What is Bitcoin?
Bitcoin is a digital currency released as open-source software. Released in 2009 by an unidentified genius nicknamed Satoshi Nakamoto. Bitcoin uses a peer-to-peer protocol for all transactions, which helps Bitcoin eliminate the middleman step in the transaction execution process. Basically, Bitcoin transactions will be made directly from the sender to the receiver with extremely low transaction fees (almost zero) without having to go through any intermediary organizations or individuals.
With important features such as anonymity, no transaction fees, more and more people trust and accept it. Bitcoin has a high level of security, appears and is divided completely automatically based on algorithms and anyone can own it through deciphering mathematical equations and giving answers, aka “mining”.
The History of Bitcoin
In 2008, the world financial crisis occurred due to the United States housing bubble. This led to Lehman Brothers – the 4th largest US investment bank declared bankruptcy with a debt of $619 billion.
The US and world economies wobbled. A series of consequences such as unemployment, business bankruptcy, etc.
Doubts about the traditional banking system arise from here. At the time, the domain bitcoin.org was registered on August 18, 2008.
On October 31, 2008, the Bitcoin Whitepaper was released by Satoshi Nakamoto.
January 3, 2009 Genesis Block – the first block on the Bitcoin Blockchain was born. For the first time, a currency that was not controlled by a government or a central bank was born.
How does it Work?
The answer to the above question is Blockchain – Decentralized Storage.
Bitcoin works through the blockchain – a public ledger that records all transactions. The registry is maintained by a network of peer-to-peer nodes. As transactions take place, they are grouped with other transactions in a “block”. Blocks are verified and added to the chain using cryptographic methods. This measure has a high level of security and is resistant to hacker attacks.
Once added to a blockchain, blocks are propagated to other nodes of the network. Each node keeps its own copy of the blockchain and checks each transaction along the way. The process is immutable and accessible to all; this makes hacking impossible.
Pros and Cons of Bitcoin
- Security: Thanks to blockchain, the Bitcoin system is very secure. Relative anonymity makes problems like identity theft unlikely.
- Decentralization: Bitcoin is completely decentralized. Hence not subject to any interference by politicians or bankers.
- International: Bitcoin is a truly international currency. Making international transactions with Bitcoin is extremely easy. Cryptocurrencies will likely become more and more valuable as we move towards a more global economy.
- Bitcoin could be the future: Cryptocurrency is rapidly gaining acceptance and widespread use. Many large companies in the world of finance and technology confirm that a new era is underway. The future is uncertain, but Bitcoin could also be a game changer.
- Market share: Bitcoin occupies a large share of the cryptocurrency market. It is the first and best known digital currency today. If you want to invest in cryptocurrencies, Bitcoin is the most obvious choice.
- Volatility: Bitcoin has experienced frenzied price fluctuations. Value increases exponentially, but always in the face of economic bubbles. As with many other investments, trade only what you can lose.
- Bitcoin legal uncertainty: The legal and regulatory status of Bitcoin is uncertain in many territories.
- Scams and Hackers: Cryptocurrencies are not immune to scams. Multilevel models that promise huge profits tempt many traders and lead to losses. Currently, exchanges are increasing security; so scams can become rare.
- Bitcoin may underperform new cryptocurrencies: Although it is the first and most valuable cryptocurrency, some argue that BTC is lagging behind other alternatives. Since BTC is decentralized, it can’t really grow much. No company backs or monitors. Any change to the network or system requires the consensus of a majority of miners. Competing currencies use newer technology and can benefit from a centralized model. BTC has taken the lead, but this position could be challenged by new competitors.
Is Bitcoin Safe to Invest In?
For those who are new to BTC in particular, the Crypto market in general wants to know if Bitcoin is safe. To get the answer, we need to learn about the technology used to create this coin, the security and privacy features of Bitcoin owners.
Bitcoin is a currency created based on Blockchain technology, designed to resist data change. This is considered a breakthrough for future finance.
A blockchain is a digitally distributed, decentralized, public ledger that exists across a network, stores all transaction information and ensures that it will not be changed in any way. Blockchain will be distributed data stored and validated on many different computers connected in a common network.
No person or machine can change, delete, or overwrite the data in it. Note that although the information cannot be changed, it will be added when there is a consensus of all nodes in the common system. And yet, thanks to Blockchain technology, the ability to transmit data does not require and requires intermediaries to confirm information. People can share information for many units in the same construction network.
Security and Privacy
The Bitcoin cryptocurrency has very high security, the appearance of BTC and the division for miners is completely automatic according to the algorithm.
It is very difficult to hack into the Bitcoin system to profit, change the amount of BTC because the hacker not only has to infiltrate a single computer, but he needs to simultaneously hack into more than half of the network’s computers, accounts for about 51% of all computers scattered around the world, at the same time. Therefore, everyone can rest assured that Bitcoin cannot suddenly disappear or change abnormally.
In addition, the Bitcoin network is protected by when each transaction is formed, its information is immediately recorded on a new block. Participants are required to decrypt to confirm the transaction, then the information is recorded in a distributed ledger distributed on many different computers. Adding a new block to the ledger needs to be agreed on the validity of the block, can not arbitrarily delete, overwrite a previously used block.
How to Invest in Bitcoin?
Cryptocurrency investing can take many forms:
- Bitcoin mining: A person can become a bitcoin miner provided they have a massive computing system loaded with different software and ample electricity to start with.
- Buy and hold BTC for a long time: You don’t need to know too much about technical analysis, just wait for low price to buy and high price to sell to make a profit. However, making buying and selling decisions requires investors to know how to evaluate and predict fundamental analysis. You can buy directly on the exchange or on the black market.
- Bitcoin trading: This is a form of making money from BTC in a short time from just a few hours or a few days. You will become a Trader, using the technique of analyzing price charts with BTC, finding the appropriate buy and sell points.
There are also many other forms of investment such as ICO, margin trading, etc. that people can refer to and choose the method that suits their risk appetite.
Above is all important information about Bitcoin. Hope you guys have got the answer to the question What is Bitcoin? From there, understand and make the most effective investment decisions.