Bitcoin is the first cryptocurrency ever created. It was developed by an anonymous person named Satoshi Nakamoto in 2008. It is a decentralized digital currency without any central bank or single administrator. Bitcoins are issued to registered bitcoin addresses. Each address corresponds to a user account and only sends or receives bitcoins associated with that address. Users send bitcoins to each other with the help of peer-to-peer software applications (known as wallets). These applications generate unique addresses for receiving payments and storing bitcoins. A payment to a wallet generates a transaction record, which is added to the blockchain. Once recorded, the transaction cannot be altered retroactively. Instead, the blockchain is updated with the result of the alteration. Since they were introduced in 2009, bitcoin prices have experienced extreme volatility. In 2017, one bitcoin was worth over $20,000 US dollars. Today, one bitcoin is worth around $11,500 US dollars. Users can send bitcoins to each other directly without going through a third party.
The Purpose of Bitcoin
Bitcoin was created to function as a source of digital currency, and people would use it to send money digitally. This digital currency was introduced to eliminate third parties so that operations could be free of control.
The risks of Bitcoin
No investment or currency is totally risk-free. Money comes in with its share of risks, so the same goes with bitcoin; however, the cryptography that is used behind bitcoin is based on the SHA-256 algorithm and to commit a crime or fraud in this is impossible.
The main risk for investing in bitcoin is the market. Bitcoin has been on a wild ride in the market. The prices of bitcoin have fluctuated several times, so you can never be sure of what can come next. There is no assurance or guarantee in bitcoin, but in this risk, there is also a high outcome. If you make the right move at the right time, then there are many chances of getting a high-profit margin in the investment of bitcoin.
Bitcoin is not a currency that has been issued by the government, so there is a high chance that it can be called illegal anytime, and there won’t be anything you can do about it. In 20221, China made it illegal for all citizens to mine or hold any cryptocurrency, and because China is the second biggest economy, it created a huge impact on digital currency.
If you are an investor, then you are surely known and used to the uncertainty and risk of investing because this is not a promised investment one day, you could be sleeping with $60,000 in your bank and wake up with $45,000 in your bank but if you are someone who is willing to take risks the surely bitcoin can be a good choice for investments.
Learn more about how digital currency works and the benefits of using cryptocurrency in the book The Block by John McMickle. The author has vividly explained the details of using cryptocurrency and also highlighted the cons that can come along. The novel tells all about cryptocurrency in a fictional story, which makes reading about it entertaining.