What is Bitcoin
Since time immemorial, coins have been used primarily as a medium of exchange or legal tender. They are produced by the government to facilitate trade. In this modern era, technology paved the way for introducing digital coins to revolutionize trading. Digital coins started with one brand, and its name was Bitcoin.
A decade ago, Bitcoin was invented in the form of virtual or digital currency, which means that these coins are not physically made but created electronically through computer software. Digital money is referred to as cryptocurrency since these digital coins are verified based on cryptography.
In 2008, a person who goes by the name Satoshi Nakamoto developed Bitcoin as a form of an electronic payment system based on mathematical proof. Just like forex, Bitcoin is a decentralized market, and it can be transferred electronically in any parts of the world.
Bitcoin has become very influential since its inception that it referred to different concepts altogether. Some use the term Bitcoin to refer to the brand of cryptocurrency, while others use Bitcoin to mean a store of value. Investors also consider Bitcoin as a payment network, and traders refer to it as an asset class.
The Bitcoin Foundation said the word “Bitcoin” is capitalized when referring to the crypto brand while bitcoin pertains to a quantity of the currency. Bitcoin is abbreviated as “BTC.”
How Does Bitcoin Work
In essence, every Bitcoin is in the form of a file on the computer, which is stored in a digital wallet (that comes as a mobile or desktop app).
Online traders can send Bitcoins to digital wallets of other traders, which are recorded in a public list or ledger known as the blockchain (technology).
Blockchain consists of a single chain of discrete blocks of information that are chronologically arranged. Bitcoin transactions are not centrally recorded since blockchain technology is at work. This means that users are the ones creating and verifying blocks of transaction data.
How to Buy and Sell Bitcoin
Buying and selling Bitcoins is made more accessible through online exchanges. Use an exchange service to buy and sell Bitcoin together with a wallet app to store it safely. To start, choose an exchange service online and open an exchange account. Once in there, the exchange broker will automatically sell and buy Bitcoins for the user.
Another way to buy Bitcoin is through cash. The trader needs to choose a method of purchasing Bitcoins. For this, a trader needs to use an online platform to help the trader look for those who are interested in exchanging Bitcoin for cash.
Some platforms will direct customers to banks that will allow them to make a cash deposit to purchase Bitcoins.
How to Protect Bitcoin Wallet
Bitcoin wallets serve as the safety vaults for Bitcoins. A wallet holds many private keys, and an investor owns several wallets. These wallets come in different forms: electronic, software, online, mobile, hardware, and paper wallets.
Among these wallet forms, hardware wallets are the safest as these can be kept offline and risk-free from hackers. However, losing this form of the wallet also means losing bitcoins in it. However, it can be avoided if there would be a clone or duplicate of the keys.
The online wallet is the most susceptible to hacking as a third party can hold the keys. However, it also is the most convenient to open among the wallet forms.
Future of Bitcoin
Bitcoin’s future, no matter how much it has grown in the present, remains uncertain. For one, many countries have blocked the use of Bitcoin as a form of payment and transaction online. Another thing is that Bitcoin usually goes unregulated in most countries. Several government systems are afraid of Bitcoin since this can’t be controlled and that it skips taxation premises that governments couldn’t capitalize on.
Whether Bitcoin will become more prominent and endure the test of time will highly depend on how it will be utilized worldwide to remain relevant.