Bitcoin is big right now, probably too big for its own good. Since a Bitcoin has no value beyond what someone is willing to pay for it, the price of Bitcoins tends to change quickly, Bitcoin is a very volatile asset, and the recent developments in the price of Bitcoins do have some of the characteristics of an economic bubble.
The algorithms involved in Bitcoin production are far too complex for most non-crypto-nerds to grasp, which is why most people use the term Bitcoin mining. It’s analogous to toiling in tough conditions in search of gold. And as with gold, only a limited supply of Bitcoins exists.
What is Bitcoin ?
Bitcoins are all the buzz. The virtual currency is riding a rollercoaster of speculation, With the Bitcoin price so volatile everyone is curious. The category creator of Blockchain technology, is the World Wide Ledger yet extremely complicated and no one definition fully encapsulates it. it is like being able to send a gold coin via email. It is a consensus network that enables a new payment system and a completely digital money.
Who created Bitcoin ?
The first Bitcoin specification and proof of concept was published in 2009 by an unknown individual under the pseudonym Satoshi Nakamoto who revealed little about himself and left the project in late 2010. The Bitcoin community has since grown exponentially.
Satoshi’s anonymity often raises unjustified concerns because of a misunderstanding of Bitcoin’s open-source nature. Everyone has access to all of the source code all of the time and any developer can review or modify the software code. As such, the identity of Bitcoin’s inventor is probably as relevant today as the identity of the person who invented paper.
Reasons Why People involved in Bitcoin ?
There are many different reasons as to why people get attracted to Bitcoin. The possibility for significant financial gain in the long is one of them, whereas others see it as a lifeline to escape capital control and a failing economy. The viability of this cryptocurrency has never been questioned, as more use cases emerge on a regular basis.
1) Bitcoin Is A Way Out From Financial Turmoil
Bitcoin is the first and foremost a prime example of how a currency not issued by a government or central bank can work just fine. That does not mean any cryptocurrency will make it, though, as there are plenty of useless altcoins to be found as well.
Despite its rather low adoption rate all over the world, Bitcoin has become a global phenomenon. Exchanging the cryptocurrency against any imaginable fiat currency is not that big of a problem anymore. Moreover, given the global nature of this decentralized cryptocurrency, Bitcoin is far more accessible than any other currency in the world today.
2) Bitcoin is An Investment Vehicle
Bitcoin holds a lot of promise to increase in value in the future. With a supply of only 21 million Bitcoin – divisible to 8 digits after the decimal – the current price of US$465 per BTC is vastly undervalued. Some people even predicted the price per Bitcoin could go as high as US$10,000, albeit that may be a bit too optimistic.
3) Bitcoin Is A Novelty And I Want In
As more people keep Bitcoin, the network only grows stronger due to its distribution all over the world. Unlike a bank, which is a centralized point of failure, Bitcoin has no entity or government controlling the generation and distribution of funds. Everything is in the hands of the people who use Bitcoin, and every person who becomes part of the network becomes a part of Bitcoin.
Who controls the Bitcoin network ?
Nobody owns the Bitcoin network much like no one owns the technology behind email or the Internet. Bitcoin transactions are verified by Bitcoin miners which has an entire industry and Bitcoin cloud mining options. While developers are improving the software they cannot force a change in the Bitcoin protocol because all users are free to choose what software and version they use.
In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.
As a decentralized form of currency, Bitcoin prides itself on having no governing body. It is completely run by the people who use it. However, many people wonder who actually has control of Bitcoin. There are some systems that are vital to keeping Bitcoin running properly. Its Blockchain technology isn’t automated, as some people believe, instead it relies on the hard work of miners to keep it going.
How does Bitcoin work ?
From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and enables a user to send and receive bitcoins.
Behind the scenes, the Bitcoin network is sharing a massive public ledger called the “block chain”. This ledger contains every transaction ever processed which enables a user’s computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses therefore allowing all users to have full control over sending bitcoins.
Bitcoins (or fractions of Bitcoins known as satoshis) can be bought and sold in return for traditional currency on several exchanges, and can also be directly transferred across the internet from one user to another using appropriate software. This makes Bitcoin a potentially attractive currency in which to settle international transactions, without messing around with bank charges or exchange rates. Some internet services (such as web hosting and online gambling) can be paid for using Bitcoin. The complexity and opacity of the system means it also appeals to those with more nefarious purposes in mind, such as money laundering or paying for illegal drugs. But most people will be reluctant to adopt Bitcoin while the software required to use it remains so complex, and the value of an individual Bitcoin is so volatile. Just as BitTorrent was not the first file-sharing service and Skype was not the first voice-over-internet service, it may be that Bitcoin will be a pioneer in the field of virtual currencies, but will be overshadowed by an easier-to-use rival, thus, there is no fraud, no chargebacks and no identifying information that could be compromised resulting in identity theft.
Can u profit from holding it ?
Over $1B of investment into Bitcoin and blockchain companies has taken place resulting in thousands of companies and hundreds of thousands of individuals involved from around the world. If you want to start earning bitcoin you first need to obtain a bitcoin wallet, which is used to send, receive and store your bitcoins. You can obtain one from an online based service such as Coinbase or Blockchain.info . These are two of the most used bitcoin wallet and come with an online and a mobile version. Having said that, the safest way to store your bitcoins would be offline. For that, you could use a so-called “cold wallet” such as Trezor.
Once you have a wallet service, you can establish multiple bitcoin addresses, which allow you to receive bitcoins from others. No real life addresses are necessary, just your bitcoin address will suffice for any digital currency transfers. All transaction can then be viewed on the blockchain at Blockchain.info. This is why bitcoin is considered as a semi-anonymous digital currency as transactions are linked to bitcoin addresses but who is behind those addresses is unknown.
How secure is it ?
Over $1B of investment into Bitcoin and blockchain companies has taken place resulting in thousands of companies and hundreds of thousands of individuals involved from around the world.
It should go without saying that you should treat bitcoins like the money in your bank account. Cryptocurrencies become more popular day-by-day, and thieves have definitely been paying attention. In the last five years, over $500 million of bitcoins have been stolen.
How is this done? For starters, 22% of all financial malware attacks target bitcoins. Over 12 exchanges (including Mt. Gox) have been hacked and there are more than 140 viruses out there that target bitcoins as well. On the upside, these threats also present new market opportunities for cryptocurrency related protection services.
Famous venture capitalist and Bitcoin proponent, Fred Wilson, believes that digital currencies will have to be more secure to gain mainstream adoption. This means exchanges and wallets are going to have to be better. Entrepreneurs around the world are trying to figure this out right now, and many of their new services could – in the process – also disrupt the financial system as we know it.
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Source : Bitcoin.org
Video Source : Bitcoin
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