Do you know enough about the Bitcoin to start trading or investing in it? Bitcoin is not a gold nugget, nor is it a complete hogwash. While people may still be debating about its relevance or legitimacy, the fact remains that the Bitcoin is a revolutionary product, and the blockchain technology on which it rests is a disruptive technology having tremendous potential for the future.
What is the Bitcoin?
Bitcoin is really a type of digital currency, a decentralized peer-to-peer payment mechanism that is not regulated by banks or financial institutions. Bitcoins can be created and stored by computers; it is not paper currency like the dollar or Euro. It can be generated when computers successfully solve complex cryptographic problems. Every time a block is successfully mined by a miner, rewards in the form of new Bitcoins are given.
So, Bitcoin makes way for money transfers through computers and the transaction fees are much lower than traditional money-transferring services. Incidentally, there are can only be 21 million Bitcoins, making it a fixed asset. The blockchain technology that made its debut along with the Bitcoin is believed to have far more potential in various industries, and not only financial uses. This blockchain or distributed ledger technology makes the Bitcoin transactions totally transparent.
How can you mine Bitcoin?
Bitcoin is generated through mining. The blockchain depends on a large network of nodes ensuring integrity of transactions through consensus. Mining helps to produce new coins and facilitates transactions in the Bitcoin network. But, it is an energy-intensive process and power costs will outweigh value of coins mined. Mining makes use of protocols like Proof-of-Work and proof-of-Stake algorithms. The latter does not need hardware or energy for achieving consensus.
What makes the Bitcoin different from other currencies?
Unlike traditional currency, Bitcoin has a finite supply; there can only be a total of 21 million Bitcoins and not more. Paper currency is inflationary but Bitcoins is deflationary. It acts like stocks in that the prices can fluctuate just like stocks in a stock market. Bitcoin remains the first programmable money offering us virtual borderless cash and the blockchain technology is being hailed as the technology of the future, capable of shaping future of economies. Since the Bitcoin is a pan-global currency usable by people all across the globe as medium of exchange where there are no governments of banks involved, this cryptocurrency will keep garnering interest and challenges. However, as the transactions are anonymous, the Bitcoin is going to appeal to criminals keen to use the crypto asset for funding illicit activities.
How secure is the Bitcoin?
The blockchain is decentralized and distributed and this means there is no central database capable of being hacked. In order to hack transactions, every computer inside the blockchain will have to be hacked at the same time, and this is practically impossible.
With the Bitcoin it is now possible to buy almost everything online; big companies like Overstock.com and Microsoft are accepting payments in Bitcoin. Besides merchants using the Intuit Inc’s QuickBooks software accept payments in Bitcoins while Dish Network Corp is accepting Bitcoins for its packages. Where the Bitcoin will go ten years from today is hard to predict, but the fact remains that it has been a game-changer in the world of finance. Whether it is really a bubble that will eventually pop, as some critics pointed out, or the Bitcoin will continue to shine bright, remains to be seen. Either way, you must know the basic facts before investing in it.
Am I able to take advantage of Bitcoin as a beginner?
Bitcoin has had several advancements in its short history. Many are new to Bitcoin but still have the disposable income to invest and hopefully acquire impressive returns. For this reason, several Bitcoin software programs have been released including the very popular Bitcoin Pro. These “Bitcoin Robots” allow you to simply deposit a small investment sum and then then (hopefully) reap the rewards of it’s complex algorithm software which promises very impressive returns.