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What Is Bitcoin? Should you buy it?


What Is Bitcoin?

Bitcoin is a new currency that was created in January 2009 by an unknown person named Satoshi Nakamoto and it is often described as a cryptocurrency. Through Bitcoin, you can make transactions anonymously as it is not controlled by any central bank or financial institute. Through Bitcoin, you can buy various stuff and make transactions securely, But most small people buy it as an investment because of its spontaneous growing value.


Cryptocurrency:

Cryptocurrency is a digital asset over which central banks or financial institutes have no control or regulation. It uses an online ledger with strong cryptography to secure online transactions. A cryptocurrency is a medium of exchange like normal currencies such as USD but designed for the purpose of exchanging digital information. Bitcoin was the first decentralized cryptocurrency.


white paper published by Satoshi Nakamoto

How Bitcoin Works?

There is one public account in digital form, of all the bitcoin transactions this is called a 'ledger'.A copy of this ledger exists on all the systems that are a part of the bitcoin network. The people who run this system are called miners. Their work is to verify transactions through solving complex math puzzles. Every bitcoin has a unique variable and the miners have to find it and they do it with the help of powerful computers. Once the equation is solved it is confirmed and added to the transaction chain and it forms a block.


Bitcoin as an Investment

some people use bitcoin as an alternative for physical assets, while some use them as an investment. But the main use of a cryptocurrency at present is like an investment. While many are in favor of Bitcoin as an investment many oppose it because of the reason that it is not physical like gold and is digital (does not has any physical value).The price of a bitcoin is determined by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls.


Chart for Price of Bitcoin

The price of Cryptocurrency fluctuate greatly but can be profitable if you invest with care. there any many cryptocurrencies and there are 4,000 cryptocurrencies in existence as of January 2021.

Also, during covid pandemic where many industries and mutual funds are struggling, the value of cryptocurrencies like Bitcoin and Ethereum has been on the rise.


Bitcoin as a medium of exchange

Bitcoin and other cryptocurrencies let you do transactions anonymously. Each Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer. You can get Bitcoin buy three ways:

  • You can buy Bitcoins using 'real' money.

  • You can sell things and let people pay you with Bitcoins.

  • Or you can create bitcoin using you computer by mining

bitcoin also has a negative expect, as it lets you do transactions anonymously people use it to pay for illegal things such as buying drugs, weapons, pay on dark web, etc. There one more thing that anyone can make his own cryptocurrency which makes a path for many fraud companies to come forth. So always invest in popular and trusted cryptocurrencies.


How can you buy bitcoin?

you can buy bitcoin from marketplaces called 'bitcoin exchange' which allow people to buy and sell bitcoins. Some of the popular bitcoin exchange are Coinbase,Bitstamp and Bitfinex. But, Befinix was once hacked in 2016 which can be a concern.


The Takeaway, Should you buy it?

No one can tell whats the future of bitcoin and other cryptocurrencies, you will have less legal protection and a high risk of losing some or all of your capital. there are a limited number of Bitcoins i.e. 21 million and we know that the demandof Bitcoin is high and the total number of bitcoins is less, so there should be an increase in the price of bitcoin, but bitcoin is not a physical thing that can be limited, its a computer file which can be created when needed. there is a small percentage of possiblity to increase the number of total bitcoins but its not Zero. Bitcoin has also lost 80% of its value multiple times over the past decade, including a handful of instances when it was halved in roughly a 24-hour period. Also bitcoinis not widely accepted as a medium of payment and not many transactions are made in bitcoin. however,if everything works fine there should be an increase in bitcoins price, but remember that no one can tell the future, the only thing we can do is assume. So, it would be better to make your own decision.


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