Beginner’s Guide to Bitcoin
What is Bitcoin and should I buy or sell my Bitcoin? oh if only I had 1 bitcoin for every time I have been asked these questions.
So let’s take a moment and dig into this gold rush of the digital cryptocurrency age and see what it all means and answer some of the common Bitcoin questions:
Where did Bitcoin come from?
Bitcoin emerged in 2008 when Wall Street was taking serious heat regarding unscrupulous investors and banks mistreating borrower’s money, practicing nepotism, and generally rigging the system. Satoshi Nakamoto, an unknown individual or party, wrote the white paper for Bitcoin and is the person(s) behind the movement of decentralized currency.
By 2010, the first purchases were made using the cryptocurrency and in 2011, Nakamoto released the source code and domains to the general public before disappearing.
What Is Bitcoin?
Bitcoin is a digital currency that exists solely on a decentralized network so it is completely independent of government regulation or even ‘human’ ownership. It has no physical backing like gold or paper for instance and is, although there are some exceptions, completely anonymous.
This means the people utilizing the peer-to-peer network make transactions yet retain anonymity, being that there are no account numbers, names, SSNs, or any identifying materials within the network.
The entire code is built atop blockchain technology and utilizes other computers within the network to validate, or in other words ‘verify,’ transactions made from one peer to another. Blockchain technology has evolved, expanded, and progressed at an unprecedented rate.
How Do You Mine Bitcoin?
There are currently some 5 million Bitcoins left to mine of the 21 million in existence. To “mine” you need a super powerful, high-energy, behemoth-like computers that work to ‘crack’ Bitcoins algorithm in hopes of gaining a piece of the gold. The GPU mining rig, operated by multiple users across the world, works tirelessly to solve this mathematical equation and, every time an algorithm is ‘solved,’ the equation becomes harder to break.
Is Bitcoin a good investment?
Bitcoin is a viable currency. It has a value, is backed by its own network, and can even transfer into alternate cryptocurrencies backed by the US dollar. In essence, Bitcoin is a currency, utility, and also what many consider to be a good investment. However, every opportunity is going to come with risks and this phenomenon marries Bitcoin.
For one, the lack of government regulation is a major selling point of the cryptocurrency, but this can backfire. Losing coins or having your account hacked can mean an unsolvable problem due to the lack of a centralized body and the extreme encryption of accounts and transactions.
A quick cursory glance at Coinbase which allows you to track Bitcoin’s value throughout its history will show you exactly how volatile the currency is! You may purchase, obtain, or mine Bitcoin at a certain time and in the blink of an eye that value can drop by 20 or 30 percent—and with Bitcoin, these swings are common.
In fact, it’s this very volatility that piques people’s interest with Bitcoin, seeing as in October of 2017 it was valued around $5k and, by the end of the year, hit a high of $19k. The value of Bitcoin as of the time of writing this post is around $6300 and yet there are “analyst” who predict that this will rise to over $22 000 by the end of 2018.
We have seen sudden radical changes in Bitcoin values in the past, so one thing is certain…anything is possible in any direction. Just like any other investment, be aware of the hype, really understand the investment and then make a financial decision that is right for you.
Note: none of this should be taken as investment or financial advice. See the help of a professional.