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Many people who are new to bitcoin wonder what is the best way to invest in bitcoin and other cryptocurrencies. The two best ways to invest in bitcoin are to trade it or to mine it in order to get rewarded in bitcoin. Trading it involves buying bitcoin thats already been mined and in circulation whereas mining bitcoin involves mining the bitcoins into existence and thus bringing them into circulation. When considering an investment, one should always measure the risk against the potential returns. The same applies to bitcoin, so we have done a comparison of buying vs investing in bitcoin.
When you purchase Bitcoin outright your capital is at risk 100% of the time. The bitcoin price is highly volatile, this approach may cause some sleepless nights and upset stomachs due to the stress and constantly checking the price. December 2017 saw Bitcoin reach its all-time high of close to $20000 only for bitcoin to crash the entire 2018 in what was termed the crypto winter, crashing by more than 70% to reach a low price of around $3,191. A few months before the December bull run in September 2017, Bitcoin hit an all-time high of $5000, only to lose 40% of its value overnight. April 2013 saw the price of Bitcoin lose 71% of its value in a few hours.
The price did recover over time in both instances but those types of price swings are not for everyone. If you can buy and sell at the right times then you stand to make good short term returns with bitcoin trading.
As far is bitcoin mining is concerned, to be profitable the cost of bitcoin mining must be less than the price of the amount of bitcoin mined. For individual miners this could be difficult to maintain as setting up a bitcoin miner is expensive and running a bitcoin mine is also expensive due to its electricity usage. The country you are in could affect how profitable your mining operation is as well as how powerful your bitcoin mining hardware is. A few things to know before getting involved in bitcoin mining are:
– block rewards – new bitcoins that are released with each mined block. The block reward is halved every 210,000 blocks (about every 4 years). The current block reward is 12.5 BTC. The event when the block reward is halved is called the bitcoin halving and many expect a price increase close to the event due to decreasing supply.
– Transaction fees – a few bitcoins are included in bitcoin transactions as a reward for the miner who mines the block. Transaction fees are incentives for miners to prioritize verifying certain users transactions.
– Mining difficulty – the bitcoin network adjusts the difficulty of mining blocks, to keep the rate at which bitcoin blocks are mined constantly. The higher the difficulty level the less profitable to mine for bitcoin miners.
That is why Nextgen Systems exists, to make it easier for people to participate in bitcoin and cryptocurrency mining without owning any cryptocurrency mining equipment or taking on any of the running costs or needing cryptocurrency mining expertise. We give people the opportunity to invest in cryptocurrency without risking stress or risking up to an 80% loss of their initial investment.
Short term gains on trading Bitcoin are undeniable; however, over medium to long term, mining is not only more profitable but carries significantly less risk. With the initial cost of the IMA being returned in full at the end of the 36-month period.