Bitcoin has drawn the attention of many people. Whether you're an investor or an ordinary person, you've probably heard people talk about this cryptocurrency. Although the world has many cryptocurrencies in circulation, Bitcoin is the most popular among them. That's because it's among the pioneer digital currencies. But, what should you know about this cryptocurrency?
If you've been following news about cryptocurrencies, you probably know that countries like China are already making their digital currencies. Today, you can purchase or trade bitcoin. However, Bitcoin remains the most popular digital currency in the world. Here are the top questions that people ask about this cryptocurrency.
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What is Bitcoin?
Bitcoin is among the first cryptocurrencies, introduced in 2009. It's a form of digital money. That means you can't have this money in a physical form. It's only available in electronic form. Thus, you can only access Bitcoin via your phone or computer. People send Bitcoin online without involving an intermediary or bank.
Instead of following the conventional process of credit card firms or banks to confirm a customer's identity, this digital currency depends on public and private keys. These keys protect the parties involved in a transaction. Public access compares to an email address, and you share it with a person you want to send you Bitcoin. On the other hand, a private key protects your Bitcoin access in a digital wallet, and you should keep it safe.
How Do People Get Bitcoin?
People get Bitcoin in different processes. But mining is the primary method of earning Bitcoin. And this process compares to digging gold. A miner uses a powerful computer to solve a math puzzle. In return, the miner gets Bitcoins. Essentially, nobody creates or mints Bitcoins like fiat currency. And this explains why Bitcoin is deflationary, like gold. Miners check the accuracy of every Bitcoin transaction.
But if not ready to mine Bitcoin, you can purchase and trade it on a crypto exchange platform. Here, you use fiat money to buy Bitcoin. People use crypto exchanges to trade or invest in Bitcoin.
What Gives Bitcoin its Value?
For anything to have value, people must agree about it. The basis of fiat money's importance, like the US dollar, is the agreement that it has value. That's why the government allows people to use it to pay tax debts. Here are the potential reasons why Bitcoin has value:
- People hold it as an asset for storing value. That's why Bitcoin is an investment.
- People see it as a scarce asset with the assurance that its scarcity will remain and nobody can artificially generate more of it.
- People hold Bitcoin because it serves valuable functions as money or a tradable commodity.
Bitcoin has value for reasons like its mining process, the network effect, and scarcity.
What is the Bitcoin blockchain?
Bitcoin blockchain refers to a distributed database for validating future, current, and past transactions. It ensures that nobody can hack Bitcoin transactions. To understand Bitcoin blockchain, think about it like a large, global checkbook that doesn't involve banks, but millions of users can access it.
What should I know when investing in Bitcoin?
The first thing to invest when it comes to cryptocurrencies like Bitcoin is your time. Understand the basics of cryptocurrencies first. For instance, learn and understand how you can purchase and sell Bitcoin. Learn how Bitcoin price fluctuates and how you can speculate to earn profits. Also, learn different ways of investing in Bitcoin to spread your investments and risks.
Bitcoin may present a significant investment opportunity for people that believe in modern technologies. However, only people ready to take the risk and invest time in learning will benefit from their Bitcoin investments.