When you start delving into Bitcoin for the first time, you may start to feel dizzy. So many different terms used. And where on earth do you start if you want to invest in crypto? The best-known cryptocurrency is Bitcoin, which gained fame when the price of the coin suddenly went through the roof in 2017. This made the coin more mainstream and came out of the dark corner of the dark web. Entire tribes started investing in the digital currency.
Bitcoin was developed in 2008 by Satoshi Nakamoto. This pseudonym represents the person or group that developed Bitcoin. This was initially supposed to work as a peer-to-peer electronic money system. Aims to solve the global problem of inflation and third party intervention. Bitcoin has now developed into a digital currency that can be used to make payments worldwide.
Before you dive into the wonderful world of Bitcoin and other cryptocurrencies, it is good to know why Bitcoin is such a cool invention. In 2008, a document from the pseudonym Satoshi Nakamoto appeared online. This white paper described the concept of Bitcoin. It answered the question: “How can you ensure that something is not copied, but still goes via the internet?” For example, if you email a photo to someone else, the copy of that photo is still on your computer. So then this has been copied.
Each Bitcoin is in fact a computer file that is stored in a digital ‘wallet’ or wallet app. Saved on a smartphone or computer. It is a decentralized digital currency without a central bank. A Bitcoin can be sent from user to user without the intervention of third parties.
It is important for the rise of Bitcoin that the financial world shook to its foundations in 2008. One of the most important and powerful American banks, Lehman Brothers, went bankrupt. The credit or banking crisis that followed meant that people, companies and governments all over the world were at risk of losing bank-held properties. Think of houses and savings. People lost confidence in banks and distrusted the system. They wondered how such institutions could go bankrupt.
It is no coincidence that shortly after this event an unknown person published a white paper: Bitcoin: A Peer-to-Peer Electronic Cash System. This was published under the pseudonym Satoshi Nakamoto.
Initially, Bitcoin was not intended as a digital currency. But as a closed system to transfer money directly from one party to another. This without the involvement of a financial institution. The desire for such a system has not been one of recent years. In fact, since the advent of the internet, several parties have been working on this. But the development of such a system accelerated with the banking crisis.
Bitcoin became the first digital currency that works without a bank or central administrator. The technology behind it, Blockchain, makes it an online version of cash.
Since the rise of the internet, work has been underway on a form of digital money. But the inventors of digital money systems encountered an important question: How can you ensure that something is not copied, but still goes via the internet?” If you give a twenty euro note to someone, then someone knows for sure that he has that twenty euro note. If you send something via the internet you do not have this guarantee, because how do you check the transaction?
Normally, in this example, a third party, a bank or other financial institution, would verify the transaction. With Bitcoin this process is decentralized. Transactions no longer rely on traditional parties to demonstrate one’s credibility.
Checking and verifying transactions is done by numerous powerful computers connected to the network: the blockchain. After verification, the transactions are added to the blockchain. This process is called mining. Here we explain to you how Bitcoin mining works. In this way, numerous individual computers contribute to the operation of the system. The dependence on a central party has disappeared. And that is exactly the core of decentralization.
Yes. it is possible to pay for goods and services with Bitcoin. These transactions are validated and recorded via the Bitcoin blockchain network. From your own digital Bitcoin wallet you select how much Bitcoin you want to pay and to which Bitcoin address you want to transfer this amount. The transaction is then validated by the blockchain network, registered and processed. You can easily pay with Bitcoin via your computer, laptop or via an app on your smartphone. The only requirement is that you have a Bitcoin wallet with sufficient funds. There are several options for storing Bitcoin in a Bitcoin wallet.
Although Bitcoin is not yet legal tender in the Netherlands, there are now numerous places where you can already pay with Bitcoin. Thuisbezorgd was the first major Dutch webshop to make payment via Bitcoin possible. Well-known large web shops such as bol.com and Zalando also offer the option to pay with Bitcoins via gift cards. You can now also use your Bitcoins at many restaurants and shops. Nowadays it is often possible to pay at the cash register with your Binance Credit Card. You can easily find all stores that accept Bitcoins via Coinmap.
You can buy Bitcoins in a number of ways:
Through a broker
You can quickly and easily buy Bitcoins from a broker via iDEAL, credit card or bank transfer. Reliable Dutch brokers are registered with the DNB and fall under the Financial Supervision Act. You pay a fairly high fee per transaction and your purchased Bitcoins are immediately sent to your digital Bitcoin wallet after verification. Please check this overview for the best current crypto brokers.
Through an exchange
An exchange offers the same options as a broker. You also have the option to exchange other crypto coins into Bitcoins. The processing time of a transaction is shorter with an exchange than with a broker. Furthermore, the transaction fee is often lower than with a broker. A disadvantage is that international crypto exchanges do not fall under the Financial Supervision Act. It is therefore wise to compare crypto exchanges based on price and reliability.
Through a digital wallet
various digital wallets with which you can also buy crypto in addition to storing your crypto. The best-known wallets are Trustwallet and Metamask. Through these wallets you can, as it were, buy crypto with crypto.
Also view our latest tips for low crypto trading fees and additional trading costs.
Yes. Buying crypto is safe as long as you take the right precautions. Only buy your crypto via a laptop or smartphone with up-to-date security software. Or buy your crypto from a reliable broker or exchange. Read more about how to buy Bitcoins safely.
In addition to investing in crypto, you can also actively trade. You trade your crypto on an exchange with the aim of selling your purchased crypto again for a profit. On an exchange you can trade both Bitcoin and altcoins. You pay the exchange transaction costs with every transaction. These can often be on the high side. In the Netherlands, the most used crypto exchanges are Binance, Bitvavo and Bitcoinmeester. If you want to know more about this, read our Binance review, our Bitvavo review or our Bitcoinmeester review.
A crypto exchange offers you numerous options to trade your crypto. In addition to the regular buy and sell orders, you can also set stop-losses to limit your losses. You also gain insight into the order book and the traded volume. To help you on your way, we have written a guide to using the largest global crypto exchange Binance. Read the manual here that answers the question: How does Binance work?
We call professional crypto traders day traders. They earn their living with this. It is not easy to become a successful day trader. You will have to know how to manage your time and continuously monitor the Bitcoin price. In addition, it is important to stay in control of your emotions. Traders make their buying and selling decisions based on a preconceived plan: a set-up. It is important to adhere to this to maximize your profits and limit your losses. Read more about how to become a successful Bitcoin trader.
With the right strategy and by making the right choices at the right time, you can make a lot of money with Bitcoin. Recent years have shown that buying Bitcoin and holding it for a long time can yield significant returns. But as with any currency market, upward trends always alternate with downward trends. So you will have to sell your Bitcoins again at the right time to finally cash in your profits. And if you buy in or just before a downward trend, you run the risk of being left with a loss. After all, Bitcoin’s past success offers no guarantees for the future. Therefore, read carefully before investing in Bitcoin.
Also view the frequently asked questions when buying your first Bitcoin. Or check out these 10 tips when buying your first crypto. Do you want to buy Bitcoin immediately? Then first compare the different Bitcoin providers.
