Bitcoin has been steadily gaining popularity in recent years. This is largely because its price fluctuates so wildly, giving savvy investors the chance to take advantage of any dips or spikes.
But what exactly is Bitcoin? And how does it function as a currency and investment vehicle? Here are some Bitcoin 101 facts you should know before investing your hard-earned money into this digital asset.
Bitcoin is a decentralized and digital currency. It may be difficult to conceptualize at first because it’s not tangible, but the coins do exist in cyberspace as encrypted data on people’s computers all over the world. Bitcoin was originally designed with anonymity and security in mind.
Decentralized Currency
Bitcoin is a fully decentralized currency, with no control over it by governments or centralized banks. Some nations have outright prohibited the use of Bitcoin.
Bitcoin is a digital currency that can’t be affected by inflation, deflation or other government policies. Bitcoin has an unchangeable supply in which only 21 million coins exist; this makes it akin to gold and more valuable than fiat currencies with higher production rates.
Bitcoin’s Technical Foundation
Blockchain is the groundbreaking technology that powers Bitcoin. Blockchain seamlessly records the history of bitcoin transactions as they happen, which means that anybody has access to it. Blockchain is a public ledger system with an expanding chain of confirmed transaction data and will only grow in size in the future.
The blockchain is a great way to secure transactions, but it can be frustrating if you make an error. Once the transaction has been verified and confirmed there’s no going back.
Experts have accused the Bitcoin network of being vulnerable to exploitation. The fact that thousands of computers validate it means hacking a blockchain can be nearly impossible because hackers would need more computing power than all nodes in order to compromise the system.
Bitcoin Mining
Cryptocurrency miners are often called the “gatekeepers” of a digital currency system. They use their high power computer equipment to decipher complicated cryptographic codes that confirm transactions made by others in order to authenticate them and validate ownership.
Bitcoin miners are rewarded with Bitcoins for the work they do in their profession. These coins are valuable to say the least and mining may be a very profitable endeavor but there’s an issue with them- when new Bitcoins are created or “mined” as they’re called, it shrinks that number available for everyone else.
Bitcoin has risen in value, yet mining Bitcoin is not as profitable. With the rise of cryptocurrency around the world and its increased demand for processing power, people are turning to cheaper alternatives or using their computers less because it costs too much money. Mining requires high-powered computer equipment that would be running 24/7 if you want any chance at success – which comes with huge electricity bills.
Where To Get Bitcoins?
Getting your hands on Bitcoins is easier than ever before. You can purchase them with a credit card, PayPal account or bank transfer using Coinbase. Your Bitcoin is stored in your online cryptocurrency wallet. There are various types of wallets to choose from, such as the desktop wallet or paper type.
Bitcoin and other cryptocurrencies are quickly becoming one of the most talked about topics in today’s world. They seem to be at the forefront of people’s minds with headlines from all over the internet talking about this new form of currency that is taking over financial markets across the globe.
This Bitcoin 101 guide can help you to better understand the complex and volatile nature of Bitcoin and cryptocurrencies in general. If you are looking for a new way to make money, after doing your homework, you may want to consider investing or trading in this new type of digital money.
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