Investing in bitcoins

The bitcoin has increased enormously under the influence of the recent cryptocurrency hype. It is therefore very attractive to invest in the bitcoin. See where you can invest in bitcoins and read the short course so that you can get started trading bitcoins immediately!

Where can you invest in bitcoins?

Before we go in depth and analyze the subject of bitcoins further, we look at where you can invest in bitcoins. At the moment, there is one reliable broker where it is possible to trade directly in bitcoins. At the broker Plus500 you can buy and sell CFD bitcoins and you can benefit from the strong exchange rate changes by taking a position at the right time.

A big advantage of bitcoins trading at Plus500 is the fact that you can buy a number of bitcoins for a shorter period of time. The bitcoins are quite unstable, but by investing in bitcoins in the right way you can benefit from this. You do this by going short when the price is falling. You then earn money when the price of the bitcoin decreases.

You can try investing in bitcoins for free with an unlimited demo.

Click here to begin investing in Bitcoins immediately with Plus500 >>

Buying bitcoins1Buying bitcoins from a broker is very simple

What makes investing in bitcoins profitable?

Investing in bitcoinsThe price of bitcoins is extremely variable. While traditional currency pairs move only slightly, the price of the bitcoin has made huge leaps. This erratic exchange rate makes it possible to earn huge amounts by trading in bitcoins: because you can go both long and short, you can profit from both decreases and increases.

On average, the rate of bitcoins moves several percent points per day. Thus you can earn quite a bit every day. But how do you ensure that you take maximum advantage of this volatility in the price of the bitcoin?

You do this by investing in bitcoins in the proper way:

  • Buy the bitcoin when you think that the price will increase.
  • Sell the bitcoin when you expect the price will decrease.

Small course on investing in bitcoins

How do you invest in bitcoins?

It is fairly easy to invest in bitcoins with an online broker. Below you can see a short list of the most important steps you need to go through to invest in the bitcoin:

  • Buy: press this button when you expect the price to go up
  • Sell: press this button when you expect the price to go down
  • Order: here you enter an amount at which you automatically open an investment
  • Stop loss: enter the value at which you automatically take your loss
  • Take profit: enter the value at which you automatically take your profits

It is advisable to always use a stop loss. In this way you prevent unexpected losses on your investments when you are at work.

When do you buy bitcoins?

It is wise to buy bitcoins when you expect the price to increase. The price of the bitcoin will usually go up with positive news. In addition, media attention also ensures that the price of the bitcoin rises. After all, the hype encourages investors to buy more bitcoins, so that the price rises further. In that case it is therefore smart to invest in bitcoins.

Below you can see an example of a news item that contributes to the price increase of the bitcoin. By reading the message you can decide whether it is a good time to buy the bitcoin. This is the case here below: because bitcoins are now tradable as futures, larger financial institutions can also benefit from the digital currency. After reading a positive news item, it is therefore wise to buy.  

Bitcoin good newsFavourable news often leads to the rise of the bitcoin price. Source: Nu.nl.

When do you sell bitcoins?

When you want to get the most out of your bitcoin investments, it is wise to sometimes also sell bitcoins. With many online brokers there is the possibility to go short. Every pound drop in the bitcoin is profit for you! You can thus benefit quite a lot from any price falls. Therefore, even if there is bad news it can be wise to invest in bitcoins.

Below you can see an overview of a news item that can contribute to the price decrease of the bitcoin. Again, it is important to read the content carefully. The fact that China wants to prevent the issuing of new digital coins is a strong negative signal. After all, China is a very large country and if it forbids this activity it can lead to a considerable drop in the price of the bitcoin. In such a case it would be best go short.

bitcoin sellingAdverse news often leads to a decrease in the bitcoin price

What are bitcoins exactly?

Before you invest in bitcoins, it is important that you understand exactly what the bitcoin is. The bitcoin can be seen as a new digital currency. These digital currencies are also called cryptocurrencies. Compared to normal currencies, the bitcoin is a bit of an oddity: the bitcoin is not regulated and is not influenced by any central bank or government.

The bitcoin is an invention of a brilliant hacker who goes by the pseudonym Satoshi Nakamoto. It is possible to mine the bitcoins by having computers discover complicated series of numbers. But how is it possible that a digital currency has any value? And how can you obtain bitcoins yourself? We will discuss this in the rest of the article.

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What determines the value of bitcoins?

Bitcoins are not used as a valid currency in any country, so it is rather strange that the bitcoins or BTC have a certain value. This value arose because the bitcoin can be used as an online exchange medium. Each user has their own wallet whereby it is possible to send bitcoins to other internet users via a unique address.

Because the bitcoins are used as an active exchange medium, a certain value has been established. The prices for investments in bitcoins are therefore actually realized in the same way as the prices for investments in stocks. More and more online webshops accept payments in bitcoins and the bitcoins also seem to be making their appearance in physical stores; recently, the Delft city café De Waag, for example, began accepting payments in bitcoins.

How do you get bitcoins?

It is now clear that the value of bitcoins exists because it is used as a medium of exchange, but how do you actually get bitcoins? Without a shortage, a bitcoin would not be worth anything. However, because bitcoins have to be found through mining, it takes time and energy to find a bitcoin.

To generate a bitcoin, a computer needs to mine for it; the computing power of a computer is used to find a unique code with which it is possible to obtain a bitcoin. Because there are only a limited number of bitcoins and because the bitcoins are increasingly used as a medium of exchange, this virtual currency has a certain value.

Bitcoins minenWhy has the price of the Bitcoin increased so much?

  • There is a lot of hype around the Bitcoin; many investors are attracted by the media attention.
  • It is a new method of payment which is increasingly being used by various service providers.
  • The currency is perfect for criminal activities as the payments are difficult to trace.
  • The bitcoin is starting to be seen as a safe haven, much like gold.
  • The bitcoin can be used to lower transaction costs.

Current bitcoin price

Below you can see the current price of the bitcoin.

Be careful when investing in bitcoins

Bitcoins are not regulated by a central bank, making it difficult to apply any kind of regulation to the currency. Because the source of bitcoins is fairly unclear, brokers can play dirty games where it is difficult to discover the source of a bitcoin. In addition, bitcoins can be used for money laundering because they are so difficult to trace.

All in all, bitcoins are a very interesting but also speculative investment opportunity. It can be fun to play with this kind of financial security, but we do not recommend investing too much money in trading in bitcoins.

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