An introduction to Bitcoin

An introduction to Bitcoin

What’s a Bitcoin (BTC)?

Digital currencies have made its foundations strongly. Digital currencies are counted as the most well-earning way to bank money. Bitcoin (BTC) is the most valuable digital currency among all.

BTC was created in January 2009, yet the names of the person created it is a mystery to be solved. Unlike all other online payment mechanisms, BTC is not operated by any government.

Bitcoin is a cryptocurrency and can be earned by every people and company in every corner of the world. Being a digital currency means there is no need to keep paper cash and you are free from all the banks and governments.

Wherever you live, you can earn Bitcoin and trade it with whatever you want, just using a computer. The process of using Bitcoin is thanks to decentralized ledger system, also known as blockchain. BTC as a result of being global, becomes the most popular currency, so, hundreds of others cryptocurrencies were invented called altcoins.

How does Bitcoin work?

Blockchain is just a digital record which can be observed by anyone wishing to view it. It’s a process that cannot be cheated. It works as a big data, all the transactions made, with date and time, total value, buyer and seller and any slight information needed are stored there with a unique identifying code. Anyone with a link, can reach Bitcoin’s data center and do his desirable transaction.

The unique codes following a pattern, is what that makes Bitcoin safe and secure. The blockchain is too tight to be tricked. Each code contains a long string of random numbers that the chance of guessing a specific one is as nine time hard as winning a Powerball lottery.

Bitcoin was first proposed by Satoshi Nakamoto to be an independent currency system from banks. This currency system is based on mathematics and being so, is the reason of giving independence from banks.

Is Bitcoin legal?

Bitcoin like every other cryptocurrency count is legal in most of the countries all around the world. As not being supported by banks, using BTC and all its transactions are at person’s own risks.

Cryptocurrencies are illegal in following countries. Algeria, Bolivia, Egypt, Iraq, Macedonia, Nepal, United Arab Emirates and Vietnam. In countries like Bangladesh, Iran, Thailand, Lithuania, Lesotho, China, and Colombia, cryptocurrencies are restricted, so, they are not good choices to do transactions in.

Bitcoin you earn as a payment should be reported as its conversion to your country’s currency. Bitcoin you earn will be added to your taxes because it is counted as a capital gain.

Is Bitcoin legal?

Mining Bitcoin

Mining Bitcoin

Bitcoin can be created too. To do so, people must add transactions to blockchain and it’s a quite hard task to do. Furthermore, it requires a group of genius minds and hardworking people to solve unbelievably tough puzzles.

The process of creating Bitcoin is called mining. Mining Bitcoin used to be a simple task to be done. It wasn’t as challenging as it is nowadays. Today, to mine BTC, too many resources such as powerful computers are required.

Unfortunately, in mining Bitcoin, the harder you try, the lesser you get paid over years. It is predicted that around 2140 no BTC is left to be mined, so, transactions will be the only way to mine Bitcoin.

Using Bitcoin

As a result of being worthy, people do not trade Bitcoin much, they use it to invest on products. Not only does the product invested in give them a raise, but also Bitcoin value will face huge raise in the future.

Not all companies do accept Bitcoin as a payment. Twitch, Overstock and AT&T are the most famous companies using Bitcoin to be mentioned.

According to Spencer Montgomery, founder of Uinta Crypto Consulting, there are 346 million users connected to 26 million merchants. The number mentioned sounds amazingly fascinating.

There are services such as Crypto.com and CoinZoom which connect your debit card to your crypto account. With these services converting Bitcoin to dollars would be a piece of cake.

In countries buried under a pile of debts, where money is not stabilized or has a little value, cryptocurrencies are the light at the end of the tunnel. If you will not be pressured by huge taxes, earning Bitcoin could be a solution to all your problems.

Digital currencies have made its foundations strongly. Digital currencies are counted as the most well-earning way to bank money. Bitcoin (BTC) is the most valuable digital currency among all.

 

Buying BTC

First you need to open a digital wallet so your BTC could be stored in. There are hot wallet and cold wallet. A hot wallet is a digital wallet known as online wallet. This wallet stored in the cloud while doing exchanges. Exodus, Electrum and Mycelium are the examples of providers of online wallet. A cold wallet is a device which is not required to be connected to the internet. This wallet also known as a mobile wallet stores Bitcoin to its memory. Trezor and Ledger are two examples of a cold wallet.

With verifying your identity and providing your funding sources, you can start exchanging cryptocurrencies. Coinbase, Kraken, Binance and Gemini are major exchanges suitable to earn Bitcoin.

You can read a bout best cryptocurrency exchanges in our blog.

As a result of being safe, all the exchanges you make and all the transactions you do, must be verified by miners and it may take 10 to 20 minutes.

Risks in investing in BTC

Regulatory risks are in investing in Bitcoin. As not being supported by government, too many illegal activities may happen while trading BTC, and that may force government to act harshly.

Security risks may occur while trading with BTC. Exchange markets are not all trustworthy and they can abuse your trust. Also, hackers waste their talents just to gain access to your digital wallet.

There are also insurance risks. Not all investments contain insurance. Dealing with Bitcoin is as dangerous as dealing with cash. Once you get tricked or lost in an unwanted way, there is no point to return, it’s an irreversible process.

There is also false BTC. BTC not having an identifying code. This is a fraud risk need to be aware of.

Investing in BTC

Investing in BTC

BTC price varies too much. In 2020, its price experienced a downward to $5,165 as well as a raise to $28,990. So, it’s a worthy choice to be invested in, don’t aim too high though.

Due to its price’s swings, paying with Bitcoin is a foolish choice. Everyone rather to keep their Bitcoin for themselves. Afterall, why should we spend the most valuable currency with the knowledge of its raise in the future?

If you become an accredited investor by making at least $200,000 or having a net worth of $1 million, you can invest in a huger trade. Buying the shares of the Grayscale Bitcoin Trust (GBTC) is the trade mentioned.

Although BTC is a great investment, it carries a breathtaking risk. It is not recommended by Bitcoin experts. A certified financial planner (CFP) in New York City, Ian Harvey, said the biggest concern for them is when everyone invests in Bitcoin and their investment doesn’t go well, then they will face a pandemic of people can’t afford to send their kids to college.

If you are passionate about investing in Bitcoin, just put 1 to 10 percent of your money in it. Do not even consider it as your main investment. Scott Hamell, a CFP in Dallas, calls it as a Vegas account, and said let’s keep it that way so in a long-term process it won’t be too large to lose.

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