While you probably already heard or read about Bitcoins before, the truth is that if you’re like most people, you still haven’t quite figured out what Bitcoins are or what they do. So, with this in mind, we decided to write this post to make sure that you know all about Bitcoins and why you just keep listening about them all over the place.
What Is Bitcoin?
Simply put, Bitcoin is a digital currency that was created back in 2009 by Satoshi Nakamoto. Even though this is known to be a pseudonym and no one knows exactly who this person this up until now, the reality is that he was able to create Bitcoins that are being used more and more often for many different things.
One of the main differences between Bitcoin and a real currency like the US Dollar or the Euro, for example, is the fact that Bitcoins use a decentralized market. This means that there isn’t one entity that regulates all the payments that you do. However, all the payments need to be verified by everyone who belongs to this network. This assures that all the payments are valid.
One of the things that tend to confuse many people is when they hear about cryptocurrencies. The truth is that Bitcoin was the first cryptocurrency to appear. However, after so many years, other cryptocurrencies have been appearing on the market. One of the most famous ones is Ethereum.
How Does Bitcoin Work?
According to Nakamoto, there shouldn’t ever be a third entity or party to verify any payment made. So, instead of this, Bitcoin uses a system called blockchain. All the payment transactions are recorded on the respective blockchain which is powered by users who offer their computer power. By doing this, these users are then rewarded with the newly created Bitcoins. This activity is known as mining.
In order to create Bitcoins, the user needs to generate blocks on the network. However, there is a limit to the creation of Bitcoins to make sure that the value just can’t be diluted. This value is right under 21 million Bitcoins.
How Can You Get Bitcoins?
Even though you may think it’s complicated to get Bitcoins, the truth is that it couldn’t be any simpler. You can buy Bitcoins directly from special websites that are called “exchanges” where you can easily swap them by any other regular currency. or you can also buy them directly from individuals.
In case you have a website, for example, one of the payment methods that you can have may accept Bitcoins. This will also allow you to get Bitcoins.
What Are Bitcoin Wallets?
Just like you have a regular wallet to store your cash when you own Bitcoins, you want to make sure that you store them properly. And for this, the best option that you have is to have a Bitcoin wallet which is a specially designed program with this goal. Depending on the Bitcoin wallet that you choose, you may access it through your regular PC or through an app.
What Are Bitcoins Used For?
One thing is for sure – Bitcoins have changed a lot in the last few years.
When most people started hearing or reading about Bitcoins, this digital currency was mostly being used for illegal activities that included money laundering, cybercrime, and drug dealing. After all, Bitcoins are untraceable since there is no third party to verify any payments made. However, things have changed a lot. The truth is that you can already see some websites accepting payments in Bitcoins as well as some retailers across different countries, especially the UK and the United States. Bitcoins are not only accepted by online businesses anymore. More and more offline businesses are accepting Bitcoins as well.
So, when you have some Bitcoins and you are considering buying a product or service, you can always check out if the company accepts Bitcoins.
However, some people decide to simply keep Bitcoins. This is more like an investment than using Bitcoins for paying for a product or a service. For these people, holding Bitcoins is just the same as holding a stock, for example.
Should You Invest In Bitcoin?
Just like we said, many people are simply buying Bitcoins to hold them and to later sell them for a profit. But should you do it?
The final answer is totally on you because you know yourself better than anyone. One thing that you need to keep in mind is that investing in Bitcoins is a risky business just like when you invest in Forex or in the stock exchange. There is always the possibility of losing all the money you invested in, in the first place. However, we also can’t help noticing that even though the Bitcoins chart has its ups and downs just like any other currency or stock, it can help you make some money.
The best thing you can do is to take a look at the chart. In 2013, for example, the Bitcoin went from a few dollars up to more than $1,100 in just a few months. After being quiet for a few years, this year Bitcoin decided to show us that t is still alive and peaked at about $4,200. However, in the next few days, it took a severe dive.
Ultimately, investing or not investing in Bitcoin is just a personal question that each one of us should answer. We already told you about the risks as well as about the rewards.
As you can see, Bitcoins aren’t really that hard to figure out. The truth is that they are just like any other currency that you know with some differences. The reality is that the fact that Bitcoins are traded using a decentralized market makes many people afraid of losing their money. However, what Nakamoto did when he created this system was to make sure that all the payments were verified within this decentralized system. This actually ends up helping Bitcoin holders trusting each other and making business together. In addition, the fact that there are no fees associated with the transactions make the Bitcoin market very appealing.
While back in 2009 Bitcoins tended to be used mostly for illegal activities, the reality is that now, more and more businesses, online and offline, are starting to accept this digital currency as a form of payment just like they accept cash, Paypal, credit cards, or debit cards.
Author: Editorial staff of 70 trades reviews blog