What is Bitcoin? Why are so many people interested in investing in it lately? And why Bitcoin itself is often considered the best investment instrument today.
Well, if you opened this article because you want to know what Bitcoin is, then you’ve come to the right place. Because on this occasion, Coinomo will discuss what it is, and how to invest in it. So, just read till the end!
What is Bitcion?
It is a digital currency that was created in 2009 by someone under the pseudonym Satoshi Nakamoto. Initially it was proposed as a medium of transfer without using intermediaries or bank services. Bitcoin itself uses a peer-to-peer (P2P) system, and the system works without a single storage or administrator. This is what makes this digital currency decentralized. Bitcoin is not issued by one major issuer like a central government. Instead, it is maintained by a distributed journal and transfers to the nodes of a P2P network.
Bitcoin uses cryptography to provide a variety of basic security functions, such as exclusivity and anonymity. The coins are also completely virtual and stored in a public ledger, which is transparent for everyone.
There are a fixed number of Bitcoins that could be found, and currently there are about 21 million bitcoins found and in circulation around the world. Even though it is not an universally accepted transaction medium, it has become very popular and has sparked the birth of other cryptocurrencies. Bitcoin itself has been around for more than ten years and has recently attracting the public’s attention again because of the sharp value increase and it’s fucntion as a value-preserving financial asset. A lot of people have earned large fortunes by buying and holding them but the price fluctuates quite significantly from time to time.
How to Get Bitcoins?
Cryptocurrencies such as Bitcoin or other Altcoins can be stored in a digital wallet in the cloud or on the owner’s personal computer. The digital wallet in question is more like a Virtual Bank account that can be used to send or receive various coins, invest, or transact.
Currently, there are two definite ways to get Bitcoins. The first is of course transactions between owners, and the second is by mining.
Well, because the current price of Bitcoin has soared, of course at this time many people are competing to do “mining” to get this very popular digital currency. Today, people usually do minging by using a computer or a smartphone. A lot of computing power need to be invested to mine effectively. Softwares and algorithms need to be designed carefully for mining, so as to fully utilize computing power and to minimize electricity consumption.
It is not easy to set up the hardware & software for mining, but the results are very rewarding. With enough computing power, you can mine 1 piece of Bitcoin as fast as one hour and each coin is worth about 47000 USD right now. Because mining could be so lucrative, hackers could insert malware or virus into other people’s phone or personal computer to “steal” their computing power.
How Does Bitcoin Work?
Each crypto coin is a file stored in a digital wallet on a computer or smartphone. Therefore, the first thing you should do if you want to invest in Bitcoin is to install a crypto wallet on your computer or smartphone. As mentioned before, the Bitcoin network itself relies on a blockchain which is a public transaction record. So all confirmed transactions will be stored on the blockchain. That way, crypto wallets can calculate and verify the remaining money or new transactions.
In addition to blockchain, there is also such a thing as a Private Key. As the name implies, this Private Key has a function to confirm, sign transactions, and to provide mathematical proof that the transaction really comes from the Wallet owner.
There are a limited supply of Bitcoin and its price is driven purely by supply and demand. Thus, prices can fluctuates quite a lot from time to time. Many people have become rich by buying and holding, like buying stocks, buy it when the price is low and sell it when the price is high.
Advantages and Disadvantages of Bitcoin
Transactions are Safe and Can Be Done Anytime: Because Bitcoin uses a decentralized system, it allows you to transact anytime and anywhere. Transactions that occur in the cryptocurrency world also do not contain personal information, such as names or credit card numbers. This of course willreduce the risk of identity theft and credit card fraud.
High growth potential: The price of Bitcoin has reached a record high of around US $ 64,800 earlier this year. Recently, in the month of July-Aug 2021, prices has risen from USD 30000 to USD 49000. This kind of price increase not seen in any other financial assets.
- Protection against inflation：Just like gold, because of the limited supply, Bitcoin can protect your assets from inflation. Central banks around the world have been printing a lot of money in fear of recession from Covid. Inflation has thus been creeping up.
- Volatility: Just like other digital currencies, crypto coins’ value that tends to be unstable. We cannot predict the price accurately, because sometimes it can suddenly go up or down. The volatility of prices make some people reluctant to invest in long-term. Thus, they speculate by buying low and selling high very frequently. This strategy does not always work as the prices could be unpredictable.
- Being stolen or lost: Because Bitcoin is a virtual currency that’s stored in a digital wallet, unfortunately it still has the risk of being hacked. Even the wallet can also be hacked or stolen through Malware. Not to mention if the contents of the Bitcoin owner’s HardDisk are accidentally deleted.
Like any good things in life, there are both risks and benefits when it comes to Bitcoin. When you want to trade or invest in it, you also need to beware of the risks involved.
Well, that’s a little explanation about what Bitcoin is, how to get it. After knowing this information, are you interested in trading or investing in it? If so, Coinomo can help you.
Apart from trading Bitcoin, you can also invest in DeFi (Decentralized Financing) products. You can visit the platform and our blog simply to learn more about crypto.
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