I have spent some of my Christmas break trying to get my head around the way in which the digital currency Bitcoin works, for I have heard of quite a number of people who have become millionaires simply by investing in it.

I do have to say that when I started researching the way that Bitcoin is mined, my eyes stared to roll and I did get so overwhelmed with information, and trying to understand the mathematical equations people have to perform to discover Bitcoin that I wished I hadn’t started to research it!

I did eventually give up on ever trying to turn my hand at mining Bitcoin, and have decided that those much more knowledgeable and technical that me can continue to do so with having to worry about me joining their ranks!

However, my research did lead me to the way in which anybody can buy Bitcoin, and all that entails me or for that matter you doing is to first download a digital wallet onto a computer or mobile device, and then set about finding something known as a digital currency exchange at where to buy any unit of Bitcoin required.

Bitcoin is actually a digital currency that is not sold in one unit, that being a single Bitcoin, you can buy much smaller units of Bitcoin if you so desire, which at today’s value is a relief for its value has become huge in recent weeks.

You then simply place an order at your chosen digital currency exchange for the amount of Bitcoin you wish to purchase, and will then be quoted a price on the spot that you will have to pay for it.

But, and this is a very big but, you are going to be faced with paying fees and charges dependent on the quantity of Bitcoin you wish to purchase and also the payment method you choose to use to buy Bitcoin with too, and different exchanges can and most certainly do impose different fees and charges on their customers.

Your Bitcoin will then be sent to your digital wallet which is where you store it. You can then choose to hold onto your Bitcoin until the price increases and then use the digital exchange to turn it back into your chosen fiat currency or you can actually buy goods online with it or pay for services online too.

Be aware though when you do choose to sell Bitcoin at a digital currency exchange you are once again going to have to pay all manner of fess and charges and there can often be a delay in regards to when it will be exchanged.

So the exchange rate you think you are getting when you sell it may not be the price you get, subject to when the digital currency exchange processes your order!

The only way you are going to make a profit from Bitcoin is to buy it and then wait until such a time that its value increases, and Bitcoin is a very volatile digital currency, so there are no guarantees if and when its value will increase.

Published by Sara O'Connell

A passionate photographer from Arizona, Sara enjoys art and culture.