Sirwin
Sirwin

Bitcoin for Beginners: What exactly is Bitcoin? - Crypto Stuff

By jedryccc | OMG - Online Money Guide | 19 Jun 2020


 

It was the beginning of 2009, the housing market just crashed when the mysterious Satoshi Nakamoto launched the cryptocurrency juggernaut Bitcoin. It was created as a peer-to-peer electronic cash system. This revolutionary digital asset allowed users for anonymous transactions in the blockchain. You might have heard of it when its value boomed to the thousands in late-2017.

 

The Digital Asset


As of the time of writing, Bitcoin currently has a value of around $9,000. It can be used to buy goods and services. Its price is dictated by supply and demand. The more people want to have one of the digital currency, the higher will its price be. At the same time, with only a finite supply of bitcoin, there is scarcity. There is a cost to mining bitcoin and that is also a factor. By 2140, all bitcoin will be mined and the price of it would stabilize and would make bitcoin a feasible digital currency with less volatility.

Mining Bitcoin

 

bitcoin-2722392_1920.jpg

With a market cap of more than $25 billion, you might ask: Where does it come from? The supply of bitcoin is gathered by miners. People use specialized equipment called application-specific integrated circuit (ASIC) miners. When someone sends bitcoin, there is a transaction and these transactions are combined in what is called blocks where they are added to a public record, called the blockchain. When miners add a new block, part of it is verifying the transactions, making sure there is no mistake in the transfer.

With this, miners are rewarded for verifying these transactions on the blockchain and they get their reward in Bitcoin. The reward given in each block is called the block reward and this reward is halved every 210,000 blocks which happen in around 4 years. In 2009, it was 50 and today it's 12.5 per block. Halvings reduce the rate on which coins are created which lowers the supply created which then usually causes the cryptocurrencie's price to go up. The last halving was just this May.

 

Why Bitcoin?


The cryptocurrency is continually being adopted into the mainstream. Many "altcoins", cryptocurrencies like Bitcoin have popped up, including Ethereum.

 

People prefer to use cryptocurrencies like Bitcoin because they provide anonymity with decentralization. Unlike in banks where there is a middleman, in transferring Bitcoin, the transactions are verified by the public ledger which holds all transactions. It is essentially, verified by the community. The only thing seen when you make a Bitcoin transfer is the wallet address of the receiver and the receiver only sees your wallet address. A wallet address is composed of a series of random letters and numbers, think of it as a very long and complicated pseudonym.

 

The Dark Side of Bitcoin

 

scam-4126798_1920.jpg

With Bitcoin providing anonymity, it becomes a bit of a double-edged sword. Many criminals have used Bitcoin to do fraudulent transactions and to launder money due to the decentralized and anonymous aspect of it. Some transactions involve illegal goods and services. Bitcoin has value and you can really use it for shady things, especially with the anonymity it gives.

There are also many cryptocurrency scams out there. When a transaction is done on the blockchain, it can never be returned. If some bitcoin is sent to the wrong address it can never be returned. This is taken advantage of by many scammers, where there can be no refunds.

It is important that when using cryptocurrency one is cautious and careful.

 

The Bright Side


Still, Bitcoin has started a revolution. It is not just a technology fad. Many people think Bitcoin is the future. It has paved the way for digital transactions and proved something great, that there can be something in the digital world that is valuable.

 

Sometime in 2140, Bitcoin will not be volatile and it will be a feasible means of exchange.

 

Should You Invest in Bitcoin?

 

round-silver-and-gold-coins-730564.jpg

Probably not, it is a high-risk investment and its value very much changes by the minute. If you want to invest in Bitcoin you need to be very sure and have done the research. Many have tried to predict the price of the cryptocurrency only to fail in the extremes. As with most high-risk assets, no one knows what will happen.

 

The Future of Bitcoin


Bitcoin has started the cryptocurrency world. It is the first cryptocurrency which showed the potential of transactions in the blockchain. Anonymity and speed, Bitcoin will be continually used in the market by people like you.

 

If you wish to read more about Bitcoin, a great way to know more about it is by reading the white paper of Satoshi Nakamoto which shows the goals of the cryptocurrency.

Read it here: https://bitcoin.org/bitcoin.pdf

This is a reblog from Hive, you can follow me there too: https://hive.blog/crypto/@onlinemoneyguide/bitcoin-for-beginners-what-exactly-is-bitcoin-crypto-stuff

I also have a Facebook page: https://www.facebook.com/olmoneyguide

How do you rate this article?

1


jedryccc
jedryccc

I like writing to help people!


OMG - Online Money Guide
OMG - Online Money Guide

Explainers and informative articles. Learn more about cryptocurrencies and the like. How to avoid scams and how to earn more.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.