Bitcoin 101: What to know and where to start

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We’ve all heard of it. We’ve heard about people who make a lot of money from it, how its value fluctuates, the questions and controversies surrounding it, and people who lose money after investing in it.

It’s bitcoin, the seemingly ubiquitous form of the so-called “cryptocurrency” that is suddenly everywhere and yet, sort of, nowhere.

You might have wondered if this is a practical investment strategy, maybe even the currency of the future, but you don’t know where to start. There are a few basics that can help you understand if bitcoin is right for you and get you started.

What is Bitcoin?

Bitcoin is one of the many forms of cryptocurrency, essentially a digital form of currency commonly referred to as coins. Government entities do not generally control cryptocurrencies. Instead, those who redeem them and use them to shop online attribute their value. These currencies, including Bitcoin, are based on “blockchain” technology – a decentralized ledger of all transactions using cryptocurrency. An important thing to understand about cryptocurrency is that it is used on a peer-to-peer system, which means that no centralized bank or authority is involved in its production or use.

Who created Bitcoin?

There is a debate surrounding the true identity of the creator of Bitcoin, who is called Satoshi Nakamoto online. Nakamoto aimed to create a “peer-to-peer electronic payment system” detailed in a white paper in 2008. As the first and most common cryptocurrency, Bitcoin holds the largest market share, with a market capitalization of $ 1.1 trillion.

Where does Bitcoin come from?

Bitcoin and all other cryptocurrencies are produced in a process called “mining”. Computers compete with each other to solve mathematical equations in order to create a new block in the blockchain. Whoever solves the equation first is rewarded with a new bitcoin. Bitcoin can also be purchased for regular currency, such as dollars, using online accounts. This process is similar to buying stocks.

How to invest in Bitcoin?

The first step if you want to invest in Bitcoin is to choose a Bitcoin wallet in which you store your Bitcoin. Then join a Bitcoin exchange – basically marketplaces for buying and selling bitcoin. Lots of these exchanges exist, so do a little research and find the one you like best. Then connect your wallet to your bank account and place an order for bitcoin. You then manage that investment the same way you manage others you might have, such as stocks. Pay attention to what is going on in the Bitcoin market and do your best to make wise decisions about holding or selling your bitcoin. You can also do some shopping with it.

How much does Bitcoin cost?

Like any currency, the value of bitcoin against the dollar fluctuates every day based on changes in the market. It recently hit a record high of over $ 60,000 per bitcoin. Cheaper cryptocurrencies exist, but they will likely have lower returns over time because they are less used and less known.

Should I invest in Bitcoin?

As with any investment, you should do your due diligence before getting involved in Bitcoin. It’s more complex with cryptocurrency because it means learning the ins and outs of an entirely new, fully digital system. You need to understand blockchain, cryptocurrency, and Bitcoin long before you invest. Speak to your financial advisor to determine if Bitcoin is a good investment for you, and remember that all investments come with risk.

Bitcoin is still new to the grand scheme of currencies and trading platforms, but has its potential benefits and rewards. Although difficult to grasp at first, this digital currency has real value in some circles, and many see it as the currency of the future. Since the owners exchange it on a decentralized ledger, some consider it to be more secure than typical currencies. Like any investment, there are risks, but it’s worth learning more.

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