Feel like you ‘missed’ the boat on Bitcoin, don’t worry: the cryptocurrency bull market is just getting started.
Social media and news agencies continue to feature Bitcoin as the currency of the future, and with its increasing popularity, that may not be too far in the future.
Despite the demand and growing acceptance of this cryptocurrency, there are still a handful of people who are clueless on how Bitcoin actually works.
An overly simplified version of explaining Bitcoin is it is a digital currency that is not being governed by any central authority. It uses a technology called blockchain, which records all the transactions using this currency and compile it into a public digital ledger.
A Quick History of Bitcoin
It is believed that Satoshi Nakamoto, an elusive software developer from Japan created the Bitcoin in 2009 with the goal of removing central authority over the new currency. This currency is not being printed like regular money, and never will be, as it is virtual in nature.
From its inception, Bitcoin has dramatically increased in popularity because of its growing consumer base. More and more people are drawn towards investing in Bitcoin due to its unique characteristics.
If you are one of those people who are eager to get started but is not sure where to begin, you can make use of this guide as your leverage to understand the nature of Bitcoins.
Characteristics of Bitcoin
Bitcoin has a lot of characteristics that make it appealing to a lot of people. Among its most common features is it’s anonymity as no personal information is required when you set-up your account or when you make use of your funds.
The fees associated with using your Bitcoin funds are also deemed as minuscule compared to the charges made by banks and other financial institutions. This means that you can access and use your funds faster and with lesser to no charges at all.
The movement of Bitcoin is also very efficient, so if you send funds to another person, you can expect that the other party will receive it within minutes after processing. You just have to keep in mind that when you send or forward your Bitcoins, it is considered gone forever because this currency is non-repudiable.
How to Get Hold of Bitcoins?
To get hold of Bitcoins, you first need to have a wallet that will serve as a storage facility for your funds. You can then purchase some Bitcoins from a private party or an exchange depending on your preference.
When purchasing your Bitcoins, you have to carefully consider which individual you do business with or the exchange you are buying from. The virtual world is full of shady individuals and you don’t want to end up losing your money over nothing.
If you also have the time and the resources, you can become a miner and work as part of a community that helps provide transparency over the use of this cryptocurrency. Mining involves the use of powerful computers that are capable of solving complex mathematical problems.
How Can I Use Bitcoins?
Bitcoins are just like real money and that means you can use your funds to purchase any goods and services. More establishments and merchants are now open to the idea of accepting Bitcoin as a mode of payment.
Other than directly using your Bitcoin as a method of payment, there are also financial institutions in other countries that offer Bitcoin ATM. These machines will allow owners to convert their BTC to local cash money.
Also referred to as Bitcoin mixing or laundering, Bitcoin tumbling is the process of breaking the connection between two Bitcoin addresses. This means that the public ledger for Bitcoin transactions will not be able to record the source of the funds and where it’s going to.
Tumbling is an important process for those individuals who don’t want to leave a trail behind their every transaction. This is done for several reasons and protecting the source of funds is one of the most common bases.
Through tumbling, the world won’t know where the funds are stored which means owners are given extra protection from hackers and other malicious individuals. This process is a good complement to virtual wallets and its private keys when storing a large amount of BTC.
To give you a glimpse into the potential value of bitcoin in the near future; just take a look at what every single financial institution currently does, from transferring deposits, to lending money and foreign exchange; all can be done so much faster, cheaper and more transparent than ever before.
Banks take days just to transfer our money. Blockchain only take minutes.
Banks charge steep fees for converting our currency into another, they add extra conversion charges on top of the already poor exchange rate. As if they are putting in a ton of work into getting us foreign currencies.
Anything you can think of with your current relationship with the bank can be solved with blockchain technology. It takes your bank totally out of the picture.
Using bitcoin allows you to transfer funds to your peers (peer-to-peer) with little to no cost at all.
With more consumers getting into the Bitcoin phenomenon, the price of Bitcoin will only continue to surge.
The bullishness of the crypto has even surprised the most ardent supporters as it has surpassed the $10,000 mark prediction made by Mike Novogratz by the end of 2017.
Financial analysts have attributed the rise in the value of Bitcoin to several factors, which includes demand, the emergence of other cryptocurrencies and politics, among others. The decentralized nature of Bitcoins make it invulnerable to speculation as more and more people are tempted to profit from it.
The amount of bitcoin is capped at 21 million (it is not possible to print or duplicate more coins than that), there are about 16.7 million Bitcoins that are currently in circulation.
Market capitalization is at a record high of more than $327 Billion dollars.
With those figures, the valuation of Bitcoin is now larger than major corporations like GE, IBM, McDonald’s and even Disney. The wild price fluctuation of this cryptocurrency remains to be a controversial topic in the lips of investors, stock traders and entrepreneurs.
Storage and Protection of Bitcoins
You may have read or heard about the many hacks on bitcoin wallets, with exchanges being hacked and billions of dollars worth of bitcoins lost forever.
While it is virtually impossible to crack the bitcoin code, with so many talented computer programmers and developers taking a shot at it, your bitcoins can be stolen if you store it in an exchange site like coinbase.com; if ever it was hacked.
Any exchange site, acts like a centralized bank that helps store your money, so with billions of dollars accumulated in one single place, it is highly probable that it would become a target for hackers.
So be safe and buy a Cold hardware wallet like the Ledger Nano S and use it to transfer your bitcoins you bought from an exchange site to your own little private bank.
This is where you store your bitcoins and you alone have the password to access your cryptocurrency. No one else can touch or use it without you approving the transaction.
Even if you lose your device, there is a 24 letter word-phrase where you can recover your bitcoins.
You could practically carry millions of dollars in your head if you memorize them.
Whether cryptocurrency is the future of money or not, one thing is certain – the value of Bitcoin is going to change the entire financial landscape.