The digital currency – Bitcoin, is causing quite a stir in the market place these days. This relatively new type of currency can be thought of as a code. It is mined on computers by users called Bitcoin Miners around the world. The best aspect of this digital currency is that it is not owned by any one bank or government.
Bitcoin is the first digital crypto-currency that is gaining popularity and acceptance with the public and retailers alike. Just like other currencies, Bitcoins can be used as a form of payment.
Currently, not all merchants accept Bitcoins, but the numbers who do is rising daily. It is also possible to trade Bitcoins in a Bitcoin Exchange.
before You Invest in Bitcoin
Bitcoin is totally different to a central bank and even to the MasterCard or Visa Network as there is no central authority running it. Transfers and exchanges of Bitcoin are done directly by users and miners – peer to peer system. Resulting in much lower transaction fees.
Bitcoins are produced using software and computers in a process involving complicated algorithms. Miners actually create the Bitcoin and they are rewarded for their efforts.
There is a cap on the number of Bitcoins which are mined. The number is 21 million and it is expected that this number will not be reached until 2140. That means the value of Bitcoin will only increase from here on out.
Blockchain is a public ledger that records all Bitcoin transactions. Any user may view this record in order to verify transactions and this transparency or access to the ledger, helps keep the currency safe.
To aquire Bitcoin you need to mine for it or buy it through an exchange. Many websites have been set up which help you locate local people willing to buy or sell Bitcoin to you.
Your Bitcoin is stored in a Wallet. Instead of using an email address for access, your key to your wallet is a long string of letters and numbers. You use this key to send or receive Bitcoin into your wallet.
Verified Bitcoin transactions cannot be stopped or refunded. If you lose access to your wallet, your funds are lost. Therefore, it is important to protect your wallet or backup it up to another device.
The volatility of Bitcoin is probably the biggest risk. The value of Bitcoin fluctuates wildly some days! Depending on when you invested this could be good or bad. In 2013 the price quickly went from around $14 to $1,200 USD, but then dropped to $632.
If you are willing to take risks, investing in Bitcoin could be extremely worthwhile.