Bitcoin: what is it, and how does it work?
Without a single administration or central bank, Bitcoin is a decentralized digital money that can be transmitted directly between users on the peer-to-peer Bitcoin network. Blockchains are openly accessible distributed ledgers where transactions are recorded and cryptographically validated by network nodes.
Because there are only 21 million of them, bitcoin is unique.
Bitcoin’s enigmatic creator Satoshi Nakamoto arrived at that figure by thinking individuals would find, or “mine,” a predetermined number of blocks of transactions every day.
An elegant answer to the issue of developing digital money without a centralized authority was Nakamoto’s plan. However, it left a gap that encouraged double-spending.
The same Bitcoin may have been sent by an attacker using their copy of the blockchain.
Nakamoto was clever enough to solve this problem as well. He proposed that each transaction include a small fee for the miner who processes it.
This way, miners are incentivized to process transactions and keep the network running smoothly. Nakamoto also designed the system so there would be only 21 million bitcoins in circulation.
This system is what we know as “mining.” Miners are rewarded with bitcoins for processing transactions and keeping the blockchain secure.
Today, you can buy and sell bitcoins on exchanges or use them to buy goods and services. But because governments do not regulate bitcoins, there is no guarantee that you will be able to get your money back if you spend it on something that turns out to be a scam.
How to Buy Bitcoin
Buying Bitcoin is still okay, but you’ll need to be careful. Here are a few things to keep in mind when purchasing Bitcoin:
1. There are different types of exchanges, so make sure you’re using the right one. If you’re looking to buy Bitcoin with fiat currency (USD, EUR, etc.), you’ll need to use an exchange that supports that.
2. Make sure you have a good wallet to store your Bitcoin. Many different wallets are available, so research to find one that’s right for you.
3. Be aware of the risks involved in buying Bitcoin. Like any investment, there’s a risk of loss, so only invest what you can afford to lose.
4. Keep an eye on the price of Bitcoin. It’s volatile so the price could go up or down.
5. When you’re ready to buy, enter the amount of bitcoin you want to purchase and complete the transaction.
If you follow these tips, you can safely buy Bitcoin and enjoy the benefits of this digital currency.
It was a wild ride for Bitcoin investors in 2017.
The price of digital currency started the year at around $1,000 and surged to nearly $20,000 by December. Since then, it has fallen sharply, trading at around $11,000 as of February 2018.
Despite the recent price drop, some investors are still bullish on Bitcoin. Some believe now is a good time to buy Bitcoin, believing the price will rebound.
Here are three reasons why you might want to buy Bitcoin now:
1. Bitcoin is a scarce asset
Bitcoin is often called digital gold because it is a scarce asset. There are only 21 million bitcoins that will ever be created, and about 16.7 million of those have been mined as of February 2018.
This limited supply is one of the reasons why some investors believe that Bitcoin could potentially increase in value in the future. If demand for bitcoin increases but the supply remains the same, the price of bitcoin would theoretically increase.
2. Bitcoin could be a hedge against inflation
Another reason some investors are bullish on Bitcoin is that it could be a hedge against inflation.
As we’ve seen in countries like Venezuela, Argentina, and Zimbabwe, inflation can cause a decrease in the purchasing power of a currency. This can lead to losing confidence in a government and its currency.
Bitcoin, on the other hand, is not subject to inflation because there is a limited supply. This means that, in theory, you could use Bitcoin as a store of value, and it would maintain its purchasing power.
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3. Bitcoin is becoming more mainstream
Bitcoin is also becoming more mainstream. In 2017, we saw a number of major businesses start to accept Bitcoin as payment, including Microsoft, Overstock.com, and Expedia.
We also saw the launch of several Bitcoin-based financial products, including the Bitcoin Investment Trust, an exchange-traded fund that allows investors to bet on the price of Bitcoin.
All of this mainstream adoption is helping to increase confidence in Bitcoin and could lead to even more adoption in the future.
Bitcoin Risks and Rewards
Buying Bitcoin has been making headlines lately as its price has soared to all-time highs. But even as more and more people are taking a chance on this new asset class, there are still a lot of risks involved. Here are Three of the biggest risks and rewards of investing in Bitcoin.
Risk 1: Volatility
The biggest risk when it comes to investing in Bitcoin is its volatility. The price of Bitcoin can swing wildly from day to day and even from hour to hour. This makes it very difficult to predict where the price will go, and it can make it tough to hold onto your investment for the long term.
However, the volatility also presents a big opportunity for investors willing to take a chance. If you buy Bitcoin when the price is low, you could make a very large profit if the price goes up.
Risk 2: Security
Another big risk when it comes to Bitcoin is security. Because Bitcoin is a digital asset, it is vulnerable to hacking and theft. There have been a number of high-profile thefts of Bitcoin, and if you are not careful with your security, you could be the next victim.
However, there are some ways to protect your Bitcoin from theft, and if you take the necessary precautions, you can minimize your security risks.
Risk 3: Regulation
Another risk to be aware of is regulation. Because Bitcoin is a new asset class, any government has not regulated it. This means there is a lot of uncertainty about the future of Bitcoin. The price could be greatly affected by any new regulations that are put in place.
However, many people see regulation as a positive thing. Regulation could legitimize Bitcoin and make it more mainstream. This could lead to more people investing in Bitcoin and increasing the price.
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