What is Bitcoin?
If you’re here, you’ve heard of Bitcoin. It has been one of the most frequent headlines in the last year – as a plan to get rich quick, end finances, give birth to a truly international currency, as the end of the world or as a technology that has improved the world. But what is Bitcoin?
In short, it could be said that Bitcoin is the first decentralized money system used for online transactions, but it will probably be useful to dig a little deeper.
We all know, in general, what ‘money’ is and what it is for. The most significant problem that has arisen in the use of money before Bitcoin is that it is centralized and controlled by one entity – the centralized banking system. Bitcoin was invented in 2008/2009 by an unknown creator under the pseudonym ‘Satoshi Nakamoto’ to bring about the decentralization of money globally. The idea is that currency can be traded across international lines without any difficulty and fees, checks and balances would be distributed around the world (not just on the books of private corporations or governments), and money would become more democratic and equally accessible to all.
How did Bitcoin come about?
The concept of Bitcoin, and cryptocurrencies in general, was launched in 2009 by Satoshi, an unknown researcher. The reason for his invention was to address the issue of centralization in the use of money that relied on banks and computers, an issue that many computer scientists were not happy with. Achieving decentralization has been unsuccessful since the late 1990s, so when Satoshi published a paper offering a solution in 2008, it was extremely welcome. Today, Bitcoin has become a well-known currency for Internet users and has led to thousands of ‘altcoins’ (non-bitcoin cryptocurrencies).
How is Bitcoin made?
Bitcoin is produced through a process called mining. Just as paper money is made by printing, and gold is mined from the ground, Bitcoin is created by a ‘miner’. Mining involves solving complex mathematical problems related to blocks using computers and adding them to the public book. When it started, a simple CPU (like the one in your home computer) was all it took to mine, however, the weight level increased significantly and you will now need specialized hardware, including a high-end graphics processing unit (GPU), to single out Bitcoin.
How do I invest?
First, you need to open an account on trading platforms and create a wallet; some examples can be found by searching Google for ‘Bitcoin trading platform’ – they generally have names that include ‘coin’, or ‘market’. After joining one of these platforms, click on funds, then click on crypto to select the desired currency. There are many indicators on every platform that are quite important and you should definitely watch them before investing.
Just buy and hold
Although mining is the safest and, in a way, the easiest way to earn Bitcoin, too much crowd is involved, and the cost of electricity and specialized computer hardware make it inaccessible to most of us. To avoid all this, make it easy for yourself, enter the amount you want from your bank directly and click “buy”, then relax and watch your investment increase in line with the price change. This is called an exchange and takes place on many exchange platforms available today, with the ability to trade between many different fiat currencies (USD, AUD, GBP, etc.) and different crypto coins (Bitcoin, Ethereum, Litecoin, etc.).
If you are familiar with stocks, bonds or Forex exchanges, then you will easily understand crypto trading. There are Bitcoin brokers like e-social trading, FXTM markets.com and many others to choose from. The platforms provide you with Bitcoin-fiat or fiat-Bitcoin currency pairs, for example BTC-USD means bitcoin trading for US dollars. Watch out for price changes to find the perfect pair according to price changes; platforms provide price among other indicators to give you appropriate trading tips.
Bitcoin as stocks
There are also organizations set up to allow you to buy shares in companies that invest in Bitcoin – these companies trade back and forth, and you just invest in them and wait for your monthly benefits. These companies simply pool the digital money of different investors and invest on their behalf.
Why should you invest in Bitcoin?
As you can see, investing in Bitcoin requires that you have some basic knowledge of currency, as explained above. As with all investments, this involves risk! The question of whether to invest or not depends solely on the individual. However, if I were to give advice, I would advise investing in Bitcoin for the reason that Bitcoin continues to grow – although there has been a significant period of boom and bust, it is very likely that cryptocurrencies as a whole will continue to grow in value over the next 10 years. Bitcoin is the largest and most famous of all current cryptocurrencies, so it is a good place to start and currently the safest bet. Although it is volatile in the short term, I guess you will find that bitcoin trading is more profitable than most other ventures.