What is Bitcoin?
Bitcoin is a new-age currency that exists online, allowing the users investing in the digital currency to remain anonymous.
Bitcoin uses no physical currency; the public ledger shows the balance visible to everyone who uses the platform. The computing power verifies the Bitcoin transaction. Moreover, it is not backed or issued by any governmental authority or banks.
So, the question is why Bitcoin is rising in popularity in recent years? What makes it the first-ever most used cryptocurrency across the world?
“Bitcoin and the ideas behind it will be a disrupter to the traditional notion of currency; In the end currency will be better for it.” – Edmund C Moy
Bitcoin: A history in making
Bitcoin is the first digital coin/cryptocurrency. It was created by the creator of the first block in the bitcoin blockchain network, Satoshi Nakamoto. He shared about the peer-to-peer cryptocurrency, Bitcoin, in May 2008.
Disclosing his white paper, Santoshi describes the functioning of the work, mining of Bitcoins by using computer software and direct transfer to users accounts. Also, there will be no tampering from the third party.
In 2009, Block 0 was the first-ever mined Bitcoin which is called the genesis block. It includes a text which states, “Times 03/Jan/2009”. It proves the mining date of Bitcoin.
After that, Santoshi disappeared from the field, and Australian entrepreneur Craig Wright claimed himself to be Satoshi Nakamoto in 2016.
The companies and individuals who participate in the Bitcoin network and own the computing power take charge of the transaction fee and rewards in the form of Bitcoin. Thus, to facilitate instant payments, Bitcoin became the first-ever digital currency to make use of peer-to-peer technology.
The Bitcoin miners are considered to be the decentralized authority that enforces Bitcoin network credibility.
How do Bitcoin Functions?
Bitcoin is basically a blockchain of distributed digital records. Bitcoin works differently from other currencies. It is a decentralized system that sets the release date as per the algorithm.
Bitcoin is marked by the symbol BTC. So, Bitcoin is a computer file that is stored in the digital wallet on your smartphone or computer. To fully understand the processing of Bitcoin, let’s walk you through certain terms and their concept:
- Public and Private Keys: The users can digitally sign and initiate the transactions with the private and public keys. They will act as proof of authorization.
- Blockchain: Blockchain is an open-source code that runs Bitcoin by creating a shared public ledger. Every transaction made acts as a block chained together with a code that creates a permanent record for the transaction.
- Bitcoin Miners: The Bitcoin Miners help confirm your transaction within 10-20 minutes by using high-speed computers.
Using, Buying and Investing in Bitcoin
What is an alternative to bonds and stocks to diversity your portfolio? It is none other than Bitcoin. Let’s understand how you can use, buy, and invest in Bitcoin to make the most of this cryptocurrency.
You can use Bitcoins for purchasing and spending just like money. It is also used to make an international money transfer or investment purposes.
Because they are available electronically, Bitcoins are kept in the Bitcoin wallet. You can find a variety of wallets, including paper wallets, web/online-based wallets, mobile wallets, desktop wallets, and hardware wallets.
It is difficult to measure the exact number as to how many people are using Bitcoin today. But, there is one way. You can measure the number of Bitcoin wallets to get an estimate of Bitcoin users.
There are about 32 million Bitcoin wallets, as per the Bitcoin Market Journal. Besides, Bitcoin users can have more than one wallet, which means that Bitcoin users are increasing worldwide.
You can acquire Bitcoins from the three methods mentioned below:
- Buying Bitcoins: There are online exchanges that offer you many options to buy Bitcoins.
- Bitcoin Mining: Bitcoin mining verifies and adds transaction records across different networks. With every block added to the blockchain, Bitcoins are rewarded to the miners.
- Work for Bitcoins: Self-employed people can get a job in relation to Bitcoin. You can gain Bitcoins by adding a Bitcoin wallet to your site or create an internet service.
Investing in Bitcoins
You can hold and buy Bitcoin just like you do with stocks as an investment. However, the philosophy of people varies on how they should invest in Bitcoins.
First, people can purchase a fraction of a coin or coin through the trading apps to invest in Bitcoin. All you have to do is set up an account and deposit money to buy Bitcoins. Secondly, some investors use Greyscale Bitcoin Investment Trust to invest in Bitcoin.
Should You Buy Bitcoins?
By now, you have the basic understanding of Bitcoins to make a decision whether you should invest in Bitcoins or not. However, you need to take care of few things before you take the step.
Holding and Buying Bitcoin
Most commonly, people hold and buy Bitcoins with the hope that their value will increase. However, you should not invest in more than you cannot afford to lose. So, make sure you only buy from reputable exchanges that have credibility.
Not regulated by any Agency
Just as you invest in the stock market, there is no regulated agency for Bitcoin. That’s the reason the price keeps on fluctuating.
Mining Bitcoin can be an expensive deal
Mining Bitcoin is expensive unless you know how to use the computer software that can calculate 64-digit codes with ease. Also, you will need to understand the cost of Bitcoin because it fluctuates regularly.
If you find the prices are increasing, they can decrease suddenly.
The anonymity that Bitcoin carries has made the cryptocurrency quite popular among people. That’s why people use Bitcoin for everyday purchases using Bitcoin wallets or gift cards. It is also one of the mainstream investment options.
So, Bitcoin is the cost-effective method when it comes to storing information. Major Banks and companies are expressing interest in the blockchain industry. Even PayPal has announced that it will allow customers to sell and buy Bitcoins.