What Is Bitcoin? A Beginner's Guide to Cryptocurrency

Bitcoin is a cryptocurrency, a digital currency that is created and held electronically. Cryptocurrencies are decentralized digital currencies that use cryptography for security.

No central authority manages or validates transactions or coordinates the network. This makes cryptocurrencies potentially more secure than traditional financial institutions. Many people have heard of Bitcoin and its meteoric rise in value over the past year.
But what is it and how does it work? This article will introduce you to the world of cryptocurrency and explain everything you need to know about Bitcoin and its variants.
What is Bitcoin?
Bitcoin is a type of cryptocurrency – a digital asset designed to work as a medium of exchange that is decentralized or “mined” by users who use special software to solve math problems.
It was invented in 2009 by a person or group going by the name of Satoshi Nakomoto, who published the invention in a white paper. The paper described the currency as having no central authority, no deposit accounts, no Federal Reserve Notes, and no presidents or queens.
It is essentially unregulated, so users can buy and sell it without being subject to any type of financial regulation, meaning it’s decentralized.
The value of Bitcoin fluctuates with the market, but it has more than tripled in value in just over a year, rising some 6,000% as of July 20, 2018.

How Does Bitcoin Work?

Bitcoin transactions are verified and stored in a public ledger called the blockchain, which is effectively a digital version of a financial ledger that tracks ownership of the currency and all its transactions.
This verification process relies on the participation of the network of Bitcoin users, called “miners.” Miners verify transactions by solving math problems and earning Bitcoin for the effort, but could be penalized for trying to cheat the system.
Once verified, transactions are added to the blockchain and publicly available for everyone to see. The blockchain is what makes Bitcoin decentralized, meaning there is no central authority that can tamper with or control the currency.
The only way Bitcoin could be regulated would be if every single user of the currency agreed on a central oversight authority.

How to Acquire Bitcoin

Bitcoin is a digital asset, like any other. You can buy it and store it in a digital wallet. There are many online wallets and offline storage options.
Once you have a Bitcoin wallet, you can send money to someone else who also has a Bitcoin wallet. If you want to buy and sell Bitcoin, you can buy it on an exchange, like Coinbase.

What Can You Do With Bitcoin?

One of the most attractive aspects of Bitcoin is that it can be exchanged for goods and services. Since it is decentralized, no central authority decides or validates the transaction.
It is completely up to the buyer and seller. This allows for a wider range of goods and services to be bought with Bitcoin and gives merchants the freedom to accept it. So far, the most widely discussed use for Bitcoin is for payment for goods and services.
The most obvious use for a decentralized currency is to buy things, but merchants also accept Bitcoin as payment for services. You can buy plane tickets with Bitcoin, or book a hotel room or concert tickets. It’s also possible to get paid in Bitcoin.
Companies like BitPay and Coinbase let you set up a payment system so that you get paid in Bitcoin.

Risks of Bitcoin Trading

Bitcoin’s meteoric rise in value has attracted many investors, but the volatility of the currency also makes it unsuitable for many investors. Bitcoin has seen a massive increase in price, but it has also seen huge decreases in value.
During one of these decreases, in December of 2017, Bitcoin values plummeted more than 40% in just a couple of days. This means that many people who bought Bitcoin as an investment during this period saw a loss of more than $10,000 on their investment.
These drops are common in Bitcoin trading, and they can happen to anyone. There is no way to predict when a Bitcoin price will increase or decrease.

Final Words

Bitcoin is a digital asset that can be used to buy goods and services online. It is decentralized, meaning there is no central authority that manages the currency.
You can buy and sell Bitcoin, but it is unregulated and volatile, so it is not recommended for long-term investment. There are also risks associated with trading it, including volatile price movements and lack of regulation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s