Things to know when investing in Bitcoin
BY READERS DIGEST
10th Mar 2021 Technology
Investing in Bitcoin is one of the most talked-about things at the moment. People across the world are looking for ways to invest in this cryptocurrency. However, Bitcoin is an enigma to some people. It's a complex yet fascinating new-age currency. Bitcoin exists online-only, and you can use it anonymously.
Some people think Bitcoin is dangerous, while others consider it suspicious. And, even if you've heard about Bitcoin, there is still something you probably don't know about it. This article tries to dispel the theory that some people have about Bitcoin as something dangerous.
What is Bitcoin?
Bitcoin is an online, new-age currency that people use to pay for goods and services. It's like the US Dollar or Euro, only that it does not exist in the physical form.
Here are the main traits of Bitcoin:
- Digital: Bitcoin is only available in digital form. There are no Bitcoin bills or physical Bitcoins. Bitcoin lives online, where people use blockchains to track it. Its records are continuously growing and creating a history.
- Decentralization: No central bank or government controls Bitcoin's supply.
- Pseudo-anonymous: Bitcoin has a link to a digital wallet ID and not personal information. However, this doesn't make it completely anonymous.
People credit Satoshi Nakamoto for the development of Bitcoin. That's because he published explaining how this cryptocurrency would operate, one year before people began mining and trading it.
Most people find Bitcoin attractive because its transactions do not involve banks and middlemen with hefty fees. Because Bitcoin exists only online, the user's wallet ID is what appears in transactions instead of their name.
So, is Bitcoin completely anonymous?
The answer to this question is no. Government agencies and talented hackers can track almost anything involving Bitcoin. Bitcoin transactions are transmitted randomly over a peer-to-peer network. However, this system does not always hold up.
A hacker can connect several nodes to a Bitcoin network. Using the combined data they collect, the hackers can trace the origin of the transaction. Government agencies and hackers can also link the real identities used alongside Bitcoin addresses.
How to get Bitcoin
People get Bitcoin in two main ways.
These are:
- Buying Bitcoin: You can purchase Bitcoin using fiat money. People use platforms like yuanpay group to purchase and sell this cryptocurrency. Such a platform enables people to start trading Bitcoin even with little or no experience. You only need a digital wallet and cash to purchase Bitcoin.
- Mining: Bitcoin mining entails the use of special software to solve mathematical problems on a computer. Correct solutions to math problems earn you a specific number of Bitcoins. Bitcoin mining is a legal process. However, laws regulating Bitcoin are evolving, and they vary from one country to another.
How to use Bitcoin
You can cash Bitcoin to your local bank or spend it online to buy goods and services. Several merchants accept Bitcoin. The adoption of this cryptocurrency is increasing. That's why more and more people are investing in it.
In addition to shopping with Bitcoin, you opt to hold it as an investment. Thus, you can choose to wait for the price of Bitcoin to go up and then sell your Bitcoin at a higher cost to make a profit. Alternatively, you can trade Bitcoin to make a short-term profit. Nevertheless, you should research the market first to determine the best way to invest in Bitcoin.
Parting shot
Bitcoin is a popular cryptocurrency partly because of its relative anonymity. With this cryptocurrency, you don't have to worry about questionable purchases. However, you can use Bitcoin legally every day via a digital wallet, exchange, or gift card. You can also use it to purchase items from some local and online stores.
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