to buy Bitcoin?
For the uninitiated, the way to buy Bitcoin is very simple. You need to sign up for an account on a reliable cryptocurrency exchange, such as Binance, OKX or Huobi. These exchanges offer a simple interface and support direct exchange between Taiwan Dollars and Bitcoins.
After registering, all you need to do is fund your account via bank transfer or credit card, and then select Bitcoin (BTC) to buy on the exchange. During the purchase process, you can choose a Market Order to buy Bitcoin directly at the current market price, or a Limit Order to set a desired price for the purchase.
It is important to note that there are certain handling fees associated with each trade, and these fees will vary depending on the platform and volume of the trade. Choosing the right exchange and understanding the fee structure is important for your return on investment.
How Bitcoin is stored
After purchasing Bitcoin, the question of how to safely store it is an important one. Unlike traditional currency, Bitcoin does not exist in the form of banknotes or coins, but is stored in the form of digital wallets. Digital wallets can be categorized into two types: hot wallets and cold wallets.
Hot wallets: These are connected to the internet and can usually be found in wallets offered on exchanges or in mobile apps. Using a hot wallet is convenient and fast, but it is relatively less secure as it is vulnerable to hacking.
Cold wallets: Cold wallets are offline storage devices such as hardware wallets (e.g. Ledger or Trezor). It is more secure and suitable for storing large amounts of Bitcoin over a long period of time.
For the average person, choosing to use the hot wallet provided by the exchange for day-to-day transactions is the easiest way, but if you plan to hold Bitcoin for a long period of time, it is recommended that you use a cold wallet to keep your funds safe.
Bitcoin price volatility
The price volatility of Bitcoin is one of its most challenging features. As the Bitcoin market is not yet fully mature, the price of Bitcoin is often subject to sharp fluctuations due to a variety of factors, such as policy changes, technological innovations, and investor sentiment.
This is both an opportunity and a risk for the average investor. If you are a short-term investor, you can take advantage of market fluctuations to arbitrage, but if you are a long-term investor, you need to stay calm and avoid overreacting during market fluctuations.
Cryptocurrency Exchange Commission Mechanism
In addition to buying Bitcoin directly, some cryptocurrency exchanges also offer a Rebate program, which is an additional source of income for investors. For example, OKX offers a certain percentage of rebates based on your trading volume, which can effectively reduce trading costs and increase your return on investment.
Such a rebate mechanism is a good way for users with a certain trading volume to earn money, especially when using the exchange for a long period of time, you can accumulate a considerable amount of rebates. Of course, it is important to understand the rules and conditions of each platform to ensure that you can enjoy the maximum benefits.
Risks and Precautions of Bitcoin Investment
Before committing to Bitcoin, it is important to understand its potential risks. While Bitcoin has the potential to bring high returns to investors, the extreme volatility of its price also makes it a risky investment vehicle.
Therefore, the average person should live within their means and not invest all of their money in Bitcoin. It is best to keep your assets diversified to avoid suffering significant losses due to fluctuations in a single market. Choose a trusted exchange to trade on and set up risk control strategies for trading, such as stop-loss and take-profit.
Frequently Asked Questions Q&A
Q1: How much capital do I need to start investing in Bitcoin?
A1: In fact, you can buy Bitcoin with very little money to start with, even as little as a few thousand dollars in Taiwan dollars. Bitcoin can be divided into as few as 0.00000001 pieces, and the smallest unit of Bitcoin is called a "Satoshi" (聰).
Q2: Bitcoin is so volatile, how can ordinary people cope with it?
A2: In the face of the high volatility of Bitcoin, ordinary people should invest rationally, set up risk control measures such as stop-loss and take-profit, and avoid emotional operations. If you are not familiar with the market, it is recommended to start with a small amount of capital and gradually accumulate experience.
Q3: How do I secure my Bitcoin?
A3: When storing Bitcoin, it is recommended that you use cold wallets to protect your funds and turn on security measures such as two-step verification. Choose a trustworthy exchange for trading and avoid using platforms from unknown sources.
We hope that today's introduction will help you understand the world of Bitcoin more clearly and set the stage for your investments in this area!
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