If you spend the vast majority of your time on the Internet, you’re already sick of hearing about Bitcoin: that its price sky-rocketed since the beginning of the year, that people trade and invest in it and that you should do so, too.
But what exactly is this Bitcoin everybody’s talking about and what’s with this hype surrounding it? Let us drop the knowledge-bomb on you.
1. What is it?
Bitcoin is a digital currency (or cryptocurrency, as it is also called). Unlike the dollars or euros in your wallet, it is not a physical, printed currency. It is produced by mining computers equipped with the necessary pieces of software and of course, by people.
Bitcoin can be used like any other currency, but only on the Internet. This makes a decentralized currency, in the sense that the government and the banks have no control over it.
The Bitcoin was created by Satoshi Nakamoto in 2009. Nakamoto is an alias, as the true identity of its creator is still unknown.
2. What can you use it for?
Bitcoin can be used for: purchasing things online, getting discounts or Bitcoin gift cards, purchasing things from physical stores that have a Bitcoin policy, paying for hotel stays (in hotels that accept Bitcoin, of course), paying for food and drinks in eligible restaurants, etc.
It can be traded, gambled with or donated. To a certain extent, it’s really not that different from a printed currency. The greatest difference is that a Bitcoin isn’t accepted outside of the Internet by too many institutions.
3. How much does it cost?
A single Bitcoin is worth USD$17,604.23 (As of 16th Dec 2017) . Did your jaw drop to the floor? Don’t worry, it’s totally understandable. Bitcoin has enjoyed a stellar increase in price and there are talks that this will allow it to become an asset class.
The reason why it’s worth so much is that people are willing to invest in it. Its value is always determined by this factor.
4. Can I buy and trade Bitcoin?
Of course. All you have to do is go to a Bitcoin exchange and that’s about it. You can even become a Bitcoin investor or professional trader. Make sure you’re familiar with the risks and the rules first, though.
5. What’s this about the “bubble”?
When the price of a currency goes up to huge heights, it is said that a “bubble” is sure to occur. What does this mean? No matter if we’re talking about a cryptocurrency or a printed currency, the bubble represents the price surge.
Should that bubble break, its price will go down and the Bitcoin will crash. This means plenty of problems for investors; so not everybody will be affected by a potential bubble break.
How can this be prevented? It’s easy: people need to stop putting even more money in this cryptocurrency.
Yes, this article has been short, but this is really everything you need to know about Bitcoin at this point. If you’re interested in becoming an investor, don’t do it unless you’ve become acquainted with this currency in detail.
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