What is Bitcoin?

//What is Bitcoin?

What is Bitcoin?

By |2018-06-18T12:11:46+00:00June 18th, 2018|Wealth & Home|

In 2009, an unknown person by the alias Satoshi Nakamoto created bitcoin, a controversial cryptocurrency, or digital currency, that has grown in popularity over the past decade.

If you are anything like myself, you probably have a lot of questions about bitcoin. What is it? What does it actually do? Is it safe? Is it the way of the future?

Some people praise the cryptocurrency, while others warn about its dangers. Through Wolf’s Eyes is here to teach you about the new craze and help you decide if an investment is right for you.

What is bitcoin?

Bitcoin is a cryptocurrency used to make anonymous exchanges online. Because of this, you can never physically hold a bitcoin in your hand; it technically doesn’t even exist. Transactions are made electronically and can go to anyone, anywhere in the world.

Bitcoin is unique because it cuts out the middle-man. Bitcoin users don’t deal with banks during monetary exchanges, so transactions feel direct and seamless.

Why are people using bitcoin?

Bitcoin is attractive because it is unregulated. Unlike traditional payment companies that have a governing body, bitcoin is maintained by a decentralized network of computers. Hence, the government can’t just shut it down. Even if the United States wanted to implement regulations, it would prove difficult because the computers and people watching over bitcoin in different countries would still be able to continue to do so. Bitcoin essentially is the perfect form of payment for those who are skeptical of the government.

Anonymity is also another appealing attribute. Transactions are not affiliated with any numbers, only a series of special numbers and letters. Bitcoin, while interesting and potentially attractive, does have a bit of a dark side, though: people looking to engage in illegal activity online are now using bitcoin as their currency of choice.

Where can I buy bitcoin?

Before you purchase the currency, you must create a wallet. Explore options through Coinbase, Blockchain, Bitcoin Wallet for Android, or Blockchain Wallet for iOS. Your bitcoins can be accessed from a website on your computer or an app on your phone. Simply create a free account, connect your bank account, and start buying and selling bitcoin.

Oddly enough, there is a common misconception that bitcoins are stored in wallets. That is not the case. Bitcoins actually are not stored anywhere. Wallets are only created to guard the unique “key” that is needed to approve all of your transactions. People with large quantities of bitcoin tend to create multiple wallets for security purposes.

Once your wallet is created, you can begin to purchase bitcoins. Classic payment methods such as credit card, bank transfer, or debit card can be used to purchase bitcoins. Purchases are made on bitcoin exchanges. When you are on the exchange, acquiring or giving away bitcoin is as easy as pressing “buy” or “sell.”

The price of bitcoin is constantly fluctuating—one bitcoin can cost nearly $10,000 on any given day. However, you don’t need to purchase a full bitcoin. Purchase half a bitcoin or .0008 of a bitcoin, whatever you want to invest. Also, keep in mind that transaction fees can incur and vary depending on who mined your bitcoins and what database you are using.

What do I do with bitcoin?

While bitcoin isn’t widely accepted yet, some major retailers recognize bitcoin as a valid form of payment. Use bitcoin to order furniture on Overstock.com, book a flight on Expedia, or buy jewelry from Reeds Jewelers.

However, most people buy bitcoin as an investment with no intention of ever using the currency to purchase goods and services. In 2017 alone, bitcoin’s value increased by more than 1,000%, reaching a peak of $11,350 in November. Investors see potential in the currency and prefer to constantly trade it in an effort to see a return.

Is bitcoin a smart investment?

The answer to this question all depends on who you ask. Through my research, I’ve noticed that many people advise against it.

You can’t deny that bitcoin is a risky investment. Because the currency is unregulated, and new bitcoins are created each day, its value fluctuates. Even though bitcoin hit an all-time high in November 2017, bitcoin quickly dropped more than 18%. Bitcoin is highly volatile and unpredictable.  If you do choose to invest, always proceed with caution.

It is hard to tell if bitcoin is the currency of the future. Yes, there are advantages to using the currency but some argue bitcoin is just a bubble waiting to pop, or at least that’s what billionaire investor Warren Buffett believes. Buffett claims, “I can say with almost certainty that [bitcoin] will come to a bad ending,” in a recent interview with CNBC.

Whether bitcoin is or isn’t for you, be sure to keep an eye on the popular cryptocurrency. You never know if the value will fall or climb tomorrow.

Have you recently invested in bitcoin? Share your story with us or tell us in the comments below about your experience.

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One Comment

  1. Chris June 20, 2018 at 8:32 am - Reply

    This is a very timely and interesting article on bitcoin. I am certainly going to go do some more research.

    Thanks!

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