Bitcoin had experienced a tremendous rise in popularity, especially after endorsements from tech mogul Elon Musk who publicly supported it on his social media platform.
Elon's comments resulted in the value of Bitcoin multiplying drastically. Consequently, the cryptocurrency worth $4,974.64 is now worth a whopping $37,309.82
Following widespread acceptance, legitimate MNCs began supporting the cryptocurrency and made it the most expensive currency on the planet.
As the popularity of Bitcoin was skyrocketing, the bank of Singapore also made its contribution by predicting that Bitcoin could replace gold when in-store value.
However, with the wealth of admirers and praisers, there are also some naysayers and haters of the blockchain-dependent tender.
In October, Andrew Bailey, the head of the Bank of England, who obviously has substantial influence over the financial market, claimed that Bitcoin made him "nervous."
In this guide, we will be discussing all the things you should know about the most famous cryptocurrency on the planet, Bitcoin.
What Is Bitcoin?
Bitcoin is the most expensive of all cryptocurrencies. It is a decentralized digital currency that can be sold, bought, or transferred without the intervention of any intermediary such as governments or banks.
One of the creators of Bitcoin, Satoshi Nakamoto, called Bitcoin a system of electronic payment that is not based on trust but cryptographic proof.
Moreover, Bitcoin transactions are incredibly difficult or almost impossible to fake because they are all recorded on a public ledger accessible to everyone.
As a result of this, transactions cannot be reversed either. And this is all because of its decentralized nature; no government has authority over it.
Additionally, there is nothing that guarantees their worth other than the proof of the system. Therefore, it is safe to say that Bitcoin is as mysterious as it is valuable.
What Is It Worth?
The worth of a Bitcoin is determined by nothing else but people who believe that it is of tremendous worth.
Since its inception, Bitcoin has been experiencing an increase in value. And because its growth is dependent on people and their perceptions about it, it keeps on changing.
In the past, it was sold at $150, and now it is worth more than $50,000 and expected to increase in the future (or decrease, you never know).
However, the interesting thing about Bitcoin is that they have a limited supply. Unlike all the other cryptocurrencies, there is not an infinite number of Bitcoins. The amount is limited to 21 million.
As a result, it is expected to grow more and more in value, especially when huge organizations with tremendous assets take great interest in it. And unlike infant coins like Tether, Bitcoin is near peaking.
Other than that, institutional investors are calling it digital gold and using it to hedge against inflation.
History Of Bitcoin
Bitcoin was launched in 2009 as the first cryptocurrency. However, the blockchain concept was there for quite some time, and it has been discussed in academic papers for years.
And then, a paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" was found, and cryptocurrency came into existence.
The concept behind Bitcoin and Cryptocurrency was to have a mode of electronic payment that doesn't require any trusted third party.
The transaction is done between two parties without the intervention of any intermediary.
Bitcoin was developed by a mysterious author who used Satoshi Nakamoto as a pseudonym. He introduced the open-source technology on a white paper, and since then, there has been no stopping bitcoin.
Bitcoin is a concept that is getting more and more hype with each passing day. But, unfortunately, many people believe that all of this hype will end soon, ending in a disaster.
However, big names like Microsoft, PayPal, Whole Foods, and more think otherwise. Hence, they have begun accepting Bitcoin as payment.
How Does Bitcoin Work?
If you're wondering, "how does bitcoin work," first, you need to know that it is not a physical currency; it is a computer file stored on a smartphone or a computer.
To grasp the bizarre concept of cryptocurrency, you must first understand these things:
Bitcoin is based on an open-source technology known as blockchain. Blockchain creates and maintains a ledger that is accessible to the public.
To simplify, when a transaction is made, it becomes a block; that block gets linked to a chain of codes.
This creates a record that is accessible to the public and is permanent. Therefore, Bitcoin and all the other 5000 cryptocurrencies – including Ethereum – rely on blockchain technology.
Private And Public Keys
There are two ways to access a Bitcoin wallet:
- Private key
- Public key
Both of these keys are required to open the wallet and perform Bitcoin transactions as they are required to authorize the transactions.
Bitcoin Miners are people who use high-speed computers to unearth bitcoins. They are members of a peer-to-peer platform that is used to handle vast clusters of transactions.
Then, these collections of transactions are bundled together into blocks following a cryptographic calculation.
When the transactions are verified and transformed into a blockchain, the miners get rewards in the form of Bitcoins. In this way, new coins are created.
However, there won't be more than 21 million Bitcoins ever. Therefore, the mining process gets harder every year because miners stand to make lesser in value as more BTCs come into circulation.
Mining is the process that maintains the Bitcoin network and also how new coins are brought into existence.
It used to be an excellent way to create Bitcoin as the rewards were instantly distributed. But now, it takes months or even more to get a single Bitcoin.
And unfortunately, the time duration is going to get longer and longer as more and more Bitcoins are mined.
Therefore, experts claim that the mining expense has exceeded the eventual value of a Bitcoin. Hence, this method is not as good as it used to be.
Ways To Get Bitcoins
Other than mining, there are two more ways to get bitcoins.
You can buy Bitcoins using cash. Unfortunately, there are countless tales of people selling their Bitcoin when it wasn't of much value. Their regret-filled videos make for great entertainment!
According to some reports, a guy paid for two pizzas using Bitcoins, and now his forsaken BTCs are worth enough to buy a small house.
Those two pizzas ought to be heavenly delicious as they were probably the most expensive pizzas on the planet.
Sell Goods and Services In Exchange Of Bitcoins
Just like that pizza maker, you can also sell your things or deliver your service in exchange for Bitcoins.
However, considering the exponentially increasing price of cryptocurrency, it is doubtful that one would pay with Bitcoins. However, an exception could be made for trades involving lucrative assets.
Contrary to common belief, Bitcoins are easy to store. Digital wallets are used to store most cryptocurrencies, and they are accessible through smartphones or computers.
So whether you have a Cardano or a Bitcoin, here are the two types of digital wallets for storage:
In the case of Hot wallet, your Bitcoins are stored with a trusted provider. These are accessible through a smartphone application, a desktop, or a laptop.
In Cold wallets, Bitcoins are stored in an encrypted storage device. It could be anything, a portable hard drive, a USB thumb drive, or any other storage device with enough storage capacity.
The main difference between the two types of wallets is the requirement of the internet. A hot wallet needs the internet to run the cloud storage so that you can access your Bitcoins.
On the other hand, Cold wallets are used to access Bitcoin storage without going through an internet connection.
Why Is Bitcoin In Demand?
The reason Bitcoins have stunned the financial world is because they are not regulated like physical currency and banking policies. Hence, governments and institutions don't have a claim over them.
More than that, there is no involvement of banks in the transaction of this currency. This feature allows people to use Bitcoins anonymously. Although, the transactions are publicly viewable.
However, it is impossible to know which account number is who's unless someone discloses theirs.
How Secure Is It?
Since each transaction is recorded publicly, no matter how small or big, there is almost no chance to fake or reverse a transaction.
More than that, due to its unique nature and public access, it is almost impossible to spend Bitcoins that you don't own.
However, the only thing about bitcoin is that there are no backups for these. So once you lose the pen drive that holds your Bitcoin, prepare yourself for a heart attack because you just lost them forever.
Once a Bitcoin is lost or deleted by mistake, there is no way on Earth to get them back.
Unfortunately, there have been many cases of people losing their Bitcoins. Either they forget or lose the USB drive, forget their cloud password, or someone has hacked their online storage account.
Because of these and more reasons, many people are still a little skeptical towards Bitcoin and wouldn't want to invest their hard-earned money in something intangible.
How To Invest
For those whore are adventurous and are not afraid to take a little risk, there are mainly two ways of investing in Bitcoin:
You can visit numerous investment platforms that offer the feature to invest in Bitcoin and other cryptocurrencies. First, however, ensure that the platform or website is authorized and legitimate.
The second option is you can set up an account on reputable and trusted cryptocurrency exchanges. In the past, these crypto exchanges weren't too reliable, and most of them were considered shady.
But now, since cryptocurrencies are a big thing, they are authorized and regulated by state law. Therefore, some of the famous cryptocurrency exchanges are:
Other than that, you can also check out financial apps to buy and bitcoin or other top cryptocurrencies to invest in. Some of the legit financial applications include:
- Cash App
The only drawback with these apps is that they don't offer most cryptocurrencies, but it doesn't make any difference if you are in for bitcoins only.
We hope that the above information will be sufficient to keep you going with Bitcoin investment.
However, if you are still hesitant and unsure whether to go all in or play it safe, we recommend visiting Superprof.
Superprof has a massive number of financial experts that will guide you into the exciting world of financial investments and provide you with essential tips and tricks of investment.
So whether you want to learn about Binance Coin, Ethereum, or Bitcoin, you will find a professional at Superprof to walk you through the process.
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