Bitcoin although the most talked about currency in the world, yet is still a conundrum to many. Here’s everything that you need to know before you invest in Bitcoin.
Bitcoin is an intriguing, twisted, new-age currency that exists solely online and lets the user be fairly anonymous.
Hearing about Bitcoin for the first time? Does it sound unsafe and suspicious? Well, we’re here to dissipate the theory about Bitcoin and answer some Frequently Asked Questions on it.
What is Bitcoin?
Bitcoin is a type of currency used to pay for goods and services just like other currencies.
Unlike traditional currencies, Bitcoin is:
- Supply of Bitcoin is not controlled by any government or any central bank.
- Bitcoin is virtually available. It is solely online, traced by blockchains, a continuously evolving group of records which provides a detailed history of each Bitcoin.
- Bitcoins are tied to a wallet ID and not with personal information.
Bitcoin was developed in 2008 with the pseudonym “Satoshi Nakamoto”. A year after it was developed, it started to be traded and mined. Transactions with Bitcoin does not require a middleman and there are no banks with hefty fees in between. Transaction is done through wallet ID and no personal information is required.
Is Bitcoin really anonymous?
No, Bitcoin is not entirely anonymous. Talented hackers and government agencies have the means to trace the very minute details about Bitcoin. Bitcoin transactions are typically done through a peer-to-peer network.
If a hacker can connect multiple nodes to the Bitcoin network, the combined data collected from each of these nodes when studied is enough to detect from where a particular Bitcoin transaction originated.
Bitcoins are sometimes used to link to real identities only if it is used in combination with a Bitcoin address. This involves the address utilized to deposit or withdraw money to or from an exchange or wallet.
How do you get Bitcoin?
- You can purchase Bitcoin with cash, credit or debit cards and wire transfers. But at first you need to establish a Bitcoin wallet which is where your wallet ID will be derived from. Your Bitcoin wallet will store all your Bitcoins.
- You can mine Bitcoin. It’s like digging for money on the web. Bitcoin miners use special software to crack math problems and are issued a certain number of Bitcoins in exchange for solving the problems correctly.
There is a specified amount of Bitcoins available on the internet and not an endless proportion floating out
in cyberspace.
Is Bitcoin mining legal?
The process of mining if Bitcoins sounds illegal but isn’t. There are international laws regulating the treatment of Bitcoin. Laws regarding Bitcoin are still developing on the use and distribution of it. Yet it is still risky when it comes to taxes.
The biggest issue arises when people make purchases with Bitcoins.
How to use Bitcoin?
Bitcoins are utilized on a large scale to purchase things on the dark web. Drugs, gambling are the most purchases done using Bitcoins.
So, what do you think where you can use Bitcoins legally?
Microsoft, Dell, REEDS, few airline sites accept Bitcoin as a legitimate payment.
Bitcoins can be turned into cash via gift cards in places like Amazon, Walmart, etc.
Is Bitcoin safe to use?
Online thieves i.e. hackers are always after your Bitcoins. You must ensure that you store your Bitcoins in a safe place.
Bitcoin wallet is one of the most secure places to store Bitcoins.
Ledger, Trezor are Bitcoin security companies that provide a range of Bitcoin storage devices. Ledger Nano S is the most secure wallet.
Should you invest in Bitcoin?
Hope you have got knowledge about the basics of Bitcoin. But before you think of investing in Bitcoin or confused whether Bitcoin is the right investment for you, you must consider a couple of things listed below:
- If you think of mining Bitcoin, you might have to spend a lot. If you are not a computer genius, you need to buy a special computer software to calculate 64 digit codes to earn a single bitcoin. The software itself is highly expensive.
- Investing in Bitcoin is not similar to an investment in the stock market. And having Bitcoin is not similar as having cash in hand. It can’t be regulated through brokerage. Because of its unregulated nature, the price of Bitcoin fluctuates rapidly. Also, it doesn’t have a tangible value like Gold.
- There is a stipulated amount of Bitcoin available and hence demand is high. Rumours say someday government agencies may buy Bitcoins which implies that demand for Bitcoin will increase with time.
- You should never invest more than you are willing or able to lose in Bitcoin. It’s a very risky investment.
- You should not attempt to buy all your Bitcoins at one transaction.
Summary
Bitcoin has become popular and allows for legally questionable purchases. The cryptocurrency is quickly becoming a mainstream investment option.