What is Bitcoin?
Bitcoin (BTC) is one of the first cryptocurrencies to rise to popularity. Invented in 2008, it is now the largest cryptocurrency by market share. As of June 2017, BTC has a market of nearly $40 billion. The only other cryptocurrency to come close to this is Ethereum.
As a cryptocurrency, Bitcoin is a store of value that is becoming more and more generally accepted. Online stores and eCommerce businesses are becoming more likely to accept BTC for payment. There are also brick and mortar stores that have taken to accepting the cryptocurrency.
Where to Buy Bitcoin?
You can purchase and invest in BTC through the following means:
- Local Purchases
Dealers buy and sell BTC, and provide liquidity to the market. These dealers make a profit through the spread between their bid and ask price. By buying through a dealer, you will most likely pay a slightly higher fee than the current market rate.
Exchanges are automated, digital marketplaces that connect BTC buyers with BTC sellers. There are many different backend Exchanges and even many more frontend/UI Exchanges. Because of the variety of Exchanges available, there will generally be slightly different market rates for BTC. For example, the GDAX which is the backend exchange used by the frontend exchange Coinbase has lower prices than the backend exchange that supports CEX.io.
Finally, local purchases are increasingly common. There are websites that act as “craigslists” or “eBays” that connect local users willing to trade their BTC for local currency.
As more people accept BTC as an accepted form of payment, its value increases. There is a fixed supply of Bitcoin in the market. In fact, the blockchain network and protocols that support BTC state that there can only ever be 21 million BTC in existence. It is expected that all available Bitcoin will circulate into the market by 2140. Because of this fixed nature, Bitcoin’s value is heavily affected by demand.
Bitcoin’s value is currently quite volatile. Much like stocks, it is affected by news in the market. As of mid-2017, there are talks of regulating BTC in certain countries. Because of this, and the expectation of reduced liquidity, BTC’s value has been stagnating compared to its past rallies. As of press date, BTC trades at approximately $2,490 per BTC.
Alternatives to Bitcoin
Because of the growing popularity of BTC, several new cryptocurrencies have been created to attempt to penetrate the market. BTC’s strongest competitor is Ethereum, followed by other cryptocurrencies known as alternative coins, or Altcoins.
We hope you’ve enjoyed reading CFI’s guide to Bitcoin. To learn more about financial markets, check out the following resources.