About bitcoin and the technology behind it
Bitcoin is one of the hottest topic in year 2017. Since it first begins in 2009, very few people had heard about bitcoin, lest terms like cryptocurrency and blockchain. People mentioned bitcoin in the early days and hardly anyone take notice of it. It was used as the virtual “currency” in computer games. Very few people actually bought bitcoin and most of them don’t buy it as an investment until quite some time later.
To cut it short, bitcoin is a new currency that was create in 2009 by an unknown person, or a group of developers using the alias Satoshi Nakamoto. All the transactions can be make without middle men – mean there are no banks. It is surely intriguing but this is real. Bitcoin at first can be use to book hotels on Expedia, shop for furniture and the likes and as well as to buy Xbox games. Nobody thought of it much until its value increase to thousands and more.
Anonymous buying is always related to bitcoin. Payments are easy and cheap especially in transnational payment. There are no credit card fees so many people like them. Imaging there is also no regulation and not tied to any country, which is simply amazing. Of course there are people who buy bitcoins as an investment, which seems to be increasing rapidly. Now almost everyone on earth heard about bitcoins and altcoins.
There are many bitcoin exchanges currently in the world. By market volume, Binance and Coinbase are most well known, while there are Kraken, Bitstamp, Coinrail…etc. You can buy bitcoins with currencies, but transaction fees are very high at the moment. There is also peer- peer buying and selling of bitcoin locally.
Think about localbitcoins.com and paxful.com just to name a few. However, one need to take note of the high amount of scam cases involving with cryptocurrency. If misuse it, it can cause distress to people. Hackers are always there so anyone who buy bitcoins or altcoins need to be vigilant always and do your own research for their every decision made.
Bitcoin is not advisable to store at exchanges as it is not the proper way to do so. Instead, bitcoins are store in a “digital wallet,” which exists either in the cloud or on a user’s computer. There is passwords to these wallets, and never give the private key to anyone. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Please note that bitcoin wallets are not insure by the FDIC unlike the banks.
Bitcoin is created by the blockchain technology which is rapidly being adopted by many sectors worldwide. Blockchain is also embrace by financial institutes rapidly. More information about blockchain shall be made available soon….
The technology behind bitcoin
Behind bitcoin is a revolution technology call blockchain, which is sure to take the world by storm. So how does blockchain comes about?
Lets go deeper into this technology. A block is the current part of a blockchain, which records some/ all of the recent transactions. For each completion, a block goes into the blockchain as a permanent database. Each time to complete a block, a new one is generate. There is a countless number of such blocks in the blockchain, connected to each other (like links in a chain) in proper linear, chronological order. Also, every block contains a hash of the previous block. The blockchain has complete information about different user addresses and their balances right from the genesis block to the most recently completed block.
What is interesting about it is, the blockchain was designe so these transactions are immutable, meaning they cannot delete. Then the blocks are add through cryptography, ensuring that they remain meddle-proof: So that means, the data can be distribute, but cannot copy. Now there is a problem in creating issues of storage and synchronisation. This is due to the ever growing size of the blockchain.
Why should we buy bitcoins?
(**Please note that any information related here are speculative and any investment made is to be done in your own research & diligence. Only invest an amount that you are prepare to lose)
Let us know the investment risks of buying bitcoin. Surely you are intrigue by bitcoin and how the world react. You must have been wondering if you had purchased bitcoin just 8 years ago, today you will be so much richer. Just an example, if you had bought $1000 of bitcoin, now it will be worth about $39,000. It would be amazing how rapidly bitcoin value had escalated.
Well, at the present moment, buying bitcoins will be like buying lottery ticket. It’s value is so volatile that you can be much richer or poorer in a matters of hours. If you want to make a comparison about buying bitcoins, it is the same as an angel investor who put his money on startups. There are high chances of losing everything, but the only one that succeed could bring a profit a hundred folds. So only invest if you feel that you can lost everything you put in.
You will not know the future of bitcoin as there is many unknowns. There is no financial report to see and analyse as it is not own by any company. Well, it can be dangerous. You could lost everything you put in. Beside bitcoin, there are many altcoins (similar or rather similar technology to bitcoin) in the market today.
But as it is still in the infant stage, many of these altcoins had “died” due to the people starting it who are not having enough experience or something just knock the project off. There are also many scams involves with ICO and uncountable number of pump & dump scheme by scammers which left the later stage investors to lose money. So we need to strike a balance here.
Ok, as a matter of fact, bitcoin isn’t the only cryptocurrency on market now. There are currently thousands of crypto-coins out there. Yes, currently most of these other coins (we call them altcoins) are no where as good as bitcoin, except a few like ethereum, bitcoin cash and a few more, but it is facing increased competition. It is no guarantee that it will always be the market leader. On any other day, a “fork” is being create with bitcoin code. So this is something to consider about bitcoin.
With more people knowing about bitcoin, it is no longer something that is relatively unknown. Bitcoin value can grow so exponentially is due to the fact that it is rather unknown some years ago. But now, most people heard about it: your family, neighbours, friends will have some how heard of bitcoin. With mass people knows it, the investment opportunity will be lesser.
So for the more conservative people, put your dollars on other funds as an advise if you are not prepare for the wild ride that bitcoin is going through. Bitcoin value is simply too volatile for most people to invest in. It is also highly risky right now.
Next, we will get to know about the good things regarding investing in bitcoin soon….
Ok now, the things everyone are waiting to read. The advantages of investing in bitcoin…
Firstly, instability is good for bitcoin. Political unrest is not good for the stock market where its value is tie up to companies and related to government services. Heard about venezuela? Well, bitcoin will be good for them at moment. It is resilient to political unrest as it is not own or back by government. So it might be attractive to invest in bitcoin in these countries. It is also easy to transact as there are few regulatory things there. Transaction cost is lower than banks too. So it can be fast and headache free to use it like a “currency”.
Next we will talk about the challenges for bitcoin ahead…especially a few years down the road.