In total, at the beginning of 2018, there are about 580,000 Dutch people who have invested in bitcoins or another cryptocurrency. Only a quarter of them have made a profit. Suppose you want to invest money in cryptocurrencies to better understand how it works, how can you do this safely?
In 2009, bitcoin appeared and this is an important moment in history. Until then, scarcity does not exist on the internet. With cryptocurrency this is different: every bitcoin is completely unique, it is not possible to copy a coin exactly. Unlike digital files such as documents or movies. Blockchain
This scarcity is possible due to the underlying technology behind cryptocurrencies: the blockchain. With the blockchain, transactions are recorded in blocks of data. These blocks are stored in multiple places. The data must match exactly, so that no fraud can be committed with data.
The blockchain technique is used for cryptocurrencies, but is perhaps even more interesting in other applications. According to some experts, the blockchain is going to change the world just as much as the internet has done.
Blockchain: more than just the engine behind cryptocurrencies How do you buy bitcoins?
Suppose you want to buy bitcoins: how does this work? Bas Wisselink of Blockchain Workspace tells De Dagwacht that there are agencies that make buying bitcoins online very easy. He mentions the examples BTC Direct, Bitonic and LiteBit. Wisselink: ‘You can simply transfer money from your own bank account.’ After the transfer, the cryptocurrency will appear in your wallet. This is a piece of software and can be compared to a wallet.
Incidentally, there are also initiatives where you do not buy bitcoins online, but directly from people. Wisselink mentions the example LocalBitcoin, where you can buy bitcoins via cash. Safe place
‘Above all, people need to think carefully and investigate where they are going to invest their money. So that they have a good feeling about who they are going to do business with’, cybersecurity expert Frank Groenewegen of FoxIT tells De Dagwacht.
The bitcoin itself cannot be hacked, but exchanges can. These are places where you can buy cryptocurrency. Because there is so much money in cryptocurrencies, exchanges are interesting targets for hackers.
According to Groenewegen, it is important that you can contact a company. ‘Would you just store or send your money if you have no idea what the company is and where it is?’ A company that is doing well in his eyes is Bitmymoney. “You can see where they are, you can call or email them.” Safety depends on the consumer
With cryptocurrency, there is a public key and a private key. The public key can be compared to a username or a bank account number. The private key is, as it were, your PIN code and so it is important that no one has access to it. Both keys consist of dozens of letters and numbers, so these are not codes that you can easily learn by heart.
That is why, according to Groenewegen, it is important that you store the keys in a safe place, but also that you have your digital security in order. Groenewegen: ‘A lot of safety rests on the consumer himself and how well you secure it yourself.’ So secure your PC, keep your PC up to date, choose a strong password or even better: use two-step authentication.
‘Banks protect your money’, says Groenwegen. This is different with cryptocurrencies. If an amount has been transferred there, the money is really gone. In the event of a hack, it is also impossible to find out where the money has gone. Print out codes or store them on a USB stick?
With cryptocurrencies, it is therefore important that you store your codes in a safe place, so that no one can access your money. One option is that you print out the public and private key of your bitcoin, but according to Groenewegen this entails disadvantages. “You can easily lose it or coffee can be thrown over it.”
According to him, a better alternative is a hardware wallet. This is, as it were, an extra secure USB stick where you store your codes. In principle, this stick is never in your computer, so hackers cannot easily access it.
You can also store your codes online at an exchange (kind of bitcoin bank). Exchanges try to take many measures to keep hackers out. In the past, several exchanges have been hacked, so pay attention to where you store your codes. How much money should you invest in a bitcoin?
Investing in cryptocurrencies is not without risks. Economist Erica Verdegaal: ‘You have a handful of winners and a lot of losers’. Also in her column on Radar, Verdegaal already announced that she is not a big supporter of bitcoins.
“What is a bitcoin worth? I cannot give the answer to that. It is determined by supply and demand. And if there are a lot of buyers, the price often becomes irresponsibly high. If the masses get nervous, the price drops and people lose money.’
If you still want to put money in bitcoins, then according to Verdegaal it is wise not to put all your savings in it: ‘It can still be useful to put a little money into something like this, so that you get a feel for it. Then it may be that you lose five hundred euros and that hurts. But then you know from that experience how it works in those markets. You have to be able to miss the money.’
