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What is Bitcoin? | It’s Wallet, Price and Value

What is Bitcoin? | It’s Wallet, Price and Value

Table of Content

What is Bitcoin?

Bitcoin is the first decentralized digital-currency, started in 2009 by a group of individuals named Satoshi Nakamoto, that can be sent from user-to-user on the internet without the involvement of any intermediaries in between. It is basically an open-source platform where everybody can take part without having the ownership or control over the Bitcoins.

Sounds a bit complicated right?

Well, here is the paragraph for your clarification and better understanding;

A Better Understanding of Bitcoins

Bitcoins are the virtual currencies that can be used as a common medium of exchange across globe. They are even referred to as digital currencies or crypto currencies.

Now, do you know how these Bitcoins work?

Bitcoins are held in a digital-wallet that can be sent over the internet as an exchange of transactions. Digital wallets or Bitcoin Wallets are precisely the unique addresses that are associated with the cryptocurrency that you hold.

The transactions in bitcoins are authorized using a digital signature. These transactions are verified by a network of miners, usually within minutes.

Once the transactions are verified, they are permanently stored on a public ledger known as the block-chain. These transactions can be viewed publicly by anyone including bitcoin traders in the blockchain.

As compared to the traditional ways of transferring money on internet commercially, fees for bitcoin transactions are comparatively very low.

New coins are released through a process called bitcoin mining and anyone can participate in it by using a computer and a free open software.

Are you worried about the security of your transactions in Bitcoin? The best part regarding this is here..

The Bitcoin amounts are associated with public addresses assigned to each user as their wallet. The balances of each addresses can be publicly viewed in the block chain, that keeps a record of all transactions.

Each address is associated with a private key, that’s used to authorize transactions, and this key is known only to the owner. This provides a security to the transaction in Bitcoins.

However, the regulation of bitcoins is not yet well-formed.

Some of the associated risks of Bitcoins are mentioned below.

What are the Risks of Investing in Bitcoins?

Due to the lack of any guaranteed bitcoin value, many investor alerts have been issued by regulatory bodies like Financial Industry Regulatory Authorities (FIRA), Securities and Exchange Commission (SEC) etc.

Some of the bitcoin investment risks include:

  • Risk of Fraud: Since Bitcoins use private key encryption method in order to verify its transactions, there have been cases of frauds and scam attempts to sell false bitcoins.
  • Risk of Security: The exchanges in Bitcoins are entirely digital and are like any other systems, also at increased risk of hackers and operational glitches.
  • Market Risks: The market is highly volatile and that is the reason it might even experience a heavy bitcoin price drop, making investors or traders face heavy loss.

Despite certain Risks associated with bitcoin trading, there are several advantages attached to it, that makes it beneficial and easy for traders to trade in.

What are the Advantages of Investing in Bitcoins?

Compared to other alternative payment methods, there are a number of advantages attached to Bitcoins:

  • It’s easy to setup.
  • It can be transferred from person to person through internet, without going to any banks or clearing house.
  • The absence of intermediaries means that the transactional fees are much lower than that of any financial institutions.
  • Can be used in every country.
  • Bitcoin accounts can’t be frozen.
  • You can easily sell or buy bitcoins in several currencies like dollars, euros and more.
  • You can get anything with bitcoins.

Some other advantages linked to Individual investor and Businesses are discussed below:

Advantages to Individuals
  • Through Bitcoins, mobile payments have been made easy.
  • You can have security control over your money invested.
  • International payments can be done in no time.
  • It can work anytime and everywhere.
Advantages to Businesses
  • The payments in Bitcoins are secure and irreversible.
  • While making international transaction, the payments are fast, with no extra transaction fees and that too without any minimum or maximum transaction limit.
  • The multi-signature approach of bitcoins allows board of directors of businesses to prevent members from making unnecessary expenditures.

For more questions on Bitcoins you can browse our Bitcoin Question section or can even ask your fresh questions there.

Frequently Asked Questions

Which is the Best Bitcoin Wallet?

Coinbase can be considered as one of the best bitcoin wallets amongst all. It is one of the easiest ways to buy, sell and hold cryptocurrencies.

What is Bitcoin Revolution?

Bitcoin Revolution is an app that provides a platform to make money from trading in cryptocurrencies.

Do Bitcoins Work?

Yes! They do work, as Bitcoins are the virtual-currencies that are most accepted among the investors, due to the benefits associated with it and also based on its record of huge profits.

Can Bitcoins be Converted to Cash?

Yes! Although, you cannot cash bitcoins directly. You can either exchange it in Coinbase or Kraken, etc. or sell to traders and withdraw the resulting cash to a bank account.

Is Bitcoin Safe?

Although bitcoins are secured and encrypted, but they are only as safe as the wallets that are storing them. Since it’s a digital currency, it might be easy for hackers to steal them.

How Bitcoin Works?

Bitcoin is a virtual currency stored in a digital wallet. People can sell or buy bitcoins through exchange platforms like Coinbase etc. and these transactions are recorded in block-chain.

Bitcoin is legal in many developing countries today like US, Japan, UK, Canada, etc. But the legal status varies dramatically as the laws in these countries for other assets also apply to Bitcoins.

Do Bitcoin Miners Work?

Yes! Bitcoin miners do work as they provide security and confirm the transactions in bitcoin. Without the miners the entire network would be hacked or become dysfunctional.

Will Bitcoin Go Up?

The present market data reveals the bitcoin price is expected to go up based on its current trend and net worth.

Where Bitcoin was Created?

Bitcoin was created in the year 2009 in Japan by a group called Satoshi Nakamoto.

Are Bitcoins a Good Investment?

Even though bitcoins are highly volatile, the current trend and market data suggest that bitcoins can be a good investment, based on your decision of when and how you invest in it.

Can Bitcoin be Traced?

Yes! Bitcoin transactions can be traced as they are public, traceable and stored permanently in bitcoin networks.

References

https://ieeexplore.ieee.org/abstract/document/6824541

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857

https://digital-library.theiet.org/content/conferences/10.1049/cp.2014.0699

https://link.springer.com/chapter/10.1007/978-3-642-39884-1_4

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