Bitcoin is a very
recent coin that changed the entire world by just being a digital coin which
has revolutionized the entire concept of what money actually means. It was
created by an anonymous person that is known as Satoshi Nakamoto. The identity
of this person was never discovered, and that’s also why Bitcoin is such an
important part of today’s economy.
Although money is usually represent by a coin or a note, with a digital
currency everything is different and doesn’t work like normal money, the one we
are used to.
With regular money
that you have in your bank account, you need to use a central ledger, someone
that essentially manages everything you do with that amount of money you have
available, in order to “protect” you from being robbed or worse. If you have
money, then you have a bank account, and banks are the ledger. Unfortunately,
banks are vulnerable to technical failures, hackers, malicious viruses, and
other problems that can leave you without any money. With Bitcoin that is
something that would never happen. There is no authority managing your account,
which is an incredible advantage that many thought that couldn’t be possible. Basically,
everyone acts like the ledger with digital currency.
Blockchain
Bitcoin Blockchain is
a data file that has all the records of the previous transactions, including
also the creation of new unit of this currency. It’s the ledger. It is a
sequence of several blocks where the previous one has all the information about
new transactions. The first block was created in 2009. Everyone is able to
actually download and read the Blockchain, because it’s public. It’s what
contains the information about the ownership of Bitcoin in any given time.
Everyone can manage their copy of the ledger. There is no one who has the right
to keep account but Bitcoin has some rules predefined and there are people who
monitor others to make sure they follow the rules. However everyone can see the
previous transactions, BItcoin is completely anonymous. No one is capable of
seeing what the name of the person is, because everyone has a pseudonym.
In order to use
Bitcoin, you will have to download a wallet that is proper for this currency
and it will receive, store, and also send Bitcoins (or fractions of it). There
is also the possibility of exchanging US dollars for it, which is very good.
You can use that money to buy this currency, or even other assets. Because
Bitcoin has become so popular all over the world, the price of large exchanges
is competitive regarding small bid spreads. Most of the exchanges provide order
books and other financial tools so that the trade is as clear as it can be. In
order to own Bitcoin, you need a buyer to broadcast the network of people that
the seller’s address is now the owner of a specific amount of Bitcoin. All of
this information will be spread on the network until everyone is informed about
the transferring of ownership.
Bitcoin Mining
In the beginning of
this currency, it was very profitable for people to mine this cryptocurrency,
but nowadays is not since many people are doing it, and that gives people less
probabilities of actually getting Bitcoins, which is only natural. However,
it’s always possible to do it and you can do it just by using your computer,
which is great but you will need mining software and hardware in order to
actually do it properly.
Software – You will
need to have a wallet in order to put your Bitcoins there.
Hardware- You have
incredible processors known as ASICs that have the best characteristics for you
to mine Bitcoins faster and more successfully. You need one of these nowadays
if you want to mine some good amount of Bitcoins.
What are the risks about Bitcoin?
Although the idea of
any cryptocurrency is wonderful since the main goal is to create a currency
that no one can control, especially governments and banks, there are still some
risks that people can have. Something very important about Bitcoin is its
protocol that can’t be changed. However, if a group of individuals decides to
do it, then modifications may happen. This can be seen as a disadvantage or
not, it depends on the person since there are people who would like
modifications and some who don’t. Bitcoin is expensive when it comes to the
energy needed to mine it and to have a computational power, which is highly
needed. There are also the costs of operations and infrastructures, and those
aren’t low. Lastly, any cryptocurrency is volatile which means that you the
price is not fixed, it’s always changing because of the demand of this
currency. This means that a Bitcoin can cost 5,330EUR now but in 2 days it can
cost the double.
Why buy Bitcoins?
Even though there are
a lot of risks regarding this cryptocurrency, there isn’t actually a certain
period of time to know where all of this demand will going to end, if it is
going to. This can be considered as a stable currency regarding its prospects
to the future, which are incredible. You should buy Bitcoins, since there are
imaginable possibilities for it. Buying this cryptocurrency is an amazing
investment, since there is no statistics that it will stop being used. In fact,
day by day, more people are using it as a normal trade coin.
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