Are you getting into the digital money and wondering what is bitcoin all about? And why is everyone talking about it? Well, you are not the only one. Digital money has a lot of people confused too. In this article, we will be covering all you need to know about bitcoin.
Bitcoin is a form of money that no government or bank can control. This form of currency is digital, which means there are no actual coins, only digital coins that allow you to trade with other bitcoin accounts for a considerable profit.
The launching of bitcoin was in the year 2009 in January. The idea of it came from Satoshi Nakamoto, who is pseudonymous. This idea was listed on a white paper. For many, bitcoins may seem just like an app or one of the computer programs that allow people who own bitcoin wallets to send or receive bitcoins with them. But the truth is that bitcoin is a chain network. And it allows the authentication of the users for every trades conducted.
Incredibly, each transaction contains digital signatures and the senders’ address. That allows bitcoin consumers to have full control over all transactions. And by so doing, it prevents the occurrence of double transactions. Even more, you can produce transactions using specialized hardware and mine bitcoin yourself. At one time this was more possible but as time has gone on it has become more cost prohibitive. Most investors now purchase through cryptocurrency exchanges.
What is bitcoin worth
Since no one owns bitcoin, its growth is unregulated and unstoppable. It means its value changes continuously. However, certain factors determine the cost of a bitcoin price that is the supply. When there is an increase in the bitcoin demand, the value of bitcoin will go up, and when the market drops, the price will also decrease. The current standing of a single bitcoin is over $13,000, but this value changes every single second. The number of bitcoins in circulation is relatively low. It means inflation must be consistent with the demand level to main to stabilize the price. The price of bitcoin is still volatile because the market isn’t as strong as it should be this means it doesn’t take much to change the market, however, this may change soon.
What is bitcoin used for
There are numerous uses for bitcoins. But the commonest is buying and selling items. It may amaze you to know that individual companies accept bitcoins as payment. The companies increase in numbers daily as more and more people are becoming comfortable with it.Interestingly, there are even laws passed to allow people to do business with bitcoins. A good example is Japan. There, retailers can do business with bitcoins. And more incredibly, an Icelandic musician named Bjork decided to accept bitcoins as payments for her albums. Cool right? From how you use bitcoins, it sounds just like the regular currency. Well, in some cases, yes. But still, there are notable differences between the traditional cash and bitcoins.
One of the most striking differences is that its existence is not physical, but rather, it is digital. You don’t get to own coins and notes in dollars or whatever currency you use. It exists online. As such, transactions are more efficient.
Another difference is that bitcoin is not controlled by any specific body. Have you ever heard of money without a master? Well, that perfectly explains bitcoin. You see, the central bank is the body that controls or manages traditional currencies. For example, the Bank of England operates the coins in their state. What that implies is that this body has a say on how much money they print, they can make adjustments to the interest rates. Remarkably, they can withdraw cash from circulation if they thought there was a need to do so. Digital currencies like bitcoin, on the other hand, has nobody that manages it. The supply of this currency is decentralized. You can increase your Cryptocurrencies through a computerized process known as mining. When you do transactions, you are the miner. For each transaction you make, you get rewards that are a fraction of the bitcoin.
And if you are wondering about the integrity of the currency, then worry no more. There is a clear record of all the transactions you make in a public ledger known as a blockchain. That way, you cannot spend what you don’t have or make double transactions. The system will run your marketing through the blockchain to confirm that it is ok for you to go ahead with the transaction or make changes. Once you press send, there is no changing the details of the transactions.
Well, the blockchain technology makes it difficult for someone to hack into your account. Therefore, you can rest assure that bitcoin is safe.
It is no secret that thefts and hacks can happen. Some of these hacks were easy, and the victims could do nothing but sit back and watch. Remarkably, many of the victims are newbies who have no clue how to store their tokens and bitcoins safely. But how do you keep your bitcoins in a place that is safe from such events?
There are quite a several ways to store your bitcoins. Do you know how you keep your cards and cash in a wallet? Well, you can do the same with bitcoins. It’s just that, in this case, it is a digital wallet and not a physical one.
Although the wallets are safe, it still depends on how well you manage them. For starters, you get a private key for your wallet. And incredibly, without it, you cannot access your cryptocurrencies. In the event you lose your key, then your bitcoins are vulnerable to hacks. The same applies if someone steals your product key. That is the most significant danger with wallets. You can also lose your private key if you lose the computer with the wallet. The same applies if you experience computer malfunctions. It is common for people to lose all their bitcoins because they crashed their hard disk.
As such, together with your wallets, you should take other precautionary measures. One of them is backing up your complete bitcoins wallet. It would be best if you did this as often as possible. And never say that it is too early to start.
It is so essential that you will be able to recover your bitcoin currencies in case of malfunctions. Please back up the wallets and then store them in more than one secure location. You can then set passwords that are difficult to hack. Secure areas include a CD, a hard drive, or a USB drive.
You can also ensure that you do software updates. That way, you get better security that comes with new and better updates. If your wallet software is not updated, it is more susceptible to hacks and thefts.
Multiple signatures are also a great and popular way to protect your bitcoins. It merely implies that a single person cannot complete transactions. You and a group of other people between 3 and 5 decide in those who can transact. To withdraw or send bitcoins, you need the approval of the others in the group. That way, thefts reduce significantly.
Even so, it is not wise to store large amounts of bitcoins in a digital wallet. It would be best if you used a secure wallet. And you should also not store bitcoins in a wallet for far too long. The risk is too high. Here are two popular types of wallets for you to keep your cryptocurrencies;
- Paper wallets
Paper wallets are one of the right ways of storing your bitcoins. A paper wallet is basically a bitcoin seed written on a piece of paper. However, you will need a great deal of comprehension of cryptocurrencies to use it. But even so, generating one is not a complicated process. You can generate one online using a trusted website.
But for the sake of playing it safe, you should generate one offline. What makes these wallets so useful is how easy it is to store them. For one, paper wallets hardly take any space. Plus, if you value your anonymity, then it’s the wallet for you.
- Offline Wallets
From the name, you can tell that it is a wallet not connected to the internet. Many people refer it to as cold storage or even desktop wallets. What makes it better than an online wallet is how much safer it is.
A good example is an accessibility. With online wallets, you can access it in any part of the globe. But that means that they are more susceptible to attacks. On the other hand, offline wallets are more reserved, and you can only access them from your computer. It has a private key that you can only use it on that one device for more security.
That means that your key is safe from others online, and everyone else cannot see it. And the risks of hacks are lower. Even so, it would be best if you still were careful. The stakes are still there. Besides, if your computer gets infected with malware that can root out keys, hacks can happen, and your bitcoins will no longer be safe.
How to buy bitcoin
A lot of people interested in bitcoins have no clue on how to buy bitcoins. The first step in your journey to purchasing bitcoins is to create a digital wallet. As mentioned before, these wallets are where you store your bitcoins for future transactions.
But it would be best if you still differentiated between your public key and private key. The public access appears on a blockchain ledger as your digital signature. It is the location where you conduct your transactions. That includes depositing and withdrawing.
On the other hand, a private key is what you need to buy and sell or trade bitcoins you stored in your wallet. Without it, you cannot access your cryptocurrencies.
With that said, you can now successfully buy bitcoins with your wallet. Here are two popular ways you can use to purchase bitcoins;
- Use credit cards
Buying bitcoins has never been easier than with credit cards. It is no wonder they are the most popular payment method. Credit cards are also extremely user friendly and make transactions quicker. But like all good things, there is always a nasty streak.
One major disadvantage of using credit cards as a payment option is the number of fees charged. The costs tend to be slightly higher compared to other payment options. But all in all, it is still easy to buy with it. When you click on the tab that says ‘buy,’ you then get the option of selecting the currency you want to buy. From there, you can choose the payment method you would like to use. in this case, you choose credit cards.
But it doesn’t end there. From the payment method step, you still need to find a market to buy from 24/7. People refer to these online marketplaces as exchanges. It would help if you got a bitcoin exchange that can then connect you to the market. From there, you exchange traditional currencies for bitcoins.
- Buy Bitcoin IRA
People with individual retirement accounts often purchase and hold assets. It usually ranges from real estate, gold, or even bitcoins. It is not uncommon to hear of someone opting for a bitcoin retirement. Investors can use self-directed IRAs. That is through trustees and custodians. The rules you follow as a self-directed IRA are the same as those of the usual IRA. But you are in charge of your investments, unlike the regular IRA.
The process isn’t complicated at all. You first need to use a secure e-sign application and open a self-directed IRA. The account you create will use a rollover for funding.
You can then complete a bitcoin allotment order. Although you face a penalty for early withdrawal if you are under 59.5 years, you should consider a bitcoin retirement a good investment.
While most people are indifferent to bitcoin, others outright hate the idea, and the lucky few embrace it wholeheartedly. Still, Bitcoin is fast gaining in popularity, and many people consider it the next big thing. Well, it is always vital that you take care when investing in cryptocurrencies. It is even wiser to use legitimate platforms. On a light note, hopefully you now have the answer to the question, ‘what is bitcoin all about?’ By following the tips highlighted in this comprehensive article, you will reduce risks by a significant percentage. All in all, starting a bitcoin journey, as challenging as it may be, it could be one of the best investments you could ever make.