If you’ve been paying close attention to digital currency, then you’ve probably heard about how high the value of Bitcoin was. In 2018, the value of a single Bitcoin reached almost $20,000. That value has since gone down, but it still hovers around the $3,000 mark making Bitcoin one of the most valuable cryptocurrencies in the world.
Bitcoin and other cryptocurrency value can fluctuate. If you time it right, you can make a lot of money trading cryptocurrency.
What is Cryptocurrency?
Cryptocurrency isn’t easy to explain, but we’ll give it a shot. Basically, it’s a form of digital currency. Bitcoin is the most well-known one but there are lots of other ones.
In order to work, cryptocurrency uses cryptography to make sure that the transactions are secure. Cryptography is the process of converting ordinary text into unintelligible text, which is how it stays secure.
A Small History of Cryptocurrency
There have been lots of attempts to create digital currencies. In 2009 an anonymous programmer-or a group of anonymous programmers-known as Satoshi Nakamoto came up with Bitcoin. Satoshi Nakamoto said that Bitcoin was invented to be a “peer-to-peer electronic cash system.”
Cryptocurrency is decentralized. This means that there are no centralized servers involved. There is no controlling body or authority such as government to regulate it. This is one of the main reasons why Bitcoin has become so popular and is being touted as the currency of the future. It may be the first global currency.
Cryptocurrencies make use of Blockchain technology where every participant has access to the public ledger that records all the transactions within the network. If you were to buy or sell cryptocurrency today, you would be assigned a digital wallet where that currency is held. It also gives you a public and private key you can use to authorize transactions.
To complete a transaction, you input your private key. All the details of the transaction, except your private key, are available in a public ledger that can be accessed by everyone in the network.
In short, cryptocurrency allows you to trade online without third party involvement. It can be as anonymous as you want it to be.
Can You Buy Bitcoin with a Credit Card?
Yes, you can buy Bitcoin with a credit card, although it’s not as simple as providing your credit card information to the website. You have to go through a platform called an exchange where your real-world money is exchanged for Bitcoins. The problem is that many exchanges are just scams that are meant to steal your credit card information. That’s why it’s important to only use an exchange platform that you have thoroughly researched.
To use any one of these exchanges, you have to create a virtual wallet in the form of a Bitcoin address. It’s very similar to your PayPal address or your virtual bank account where your purchased Bitcoins will be sent. Here are the steps to purchasing Bitcoin with your credit card:
- Visit the chosen cryptocurrency exchange.
- Choose the amount you want to spend on cryptocurrency or amount you want to buy.
- Input your ID for verification.
- Create your virtual wallet.
- Input your credit card details.
- Wait for cryptocurrency to be sent to your wallet.
The Pros and Cons of Buying Cryptocurrency Using a Credit Card
Here are some advantages and disadvantages to buying cryptocurrency with a credit card:
Pros of Buying Cryptocurrency with a Credit Card:
- It’s pretty straightforward.
- You can buy cryptocurrency even when you don’t have cash.
- You don’t have to go through other third-party sites.
- You get to enjoy the rewards and benefits that come with spending money through your credit card-this only applies to your specific credit card and what rewards it offers.
Cons of Buying Bitcoin with Credit Card:
- You can overspend.
- You run the risk of your credit card information being stolen if you don’t use a trustworthy exchange.
- You may go into debt for buying Bitcoins that have a highly fluctuating value.
- You may have to pay a transaction fee.
Buying and selling cryptocurrency with a credit card can be a good way of making money. If you don’t max out your credit card, and are strategic, then you’ll also enjoy the rewards that come with purchasing it with a credit card.