Do you need to buy a whole Bitcoin?
Jan 11, 2018, 11:00:33 AM Published By Wirex Team
If you didnt get into Bitcoin in the early stages, it might seem like its too late now. Prices are soaring to intimidating levels and few of us have thousands of pounds sitting around to spend on a whole Bitcoin. But the truth is, it doesnt matter if you cant afford a whole Bitcoin or even a tenth of a Bitcoin. It is possible to buy as little as 0.00000001 (one hundred millionth) Bitcoin at a time - a unit known as a Satoshi after the elusive founder of the currency. At the time of writing, 1 will buy you over 9800 Satoshis and 100 buys nearly a million. People have been saying it is too late to invest in Bitcoin since the price hit double digits. The best time to get involved was in 2009, the second best time is now.
Why is the price of Bitcoin getting so high?Its simple: the supply of Bitcoin is finite. The founders decided there would only ever be 21 million Bitcoins available. Once those have all been mined, thats it (unless the protocol gets changed.) As more people buy Bitcoin, the price rises and each persons money buys a smaller amount. Back in 2010, the first Bitcoin transaction ever made occurred when Laszlo Hanyecz brought two pizzas for 10,000 BTC. While the same transaction would now cost a fraction of a single Bitcoin, you would still get two pizzas. In this way, Bitcoin is more likegoldthan fiat currency. Nations can and do print more money. Gold, on the other hand, is finite - theres only so much of it out there. But while we dont know precisely how much gold is left, we do know how many Bitcoins are left. This means that, as long as new people are buying and using Bitcoin, the price will continue to rise.
Its not that different to other investmentsInvesting is changing. We no longer need large amounts of money to get started. You dont need to invest in a whole property or piece of artwork - new platforms are making it possible to buy a small percentage. Gold investors likewise dont need to buy a whole bullion and can opt for an ounce or a coin. Cryptocurrencies are much the same. Its possible to only spend what you can afford and still reap the benefits.
Whats the point in buying a fraction of a Bitcoin?It might not seem as if buying a fraction of a Bitcoin is worth the time and effort. However, there are two main reasons why purchasing even a single Satoshi is worth consideration:
- Its an ideal way to start learning about cryptocurrencies. Some crypto evangelists predict Bitcoin will become mainstream or even replace fiat currency. Countless people and companies around the world are investing a great deal of time and money into making that happen. Buying part of a Bitcoin is the perfect way to get used to using the technology, and to learn a bit more about how it works in case that does happen.
- There is still the potential for financial gain. If you start with a small amount of Bitcoin, your losses are capped but the potential gains are theoretically unlimited. For example, some analysts predict the price of a Bitcoin could rise as high as 100,000. If that does happen, a 100 investment today will be worth over 1000. While no one can predict the future, thats an enormous relative increase. Investing 100 means thats the largest amount you could lose, but we have no idea what the gains could be.
What about altcoins?Bitcoin isnt the only cryptocurrency. There are well over a thousand competitors, most of them at a fraction of the price. That doesnt mean they will necessarily experience dramatic price increases in the future though. It might seem more satisfying to buy 1000 altcoins than a fraction of a Bitcoin, even if the value is the same. However, its not guaranteed that any altcoin will continue to rise in price and many are short-lived gimmicks (or outright scams). But with more than 1,300 alt-coins to choose from, its no easy task uncovering potential winners. Before investing in anything, we recommend you do your own research to ensure you understand the vision, the utility and the practicality of what they are trying to achieve. Some quick suggestions:
- Study the team behind it
- Understand the why
- Determine where they are in the process
- Assess the valuation