Bitcoin expert Layah Heilpern shares her pro tips on what you need to know about the elusive currency…
For those in the know, Bitcoin is a revolutionary form of currency set to change everything we know about money and the way that it operates and anyone not getting involved is missing the boat.
For the rest of us, it’s something on our radar that seems inaccessible and complex.
So how do you know where on earth to start when it comes to cryptocurrency and dipping your toe in it? We asked the woman who has literally written the book on it.
Here’s your beginner’s guide with the help of crypto investor and author of Undressing Bitcoin, Layah Heilpern.
What is cryptocurrency?
“All cryptocurrencies are different, depending on their technology,” explains Heilpern.
“Some are decentralised, others are centralised and this is an important distinction.
“Decentralised networks are what blockchains – a string of blocks which contain data, usually transaction confirmations – should strive to be, as it makes them more ‘democratic’.
“Central banks and governments across the world are creating their own ‘cryptocurrency’, known as a central bank digital currency or CDBC.
“These are technically cryptocurrencies given that they are built using blockchain technology. However, the nodes and miners will be centralised.
“This means governments have the ability to control the network. They can make changes to the monetary policy as they please. This poses an obvious risk.
“Again, ideally we want money that is built on a decentralised network, where decisions are democratised.
“But on a surface level cryptocurrencies are simply digital, programmable money which lives on the blockchain.
“Bitcoin was the first cryptocurrency created by an anonymous person or group of individuals that goes by the pseudonym Satoshi Nakamoto.
“It’s a decentralised digital currency which lives on the Bitcoin Network and the transactions are secured by computers all over the world.”
Can you actually make money from it?
“The entire crypto market is very volatile so by its very nature you can make money very quickly,” says Heilpern.
“But with great volatility and great returns also comes great risk. As quickly as you can make is as quickly as you can lose.
“Personally, the only cryptocurrency I look at as a long-term investment is Bitcoin because of its unique underlying technology.
“Because of Bitcoin’s high price, making money can take time. For me it’s the safer long-term bet and hedge against inflation.
“Cryptocurrency is a very broad term and there are currently more than 8,000 different coins out there, which all have different underlying technology.
“Some have a limited supply – which is good– but some don’t. Some are more decentralised than others, and some are secured using more reliable technological algorithms.
“Many of these factors will determine whether it is more reliable and many of these coins are technically still ‘start-ups’.
“It’s imperative you do your own research to determine how reliable the coin is.
“In my opinion Bitcoin is the most reliable cryptocurrency out there due to the sound math and code that the currency is based on.”
How do you get started?
“If you want to just understand the subject there is plenty of beginner-level Bitcoin and cryptocurrency information on YouTube,” says Heilpern.
“I’ve also just launched my very first book called Undressing Bitcoin, which is a very useful, accessible and relatable beginner’s guide.
“It breaks down the problems with the traditional financial system, ultimately demonstrating why the case for Bitcoin as an alternative monetary system is so imperative.
“In terms of buying Bitcoin, Luno is a great and simple place to start.
“Because the cryptocurrency industry is so new and technical often the user experience doesn’t match that of the traditional world.
“Using the different applications can be so difficult, that they become barriers to entry in and of themselves.
“Luno solves this because its user experience is slick, elegant and efficient. It’s an incredible simple way for beginners to get involved.
“An added bonus is that they’re also giving you £10 of free Bitcoin at the moment if you sign up with the code Stylist10.”
Who or what controls cryptocurrency?
“It depends on the cryptocurrency,” explains Heilpern.
“All coins have different underlying technology which determines these specific rules.
“Bitcoin, for example, is absolutely decentralised with no central authority or CEO or board in charge. It is similar to a democracy whereby the network is run by the people and for the people.
“Bitcoin in my opinion will replace gold as the world renowned store of value and hedge against inflation.
“There’s a lot of development happening on top of the Bitcoin network at the moment which aims to make it a currency you and I can transact in instantly. Right now there can be delays and it can become a little expensive.
“Essentially, Bitcoin is here to stay and whether it will replace the dollar, and what kind of place it will have in society in decades to come only time will tell.”
What should you ask yourself?
“Before you dip your toe in Bitcoin you should first of all be asking yourself how much you’re willing to invest,” says Heiplern.
“Never invest more than you can afford to lose.
“There’s a term called Dollar Cost Average (DCA) which means buying a small sum every week or every month regardless of the volatility.
“Therefore you are averaging yourself in while keep the risk as low as possible. You should also consider the following questions:
- Do you know why you want to invest?
- Do you understand the risks?
- Can you financially afford to be patient in case the market crashes?
- Do you understand the technology behind the project?
- Are you a trader or investor?
- If you’re a trader, are you experienced?
- If you’re a long-term investor, can you handle watching 50% of your money lose value?
“Creating long-lasting wealth is for everyone. I believe that everyone should be able to financially support themselves, and this is one of the aspects I find so attractive about cryptocurrency.”
Start your Bitcoin journey with the help of Luno, a pioneering platform making cryptocurrencies easily accessible to everyone. Get £10 free Bitcoin when you sign up with the code Stylist10. For more Bitcoin tips and tricks follow Layah Heilpern on Instagram.
Cryptocurrency is a high risk investment which is not regulated in the UK. The value of cryptocurrency can fluctuate and is not guaranteed. You may lose the capital you invest, without recourse to financial regulators.