Bitcoin: A Brief Background And Guide

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Digital currency is a relatively new market, and as such, it does seem to maintain some mystery for a lot of people. Unfortunately, cryptocurrencies like bitcoin only ever seem to reach the mainstream media for negative reasons like hackings. This alone is enough to put off most people. However, they simply aren’t getting the whole story. To gain a better understanding of cryptocurrencies like bitcoin, you need to start at the beginning. So, let’s get started.

How Does Bitcoin Work?

In the simplest terms: bitcoin is essentially digital money- it does not have a physical form. It is traded online; there are no banks; instead, it operates via a global network. This should mean that transactions are anonymous as there are no central points of transaction, but this is not the case. There is a common record of all transactions, which is called a blockchain.  This works digitally through a digital ledger, meaning the record is one of a kind.

How Old is Bitcoin

The creator of Bitcoin used a pseudonym, the person or persons called themselves Satoshi Nakamoto. However, they have never been identified, although many people have tried. Nevertheless, bitcoin as an idea can be traced back to a 2008 piece where it was first mentioned in an email subscription for cryptographers. The first program was launched the following year, and it has steadily increased in popularity since then.

Bitcoin Today

As mentioned above, bitcoin has gotten more popular as time has gone on. However, it is still very much in use, and it is incredibly common on cryptocurrency trading sites. Users can buy, sell or trade their bitcoin. However, to do so, you first need an online wallet which is used to keep your digital currency safe and secure. It keeps out unauthorized users. The wallet contains all of the information that you need to send and receive bitcoins. Depending on the service you use, you may be able to set up a digital wallet with relative ease. For example, you can get a complimentary BTC wallet from Paxful, which makes the whole process a lot easier.  These wallets help store your currency and protect it.

Bitcoin Vs. Traditional Money

The value of traditional money can be incredibly precarious. Think back to the great depression or any of the other financially and mentally exhausting recessions that different countries have been subject to. While the money remains the same, its purchasing power is greatly diminished as products in grocery stores, or entertainment activities cost more and more money. Bitcoin, on the other hand, is different. The supply is carefully monitored, bitcoins cannot be created at will. There is a finite number of them that protects their value.

Investing in Bitcoin

Bitcoin can be an incredibly lucrative asset when approached correctly. However, it can also be an extremely risky and volatile. As with many investments, it can go through cycles where it ebbs and flows, which means that depending on the day, you could make obscene amounts of money or lose big. During its humble beginnings, a bitcoin was worth around $1; however, over the next ten years, it skyrocketed, reaching a high of $20,000 before sharply crashing to $3,000 before ultimately settling at $8,000. It is incredibly hard to predict as their worth depends entirely on what other people are willing to pay for them.

Bitcoin Mining

Bitcoin mining is a process. Users compete to add a new group of transactions or block to the transaction record or blockchain. It is a popular use of bitcoin indulged in by users all around the world. In order to compete, a user needs to have specialist equipment or mining hardware which often needs to be purchased. Unfortunately, the planned obsolescence that these pieces of hardware are made with does mean that it is not always the most profitable activity when it comes to bitcoin. However, those that choose to compete do so for a reason. When a new block is created and published, the publisher of said block is rewarded with twelve and a half bitcoins. They may also receive small fractions of bitcoins for every transaction too which helps to incentivize minors. As with most competitions, the more people become involved, the harder it becomes. The block reward is also routinely decreased, too, which means that eventually it Bitcoin mining won’t be worth it anymore.

Are Cryptocurrencies Trustworthy?

This is a difficult question to answer. There is no one simple answer. In truth, as with most new technologies, there are higher quality and lower quality options. This can make it difficult for ordinary people to trust cryptocurrencies because how are they meant to tell the difference? It can be difficult to work out which cryptocurrencies genuinely have potential, are technical novelties, clones or even scams. There has, on occasion, been some programs that have turned out to be pyramid schemes, notably the One Coin scandal. In all honesty, it is hard to recommend which cryptocurrencies to spend your hard-earned money on. It comes down to your personal preference, how much you have to spend, the risks you’re willing to take, and the amount of research you have done into the credibility of your options.

In The Future

As more and more elements of our daily lives go digital, it is not unrealistic to predict that cryptocurrency will become more popular. Some people believe that it could one day overtake cash or credit as the primary form of payment. However, this is likely a long way off. It would take years for it to become more widely adopted, and it would have to be subject to a lot of technical and legal reforms first. Nevertheless, cryptocurrencies will likely continue to evolve, which could mean a number of things for the financial world.

In Conclusion

Bitcoin has come a long way over the last decade and a half. It holds a lot of potential, which is precisely why it is so hard to accurately predict where it could end up. The truth of the matter is that investing in Bitcoins could change your life. How well you prepare beforehand determines whether it would be for the better or the worse.

Also Read: Best Crypto Staking Platforms



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