I am sure you have came across the term bitcoin or cryptocurrency maybe when bitcoin value rised above $10,000 in 2017 or from famous industry experts ,CEO’s and investor’s giving there opinion on bitcoins. Anyhow, if you’re not aware about it then that’s not a problem here because by the end of this post you will have a overview about Bitcoins.
It all started in 2009 when a mysterious individual or group created Bitcoins under the name of Satoshi Nakamoto and no one knows the whereabouts of Satoshi Nakamoto.
The basic idea of Bitcoins is to create platform for transactions. But why ? We have banks right ?
They keep our money and perform transactions for us.
To start with, everyone is well aware how our banking system works. It takes deposits and lends the money we deposit to borrowers. Nothing wrong with this because this helps to maintain liquidity in economy. When we look back at the year 2008, economy was under the label of global financial crisis due to careless lending of money by banks in US. This led to collapse of Lehman Brothers – one of the biggest bank at that time and this effected world economy . However in the following month US bailed out Lehman Brothers.
Further fiscal policies are made to support bank and prevent them from collapse of financial system.
So conclusion is banking system can be unfair and unreasonable for us. Bitcoin comes in the picture as an alternative to traditional financial method. It offers peer to peer transaction platform where no third party is involved. Which means less time consuming, no extra charges by banks and more secure because no third party will have our personal information.
Further, it also shares feature of fiat currency.
It is divisible -The smallest unit of Bitcoin is hundredth of millionth Bitcoin which is also known as satoshi.
It is limited- There are only 21 million Bitcoins that will ever exist in this world. From latest reports 17 million bitcoins out of 21 million are mined till date and it will take more then 122 years to mine all the 21 million bitcoin. And acceptability ?
Obviously not everyone accepts Bitcoin. However, you can use bitcoin on major retailers like Expedia, Newegg and even Overstock. Recently firms such as Microsoft, Virgin Airlines, WordPress and Subway started accepting it as a form of payment. So go ahead buy air tickets and your meals with bitcoins if these firms allow you to use bitcoin in your country.
But to buy these services you must have some bitcoins in your hand right ? So this takes us to how to get started with bitcoins.
No matter how complicated the Bitcoin system may look , buying a Bitcoin and getting involved in transaction is not at all complicated.
Infact it’s quite simple to get started with online platforms.
For buying bitcoins you can use koinex, coinsecure ,zeppay, unocoin and the list is long.
You can get started with them by completing eKYC verification.
Some of them have mobile app as well and its suggested that you download them from the official site to be safe from scams.
To store them you use wallets. Wallets are similar to your digital payment account – you can receive payments ,store them and send payments to others.
Bitcoins wallet provides it’s user with private keys which gives access to their bitcoins. So its important to keep private key safe.
There are different kinds of Bitcoin wallet and the safest one is hardware wallet because the generated private key remains offline. The only setback is that its not free of cost like other wallets so if someone is really serious about security then hardware wallet is for them.
Online wallets also known as hot wallets are not so secure wallets in the list. Hot wallet store and generate private keys on internet connected device. Hot wallets are available for Android , IOS and even for your desktop.
The main thing in handling your wallet is that you’re responsible for your bitcoins as its not supported by any authorized institutions there’s no one you can go to when your bitcoin is stolen and of course don’t miss out that even if transaction are secured your private keys are prone to hacking.
If you’re confused about the functions of wallet and exchange services then here is the major difference- Wallet generates private keys and store them whereas in exchange services you buy and sell Bitcoins. Some exchange service come up with their own bitcoin wallet but its not fully in your control because your private key is with exchange services as well. Now consider this example about Simon – a teenager , his transaction was directed to dark market. Later that transaction never took place and his bitcoins remained with exchange service called Financial Liberty which later was found out to be scam. If Simon considered his bitcoins and never stored it with exchange and instead stored it in hardware wallet or wallet which is not supported by exchange then he wouldn’t have kissed goodbye to all the Bitcoins he lost.
If you’re able to protect your bitcoins from scams and hackers then don’t worry about your bitcoin transactions. Bitcoin transactions are very secured because of the the blockchain technology.
Blockchain is a internet wide distributed ledger . When you buy a bitcoin you own a slot in Bitcoin electronic ledger and everytime you make a transaction your previous entries of transaction are evaluated and checked in that blockchain to check legitimacy.
So there are several copies of electronic ledger which is constantly evaluated and new transaction are added to them and this work is done by mining.
Let’s assume people who do mining ( miners) as students and then assume there is a classroom filled with students and every student have similar data on there tab and by every transaction you attempt a riddle is generated on there tab and they have to solve this riddle and whoever is able to solve this riddle first is rewarded through small fraction of that transaction. Now every riddle which is solved appears on tabs of all the students which they further use as reference when new riddle is produced.
Here when the riddle is solved it states that your transaction is verified and secured.
Now coming to potential part of Bitcoins,
There’s a constant debate between technological nerds and political ideals about cryptocurrency because they can revolutionise our whole financial system besides that the world is getting more aware about it as only 20 percent of Bitcoin is left to mine and audience want to invest in this digital gold this takes us to the original concept of bitcoin again – according to Nakamoto, bitcoins were supposed to be used for day to day transaction and not as store of value but here we have contrasting frame, that actually doesn’t matter when you can keep hold on your bitcoin investment till you get profits out of it but like any other trading and invesment market bitcoins are very volatile.
Consider 2017 which was high time for bit coin but by the end of 2017 it sharply went down by $11,000.
There are success stories of people all over the internet who invested in early phase of bitcoin and are enjoying their fortune now and of course story of people who lost bitcoins because of scams. Heard about the most expensive pizza ever? On 22 may 2010 a user of bitcointalk forum ordered two pizzas and offered 10,000 bitcoins in exchange. Today the value of Bitcoins will be around $6 million.
Kristofer Koch, who forgot that he was owner of bitcoin worth $886,000. He invested $26.60 for 5,000 bitcoin in 2009 and gradually forgot about it until he considered media coverage on cryptocurrencies.
If this examples are inspiring you to invest then hold yourself because today situation demands you to get updated about current market situation and potential of Bitcoins in market. And to know about it, head towards our YouTube channel for latest information about bitcoin trading.
That’s it about Bitcoin. Hope this article was helpful. And feel free to ask any question in comment section.