Guest Post

Understand Basics, Working, Pros, and Cons of Bitcoin!

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Some cryptocurrencies like Bitcoin and Ethereum have created many buzzes worldwide because their value decreased by around 45%. However, not all investors look at the negative factors and get attracted towards bitcoin and other cryptocurrencies when their price increases. If you are planning to jump into the world of cryptocurrencies, you need to learn many things. Many investors still think about whether it is the right time to enter the market or not. Traders can effectively trade bitcoin through Crypto Genius 

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Before you plan to invest in bitcoin, it is crucial to understand its basics and pros and cons discussed here in this article.

Basics of Bitcoin

Satoshi Nakamoto launched Bitcoin in 2009, and ever since, it has become the best, largest, and widely accepted cryptocurrency. The market capitalization of bitcoin is around $1 trillion. The crypto analysts never expected a digital currency to grow in this competitive world, but bitcoin has proved its real potential. Unlike traditional currencies that the government creates, bitcoin is the digital currency that has a fixed supply. It means there are only finite numbers of bitcoins that are 21 million. According to sources, around 19 million coins have been mined, and miners are yet to mine the remaining 2.5 million coins.

To enter the bitcoin market and earn profits, it is crucial to understand the working of bitcoin.

Working of Bitcoin

Bitcoin is a digital currency that no central entity like the government controls or issues, and it exists electronically over the internet. Like traditional currencies, users can use bitcoin to buy bitcoins. There is one way to create bitcoins, and that is through the process of bitcoin mining. Miners need to solve complex mathematical problems to mine bitcoins and to solve problems, and miners use fast and powerful computers along with electricity. The Bitcoin network is secure as it uses blockchain technology. Blockchain is a database that stores the transactional information of bitcoin sequentially and that too at multiple computers located at different locations. 

To invest in bitcoin, it is crucial to have access to a digital wallet. A wallet is a software that allows users to store and transfer bitcoins. Wallets have public and private keys, users can share public keys, which is known as a bitcoin wallet address, and the private key is the secret key that needs to be secured to protect from unauthorized access. A private key is more like a password, and if you lose your private keys, you will no longer be able to access your wallet or coins. Unfortunately, unlike email or phone, there isn’t any reset my password option in digital wallets. 

Reasons to Invest in Bitcoin

  • The value of the dollar, Indian rupee, and other traditional currencies will decline, resulting in more inflation.
  • There are only a fixed number of bitcoins, which is 21 million coins. So miners need to discover the rest of the bitcoins. According to sources, around 3.5 million coins in wallets are lost, which means those wallets are without private keys and are lost forever. 
  • Bitcoin is gaining popularity and is being accepted in the mainstream by firms and organizations to carry out transactions. However, Bitcoin gives tough competition to gold as it has some of the same properties as gold. 
  • Bitcoin is a digital version of precious metal, gold. It is an excellent store of value like gold, and people are buying bitcoin as a store of value, expecting its price to increase shortly. 

Reasons to not invest in Bitcoin.

  • Many altcoins are getting developed, and those are tough competitors of bitcoin. There are around 5000 altcoins that exist in the crypto world. Ethereum, Litecoin, Dogecoin, and some others are great competitors of Bitcoin. 
  • The bitcoin market is ultimately volatile, and it becomes difficult for traders and investors to handle such volatility. Crypto experts say that bitcoin isn’t affected by the stock market, but with plunges in the stock market, the value of bitcoin and other cryptocurrencies also falls. 
  • There is a possibility that governments across the world could crack bitcoin. It might be possible that the government can ban the use and trade of cryptocurrencies. 

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Disclaimer : The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of Coinpedia. Every investment and trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Guest Author

Crypto Journalist and Editor of guest articles in CoinPedia. Also, Outreach & Partnerships Manager. Contact me: [email protected]

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