What is Bitcoin Currency?
Cryptocurrency is here and going nowhere. In fact, cryptocurrency is the next big thing. But how good do you know cryptocurrency, especially, bitcoin currency?
When bitcoin came into existence, only a notable number of folks knew what bitcoin really was, leaving alone its functions as a currency.
So, what’s bitcoin currency?
One thing for sure is that it’s pretty challenging to understand bitcoin at first hearing it. The reason being, it’s neither an investment vehicle nor a standard fiat currency. However, that hasn’t stopped the giant crypto from taking the world by storm, attracting investment worth billions of dollars.
Interestingly, its blockchain technology is slowly but steadily changing various processes of modern society.
As a result, the big question among a plethora of folks is why bitcoin is massively popular. Perhaps, you’re one of them looking to understand this whole scenario of bitcoin, and to get the complete detail, just read to the end.
Let’s get straight to understanding what bitcoin is. First, it’s the leading crypto that came into existence. It’s a virtual or digital currency mined, traded, stored, and transferred electronically.
Mostly abbreviated as BTC, the digital asset is easily transferred between businesses or individuals across the globe, and there’s no regulation from the central authority or any central bank.
The History of Bitcoin
Bitcoin was invented almost a decade ago (2009) by Satoshi Nakamoto, whose identity has never been revealed. Nakamoto came up with a powerful P2P money transfer system that is based on decentralized blockchain-ledger technology.
But what’s a blockchain ledger?
A blockchain ledger is simply a digital and decentralized ledger that is distributed between various computers, and the record of each given transaction can’t be altered without a change on the subsequent blocks.
To date, the payment system by Satoshi has become the leading interest for families and other parties to transfer money.
The main reason for bitcoin’s invention was generally to create and provide a way for transferring funds electronically without any control from a central authority.
Furthermore, the objective was to have a quick as well as cheap P2P funds transfer without double-spending. In avoiding the usage of bitcoin twice (double-spending), it uses a mechanism that effectively records transactions and gives them a time-stamp.
Thus far, it may sound that you’ve got an idea of what real bitcoin is and how it operates. However, there’s much more in store behind this giant crypto. So, let’s get more in-depth with some of its details.
Earlier, we did mention about bitcoin blockchain ledger. But how much is involved with this bitcoin blockchain ledger? Here’s how it’s simplified:
For a start, any ledger is merely an account book, log, or register, and the entire bitcoin transactions are accessed by the various nodes around the world simultaneously. The ledger is kept up-to-date hence, each computer access the latest information.
The computers verify the transactions against some rules and conditions according to the bitcoin protocol. The verified transaction is then packed into blocks just like a chain that is then attached chronologically to the blockchain, which can’t be reversed once attached.
Mining of bitcoin doesn’t continue to infinity because there’s a decreasing-supply algorithm which controls the mining as well as other activities. The algorithm simply has placed a limit at which mining of bitcoin can take place.
On the bitcoin supply, it also has a limit on the total supply at 21 million. As a result, that number is estimated to be reached by 2140 when the last bitcoin is expected to be mined.
But one can ask why a limit is placed on the supply of bitcoin?
Apparently, the limited supply helps bitcoin to support its price, which is a direct opposite of fiat currencies and how it works.
How do you Transfer Bitcoin?
Unlike fiat, bitcoin is transferred between wallets with a small transaction fee. Besides, they can be sent in small portions like one bitcoin, depending on the bitcoin wallet as well as exchanges. For instance, for wallets, any amount above 0.000055 bitcoin is easy to transact.
On the other hand, exchanges have higher minimum transaction limits, with smaller transactions still a possibility.
Understanding Wallets and Exchanges
What distinguishes wallets from exchanges is that with exchanges, the fiat currencies can also be converted into bitcoin and vice versa. Moreover, there’re some exchanges that over the conversion of bitcoin into other cryptos or fiat and other cryptos.
Bitcoin exchanges enable users to send bitcoin other bitcoin wallets or only other bitcoin exchanges. Also, they can receive payments from exchanges and wallets.
A bitcoin wallet, on the other hand, is simply a storage medium and can as well send and receive bitcoin. For them, they transact only with bitcoin exchanges, other bitcoin wallets, or those merchants who accept the payment in bitcoin.
Types of Bitcoin Wallets
Various bitcoin wallets exist starting from:
Desktop wallets include;
They function similar to BitcoinQt (original bitcoin wallet), currently known as Bitcoin Core- a full client requiring mighty computing power. Bitcoin clients help verify transactions independently.
Other Desktop Wallets
Besides the bitcoin clients, other desktop wallets include mSIGNA, Exodus, Armony, and others.
They are wallets tailored into your phone with QR code capability advantage that enables immediate bitcoin payments.
The online wallets help to store your private keys, which help you to access them quickly at any time anywhere. However, if the provider doesn’t take precautions in securing it, you may end up losing control of the private keys.
These are wallets that can store bitcoin safely having a public address as well as the private key required in transferring bitcoin to other addresses. You can create a paper address easily via websites such as bitaddress.org.
These are wallets capable of facilitating payments as well as storing private keys electronically. An advantage of this category is that it enables secure bitcoin transactions on a computer not secured.
Funding the Wallet
Up to that section, you only need to have bitcoin to pay for something or send some bitcoin to someone. It only requires setting up a bitcoin wallet then provide your sender the wallet address, and you’re good to go.
Also, you can fund your wallet easily by converting fiat to bitcoin in a plethora of ways, including; via bitcoin exchanges, bitcoin marketplaces, including cash as well as bank wire transactions.
Beware of Hackers
It goes without a say that bitcoin can as well get lost or simply can be stolen. Therefore, precautions are highly required to secure bitcoin holdings, especially from hackers, thieves, and stretching to losing wallets and private keys.
Moreover, bitcoin also has the possibility of crashing or burning. However, due to the rapid increase in bitcoin’s confidence as well as popularity, there’s no likelihood of a crash happening any time soon.
Since its introduction a decade ago, bitcoin has been a safe haven asset for some folks with several considering it an excellent store of value. However, for some, it’s far from what it promises to be citing volatility and liquidity, the main problems.
What about Investment?
Thus far, others have significantly gained a lot from investing in bitcoin in the “buy-and-hold” strategy, with forex trading now becoming the best trading platform. Bitcoin also can be traded on other platforms such as eToro as well as ZuluTrade.
Bitcoin is the King but not alone
It has been merely ten years of existence for cryptocurrency, but since then, several other cryptos have been introduced. Therefore, speculators and investors have a plethora of alternatives to trade besides bitcoin with prominent cryptos being Litecoin, Monero, Ether, Ripple, and many others.
Although there’re several alternatives to bitcoin, it has still remained the King. Currently, bitcoin is trading above $13000 and still going strong.
Nevertheless, some say that bitcoin will crash or become even more expensive. For now, nobody knows where the price will go going forward-maybe hitting $1,000,000 by 2030 looks likely. Either way, bitcoin has done remarkably well outperforming traditional investments.
Given that bitcoin performs cheap and fast transactions, high anonymity, arbitrage opportunities, and extreme price volatility and price escalation, the giant crypto is poised for a brighter future.
Perhaps, an excellent FXLeaders’ bitcoin signals are essential to start engaging in the bitcoin market and enjoy the profits coming with it.