Bitcoin Basics: Point Should be Known Before Investing

Introduction

Bitcoin is the world’s first and most well-known cryptocurrency — often described as “digital gold.” Since its launch in 2009 by the mysterious figure Satoshi Nakamoto, Bitcoin has sparked a global financial revolution. But before jumping into investing, it’s crucial to understand what it is, how it works, and the risks involved.

This guide covers the Bitcoin basics every investor should know.

1. What is Bitcoin?

Bitcoin is a decentralized digital currency that operates without a central authority like a bank or government. It allows people to send and receive value over the internet securely and transparently.

Total Supply: 21 million BTC (fixed — no more can ever exist)
Technology: Powered by blockchain — a public, immutable ledger
Peer-to-peer: Transactions occur directly between users without intermediaries

2. How Does it Work?

Bitcoin uses blockchain technology to record every transaction. Here’s how it works:

When you send it, the transaction is broadcasted to a global network.
Miners (computers) validate and group transactions into blocks.
Blocks are added to the blockchain in a secure, time-stamped manner.
This process is called Proof of Work and ensures the network’s security.

Each transaction is irreversible and stored permanently on the blockchain.

3. Why People Invest in it

Here are some of the main reasons why investors are attracted to it:

Limited Supply

With only 21 million coins ever to exist it is considered scarce, much like gold.

Decentralization

No government or institution controls Bitcoin, giving it strong resistance to censorship and inflation.

Global Accessibility

Anyone with an internet connection can access and use Bitcoin — no bank account required.

High Growth Potential

Despite its volatility, Bitcoin has shown incredible long-term growth, especially for early adopters.

4. How to Buy it

To invest in it, you’ll need to:

Step 1: Choose a Reliable Exchange

Examples:

Binance
Coinbase
Kraken
OKX

Step 2: Create and Verify Your Account

Provide KYC details to comply with regulations.

Step 3: Deposit Funds

You can use bank transfer, credit card, or other crypto.

Step 4: Buy

Use market or limit orders to purchase BTC.

5. Where to Store it

Hot Wallets

Online or app-based wallets
Easy to access but more vulnerable to hacks
Best for small or frequent transactions

Cold Wallets

Offline storage (hardware wallets like Ledger or Trezor)
Most secure option for long-term holding

Important: Never share your private keys or recovery phrase.

6. Risks of Investing in it

Bitcoin is powerful, but it’s not risk-free. Consider these before investing:

Volatility

Prices can swing wildly — you could gain or lose a lot in a short time.

Security Threats

If you lose your private key or fall victim to a scam, your asset is gone forever.

Regulatory Uncertainty

Laws around Bitcoin vary by country and can change quickly.

No Refunds or Chargebacks

Transactions are irreversible — if you send BTC to the wrong address, it’s gone.

7. Tips for New Investors

Start small — only invest what you can afford to lose.
Avoid FOMO (Fear of Missing Out) and emotional decisions.
Use 2FA and strong passwords on your exchange and wallets.
Keep learning — follow news, blogs (like Crypto Relic), and tutorials.
Diversify — don’t put all your money in one asset.

8. Bitcoin vs Traditional Assets

Feature	Bitcoin	Stocks	Gold
Volatility	High	Moderate	Low
Supply	Fixed	Variable	Limited
Accessibility	24/7	Market hours	Market hours
Custody	Self-custody possible	Broker-dependent	Physical or ETF

Conclusion

Bitcoin has proven to be more than a trend — it’s a technological innovation reshaping finance. But like any investment, it’s essential to understand what you’re getting into.

Before you invest in it:

Learn how it works
Understand the risks
Protect your assets properly

With the right approach and mindset, it can be a valuable part of your investment portfolio. But always do your own research (DYOR) — and remember: in crypto, you are your own bank. Learn how to trade safely.