The price movements of Bitcoins are actually caused by a number of external factors, starting with the so-called market influences. Even though it is not subject to any monetary policy in the true sense, the price is obviously quite influenced by certain factors, though.

The method of earning on bitcoin that we described earlier takes a speculative approach. In addition to this approach, there are others that come more from the perspective of a Bitcoin supporter.

This is how Bitcoins work

how Bitcoins workMining is the traditional method of bitcoin earning. Those who are interested in this cryptocurrency can make a real profession out of earning Bitcoins through mining. So how does one go about it? To answer this question, we need to switch from a purely financial language to a more technical one. You can buy and sell bitcoins with bitcoin pro.

To mine bitcoins, you need to find the right combination to crack the secret safe that holds the bitcoin. Technically, this works by wildly throwing huge amounts of data at it, encrypted using the SHA-256 algorithm. In theory, this is very simple and anyone can do it. In fact, however, Bitcoin is by no means for everyone and not as simple as people think. In fact, it requires such a high level of computing power that conventional computers are not sufficient here. Even if computers are able to deliver the required computing power, it is done under very high energy consumption.

So if you want to mine Bitcoins, it can destroy (or overload) your computer or consume so much power that mining the Bitcoin is hardly worth it. For this reason, Bitcoin mining is not recommended.

Also, look carefully if you are promised in an advertisement that you can earn Bitcoins quickly without mining. If you know how Bitcoins work, you will quickly realize that they are scammers. Moreover, it is also always promised here that everything is completely free. We want to make it clear at this point that there is no such thing as free Bitcoins. However, there are a few tricks you can use.

There are ways to earn Bitcoins without mining:

  • Pay-per-action (PPA): the customer is paid in Bitcoin for doing something, however little. In fact, Bitcoins can be earned just by registering somewhere or downloading something.
  • Pay-per-Play (PPP): the customer is paid in Bitcoin for playing a game online.
  • Pay-to-Click (PTC): The customer is paid in Bitcoin for clicking on an advertising banner.

You hardly need a crystal ball to know that these methods of earning Bitcoins without mining are decidedly unserious and unsafe. For this reason, if the goal is to participate in Bitcoin, it is definitely better to stick to proven methods. If you have earned some BTC, you can then order a Crypto Debit Card [1] and withdraw money at an ATM.

There are no free Bitcoins

Buying and receiving Bitcoins can definitely be beneficial. In fact, this virtual currency is used not only by individuals, but also by many companies. Usually, Bitcoins payments are mostly used by companies that are mainly active online. Even though this is becoming more and more common, one should always keep in mind that those who accept Bitcoin payments are still clearly in the minority overall.

The success of Bitcoin must be analyzed primarily in terms of investments. In other words, it behaves that many buy and sell Bitcoins in the hope of making profits. Here, the concept of a money without a central bank or an alternative currency is of rather little interest.

How to invest in Bitcoins

Like all types of investments, the rule that there are no risk-free investments applies to Bitcoin. So, if you decide to bet on Bitcoins, you have to consider the possibility of losing all your capital. So, let’s assume that you are aware of the risk and still decide to bet on bitcoin. The first question that arises here is how to invest in bitcoin in the first place. Normally, the answer to this question is completely trivial and self-explanatory for stocks or government bonds, for example.

Trading with cryptocurrencies

Trading with cryptocurrenciesWhen the first Bitcoins were launched in early 2009 [2], it was hardly noticed, and that’s how it was to stay for the next two or three years. Only a die-hard Internet community was interested in the world’s first cryptocurrency.

It was not until 2013 that this began to change. Since then, a breathtaking development has taken place. Today, there are an estimated 5,400 cryptocurrencies. Together, they bring it to a market capitalization of around 250 billion US dollars. Bitcoins are still by far the most important cryptocurrency, with a “market share” of around two-thirds.

Already in 2015 and 2016, Bitcoin prices showed a significant upward trend. But that was nothing compared to the development in 2017. If a Bitcoin reached a price around 1,000 US dollars at the beginning of 2017, there was a dramatic price increase from the summer onwards. It culminated on December 17, 2017, in the all-time high of a good US$19,000 for one Bitcoin. Since then, the prices have been characterized by strong fluctuations. In the last 12 months, the high was $13,829.07 (June 26, 2019), while the low was $3,956.58 (March 13, 2020). This shows the range. No wonder many crypto players are interested in an informed Bitcoin forecast.

Process a lot of information

That’s all too understandable given the ups and downs in prices since late 2017. Bitcoin trades can earn large sums of money in a short period of time, but they can also lose money if traded in the wrong direction. Anyone who bought Bitcoins in dollar terms on March 13 would have more than doubled the invested assets by today. Anyone who got in at the end of June last year would have made a loss of around a third of their capital to date.

This shows one thing above all: Bitcoin trading thrives on speculation. That is a characteristic of all popular cryptocurrencies such as Ethereum [3] or LiteCoin. There is no central bank or national economy behind crypto-money. The prices are determined solely by the laws of supply and demand. The hope of quick high profits is a decisive factor here.

This also explains the strong price fluctuations. Bitcoins & Co. are not an official means of payment; cryptocurrencies live from the acceptance of the network community. This has made great progress in recent years, at least for the common cryptocurrencies.

Where the trade takes place

Trading in cryptocurrencies largely takes place outside official exchanges. Instead, a large number of private marketplaces have established themselves on the Internet. Those who want to conduct their crypto trading there should rely on a well-known and large provider that has been on the market for several years. This is because, unlike official exchanges, such marketplaces are not regulated and are not subject to financial supervision. In Germany, the Stuttgart Stock Exchange is the first official exchange to also offer crypto trading. Trading with cryptocurrencies is also possible at many online brokers – often in the form of derivatives [4] where cryptocurrencies serve as the underlying.

Why forecasts are so difficult

That still leaves the question of forecasting. Looking into the future is an art in itself for all stock market values. With cryptocurrencies, this is especially true. Since there is no centrally controlled monetary policy, nor any real economic activity associated with cryptocurrency, there is a lack of important data to base predictions on. Given the sharp and short-term price fluctuations, conventional charting tools also fail. To be sure, the algorithms used to create money in Bitcoins and other cryptocurrencies ensure that supply remains tight and money glut is not possible as it is with many official currencies. That is a value in itself. Nevertheless, there remains a lot of uncertainty on the demand side. This is strongly influenced by speculative expectations.

Conclusion: reliable price forecasts – especially in the longer term – are hardly possible.Therefore, trading with cryptocurrencies resembles price bets with a high luck factor. The calculation can work out, then pleasant profits beckon. However, one should also be able to cope with sensitive losses. If you are looking for security in your investments, it is better to stay away from crypto trading.

[1] http://www.cryptodebitcards.com/
[2] https://guarium.io/the-history-of-bitcoin/
[3] https://ethereum.org
[4] https://www.wallstreetmojo.com/derivatives-contracts/

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