Top 10 Basic Things to Know About Bitcoin and Other Cryptocurrencies

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June 12, 2018 by
Top 10  Basic Things to Know About Bitcoin and Other Cryptocurrencies

What You Need to Know About Bitcoin and Cryptocurrencies

Bitcoin has created a lot of buzz in the recent years. You may even know someone who has profited a lot from investments. Some questions you may have are what is Bitcoin, how can it be used, and does anyone accept it as a payment? There’s no need to search anywhere else, the following are answers to some of the most frequently asked questions about Bitcoin and cryptocurrencies. And it may also help you decide if this is the right investment for you. 

1 – Where did Bitcoin come from? 

Despite its popularity nowadays, some people don’t know Bitcoin has been around since 2009. No one is sure whether the creator is an individual or a group of programmers. Some say that the creator is Satoshi Nakamoto but nobody has confirmed the identity of this person. He disappeared and left behind the world’s first digital currency, which is Bitcoin. It was only 2013 when everyone else looked into Bitcoin more seriously. What followed is an enormous rise in its value despite being around for almost a decade. In an economic market, if there is demand for a product, service, or stock, the price naturally goes up. As of today, Bitcoin is worth 100,000 times more than the price almost 10 years ago, and its value continue to rise. 

2 – What is Bitcoin? 

Bitcoin is a computer system code that has a financial value. These codes are located anywhere and are created by supercomputers known as miners. Bitcoin is a digital currency that holds the same value wherever you go in the world. You won’t be able to hold it physically but you can sell it and earn money from it. Or you can just hold it and put it in your digital wallet and wait for it to increase in value even more (like gold coins or stocks). One benefit of Bitcoin is it can be saved offline in your personal computer far from hackers. There are online storages you can use but there is always a possibility of hacker attacks when it comes to storing anything online. 

3 – Is Bitcoin Safe?

This question can be answered two ways. First, when it comes to buying and selling Bitcoin, it’s up to your own intuition. Compared to most financial investments, Bitcoin is safer and more secure because transactions are recorded and published publicly. This may be beneficial for you or it may not. It is safe because you can give out little information to people you transact with, making it tough for hackers to gain any personal information about you. On the other hand, the person you are transacting with could just take your money and disappear before you could get your Bitcoin. That’s why it’s very important to take necessary precautions when dealing with anyone online: never share your private keys with anyone, only share your public keys to receive and send bitcoins. Second, when it comes to Bitcoin as an investment, you would have to use your own discernment. Bitcoin is a high risk financial investment in an unpredictable market. The price can change drastically upwards or downwards with no warning. Do your personal research about Bitcoin or any other cryptocurrency before making an investment much like you would with any other investment. 

4 – What can you do with Bitcoin? 

You can hold it and hope it increases in value in the future, you can buy shares with it just like with regular currency, or you can sell it to other investors for an immediate profit. Some companies accept Bitcoin as payment. Microsoft, for example, has put Bitcoin as one of its methods of payment when purchasing online games and apps. Small businesses accept Bitcoin via plugins attached to WordPress websites. Some even use Bitcoin to buy real estate. 

5 – What are Bitcoin miners? 

Bitcoin miners are important because they solve complex puzzles in order to verify an entire block of incoming transactions and when they do, a brand new Bitcoin is born. These Bitcoins are added to the blockchain where it stays until somebody purchases it. When new transactions are verified, it’s the miners job to put them in the public ledger. Technically, any person could become a miner although it’s becoming increasingly harder to mine profitably due to large groups of miners coming together to form pools. In the first years of Bitcoin, mining was done using just a gaming PC. But today, you would need a specialized hardware called ASIC. Older ASIC models consume a lot of power, it may not be worth it to get that if you are considering being a miner. Also the puzzles or problems that these machines need to solve depend on the number of individuals also mining that coin. The fewer people mining it, the easier the puzzles will be. 

6 – What are the alternatives to Bitcoin? 

Although Bitcoin is the most popular cryptocurrency today there are over 1,500 other coins out there fighting for the top spot. Alternate coins are still relatively small compared to Bitcoin, but Ethereum comes in at a close second to Bitcoin with a market cap of $58 billion. Bitcoin is still far ahead at $153 billion, but it’s worth checking out other coins as well. Following Ethereum is Ripple with a $28 billion market cap. The most significant feature of this coin is that it is more secure and fluid than Bitcoin, and you can buy and trade whenever and how ever many times you want. Another one is Litecoin which is at $9 billion. One of Litecoin’s featured selling point is the fact that it is so much faster than Bitcoin when it comes to transaction speed.

7 – Can Bitcoin run out? 

Yes, it is publically known that the maximum supply of Bitcoin is 21 million, no more no less, and as of today there are only 16 million Bitcoins out there. Therefore, we may still have a few decades to go before Bitcoin runs out but considering its popularity that time might happen sooner than expected. And what happens when it runs out? Anything that has a limited supply will have a drastic price increase. 

8 – How to get started with Bitcoin? 

Start by downloading and setting up a wallet in a cryptocurrency exchange site. Once you are successfully verified on that exchange site you’d be able to purchase Bitcoin using a debit or credit card. Then it’s your decision if you want to just hold your coins and store them in your wallet and let it increase in value, or use it as a currency to buy at online retail stores that accept Bitcoin. 

9 – Is Bitcoin for everyone? 

As long as anyone will spend money on Bitcoin or any other coins, there will be many uses for Bitcoin. Bitcoin can be split up into 1 billion pieces (known as Satoshis), meaning anyone with a small amount of money can have a piece of Bitcoin. It may sound like a waste of time but think about how much it costs now. In a few years, fractions of a Bitcoin could cost more than an entire coin. The earnings wouldn’t be as much but it may be a good way to start. If you are willing to spend more but don’t have enough knowledge or don’t have the time to educate yourself, you could always hire a broker. They can help you maximize your profits but keep in mind broker fees could also be quite expensive. 

10 – Why should you consider Bitcoin? 

You may be confused right now but there are many reasons to begin educating yourself in the space. First, a lot of big and successful investors like Tim Draper, Winklevoss twins and Barry Silbert are taking this seriously. Sure, there are also some people who think this is just a bubble waiting to burst and when it does, people will lose a lot of their money. But as Sir Richard Branson stated, Bitcoin is a working progress and it will continue to grow as time goes by. Also, consider as of 2018, the entire cryptocurrency market is $350 billion, whereas the NASDAQ at the peak of the internet bubble was valued at $6 Trillion.

Since there is a limited supply of Bitcoins available, buying Bitcoin would be smart as demand would only increase in the upcoming years, hence, the price will increase. Even now, Bitcoin continues to rise and there are no signs it will go away nor slow down. When you look at the history of Bitcoin, the success stories have surpassed the unsuccessful ones.

Read more: 4 Things Every Newcomer Needs to Know About Cryptocurrency
Cryptocurrency and the Future of Money

Name Price
Bitcoin (BTC)
Ethereum (ETH)
Bitcoin Cash (BCH)
Litecoin (LTC)
Cardano (ADA)
Dash (DASH)
Monero (XMR)
Stellar (XLM)
Bitcoin Gold (BTG)
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