How to invest in Bitcoin?

Monday, August 21, 2017

The idea of ​​crypto currency (sometimes called digital or virtual currency, or electronic cash) in general terms originated at the end of the last century. Then the first projects were presented. But the real crypto currency appeared in 2008, when someone, hiding under the pseudonym of Satoshi Nakamoto, introduced and then launched the Bitcoin network.

Bitcoin is a decentralized system of issuing electronic money, that is, it does not have a "central bank" that issues this money. The system operates on the principle of a peer-to-peer network, in which there is no central server, the variant of such a network is known to many as torrent. The emission of bitcoins occurs by mining, or "mining": in order to obtain bitcoin, the computer of the network participant must decipher some complicated cryptographic problem. Bitcoins are mined not by one, but by blocks, the size of which is halved after every 210 thousand blocks extracted, that's why the quantity will never exceed 21 million.

Through every 2016 units extracted, it becomes increasingly difficult to extract them. At the moment, the user of the home computer "get" bitcoin is almost impossible, the power of his car is simply not enough. Today, supercomputers are involved in mining, for others this task is simply unprofitable. It remains only to buy bitcoins on special exchanges or in online exchangers. The number of bitcoins is finite, therefore their cost is constantly growing. Many investors see in bitcoin some analogue of gold as a defensive asset, only more reliable, because no government can take away their e-currency from them or launch its hyperinflation. At the same time, bitcoin, like traditional currencies, is subject to fluctuations, on which one can make very good money, that is, this tool is of interest to both speculators and long-term investors.

Since the beginning of 2017 as of June 14, 2017, the bitcoin rate has increased by almost 200% , rising to $ 2,761. It would seem that he, the ideal instrument for investing, is a reliable currency, which only grows in price (according to some analysts, in the medium term the price of bitcoin will reach $ 10,000), it's not for nothing that one of the most popular queries in search engines concerns exactly the investments in bitcoins.

However, investing in bitcoin is not so simple. Our article will tell you how to invest in bitcoin in Russia with maximum protection of the interests of the investor and with a minimum starting capital.

Underwater rocks

To begin with, despite its popularity (the share of bitcoin is now around 70% in the global crypto currency market), its legal status is not the same in different countries. If in Japan bitcoin is recognized as a legal tender, in Germany it is allowed as a monetary unit, in China operations with bitcoin are allowed for individuals, but not accessible to banks, and in Switzerland it is treated as a conventional foreign currency, applying the relevant laws to bitcoins, In Russia its status has not yet been determined.

Accordingly, a Russian investing in bitcoin, not only violates the law, but acts at his own risk and risk, is not protected by any legal norms.

The other side of the coin is a high entry threshold. Recall that the value of this currency today is approaching $ 3000. Bitcoin is traded on virtual stock exchanges, the largest of which are Poloniex, Bitstamp, Bitfinex, BTC-e. Independent trading on these exchanges has its own specifics and can hardly be recommended to a novice trader. Fluctuation of quotations during the day is several times higher than the dynamics of shares or futures, and crypto-exchange services are much more expensive - for example, the commission for a transaction on the Bitstamp exchange is 0.5%. In addition, there is very little news on crypto-currencies, and it is very difficult to trade bitcoin, focusing on external information, as on the stock exchange.

There is one more important aspect concerning the safety of independent investing on the stock exchange. Bitcoin is positioned as a very reliable investment - the user is well protected by the very concept of crypto currency. However, with the growth of its popularity, the number of hacker attacks is also growing. "Take away" bitcoins from the electronic wallet, in which they are stored, is very difficult. Transactions are also safe. But to steal electronic money from a client account on the exchange - the task for hackers is quite feasible. Exchange crypto currency in recent years are increasingly in the center of scandals associated with the loss of digital money from users' wallets. So, in 2014, the theft of bitcoins worth $ 450 million led to a major Tokyo Stock Exchange Mt. Gox to the close.

Nevertheless, there is an elegant way to circumvent these pitfalls and invest in bitcoin with full legal protection and an entrance threshold accessible to the widest range of investors.

Lifkhak for bitcoin

The casket is opened in a surprisingly simple way - it is not necessary to invest in bitcoin directly, opening a bitcoin-purse. It is enough to buy securities of the fund, for example Bitcoin Investment Trust, which invests exclusively in bitcoin. Pros of this scheme - the cost of securities repeats the dynamics of bitcoin, and each share costs almost 10 times less bitcoin.

Such securities are traded on the American platform OTCQX - this is the over-the-counter market, which presents companies that must meet the highest requirements, almost the same as those made for public companies on major US stock exchanges. The fund's shares are liquid, that is, they can be sold or bought at any time, and therefore, given the significant fluctuations in the bitcoin rate, they can be earned on both a long-term investor and a speculator.

Now Bitcoin Investment Trust shares are traded at a premium to the bitcoin rate. 

This award is due to the fact that they plan to become the first public fund (ETF) investing in bitcoins. The shares of the fund can be freely invested not only by private investors, but, most importantly, by large investment and pension funds, for which the OTC market (where Bitcoin Investment Trust shares are traded) is closed by law.

How to buy a securities fund

Despite the fact that Bitcoin Investment Trust papers are not traded on the Russian market, a Russian investor can freely buy and sell these and other shares through the trading platform ROX . In this case, the investor is trading in the legal field, that is, it is protected by US law. It is not difficult to master this trading platform - it's enough to pass a special training video course. However, there is also an alternative option that does not require independent work with the trading platform: applications for the purchase of securities can be submitted by phone or e-mail - an employee of the investment company will perform all necessary operations. So, open a brokerage account - and invest in bitcoin! 

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