Bitcoin is a cryptocurrency and a payment network. It’s the first decentralized digital currency, as the network operates on a peer-to-peer basis without any central authority, bank or third party intermediary. The network is made up of computers around the world that together keep track of Bitcoin transactions in much the same way that banks maintain ledgers. If you’ve never heard of Bitcoin before, you’re not alone, as it only gained mainstream attention this year when it started trading in earnest on exchanges like Bitstamp and BTC-e. But don’t let that put you off — there’s more to Bitcoin than its volatile price fluctuations might suggest. Let us take an in-depth look at what exactly this digital currency is, where it came from, how it works, and why you should care about it if you don’t already.
What is Bitcoin?
Bitcoin is a cryptocurrency — a type of digital asset that can be transferred via computer networks. Bitcoin was the first cryptocurrency built on blockchain technology, the same principle that underpins most other popular cryptocurrencies like Ethereum and Litecoin. Though it is sometimes compared to gold, Bitcoin is not a physical asset. It is a virtual currency, which means it exists solely as a record on computers all over the world. As such, there are a few key differences between it and fiat money. First, Bitcoin is decentralized. In other words, it isn’t controlled by any single entity, bank, government, or person. It isn’t “banked” and it isn’t managed by anyone other than a decentralized network of computers. This means it’s decentralized in the sense that no singular authority controls it. It’s decentralized in the sense that there is no central authority or person managing it. You can’t tell me to hold onto it or spend it — you are the manager.
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How do you use Bitcoin?
Like any other kind of virtual currency, you can use Bitcoin to buy things online. You can use it to pay for hotels and flights, cars and real estate, as well as pizza delivery and other services. Because it is decentralized, there are no real-world or other third-party intermediaries that handle the transactions. This removes many of the barriers associated with physical money, like needing to physically be present in a bank or business to make a payment. Furthermore, because it’s decentralized, there’s no way to trace a transaction back to you. This is especially useful for people who wish to buy things that might otherwise be frowned upon, like illegal items or weapons.
Where to buy and sell Bitcoin
One of the most important parts of buying and selling Bitcoin is figuring out where to buy. While it’s certainly possible to buy Bitcoin directly from other people, it often involves setting up a Bitcoin exchange account with a broker and trading in your own money. If you’re planning on trading in a large amount, you’ll likely have to go through a broker or exchange that is regulated. When looking for a Bitcoin exchange, there are many things to consider. First and foremost, you will want to make sure the exchange is trustworthy. This means finding an exchange that is secure, has good reviews and is regulated by a reliable governing body like the US Securities and Exchange Commission (SEC). Next, you’ll want to find an exchange that has a large number of trading pairs available, which will make it easier for you to buy and sell different currencies and stocks. You’ll also want to look for an exchange that has a variety of payment options available, including a bank account, debit card, and credit card. Finally, you’ll want to make sure the exchange has easy-to-follow trading and fee-handling procedures.
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Why is Bitcoin worth anything?
Like fiat money, Bitcoin isn’t backed by anything tangible. But it is also not a fiat currency that is issued by a government. Instead, it is generated and controlled by everyone who uses it — just like the computers that keep track of it. As a result, there is no official number or amount of Bitcoin that is “worth” anything. Bitcoin is not backed by anything except the trust of those who use it. This means its value is entirely up to the people using it. In other words, people choose to either use it or not. And they choose to do this, in large part, because of its trustworthiness.
Should you buy Bitcoin?
Like any investment, Bitcoin is not an ideal “one-stop solution” for wealth preservation. However, it does have some interesting properties that make it a more interesting option than fiat money. First, it’s decentralized. This is helpful in the sense that governments and corporations can’t arbitrarily freeze your assets or seize them. Next, it’s deflationary, meaning it becomes less valuable over time. This is beneficial as it makes it less valuable for people to seize.
Conclusion
Bitcoin is a new cryptocurrency that has recently gained in popularity and is trading at record high prices. While it is sometimes compared to gold, it is not backed by any commodity and has very volatile price fluctuations. If you’ve never heard of Bitcoin before, you’re not alone, as it only gained mainstream attention this year when it started trading in earnest on exchanges like Bitstamp and BTC-e. However, don’t let that put you off — there’s more to Bitcoin than its volatile price fluctuations might suggest. Let us take an in-depth look at what exactly this digital currency is, where it came from, how it works, and why you should care about it if you don’t already.
