Bitcoin (BTC), also known as the world’s first digital currency, has been one of the most talked-about subjects for the past half-decade, attracting widespread attention.
Simply described, Bitcoin (BTC) is a digital currency that is maintained on a digital ledger and can be exchanged online. Previously sold for less than $1, a single coin now costs approximately $30,000 and has a market capitalization of around $600 billion.
Compared to other cryptocurrencies, Bitcoin (BTC) is one of the most easily tradable cryptocurrencies. Although there aren’t many service providers out there that accept it, it can be used to buy and sell products and commodities on the internet.
Bitcoin’s Beginnings
In 2008, an unknown individual going by the pseudonym Satoshi Nakamoto has been said to have started Bitcoin (BTC); although the exact identity of the individual is unknown, there are speculations out there suggesting that it could have been a group of individuals.
During 2007, Nakamoto worked on the source code for Bitcoin (BTC), and finally, in 2008, a white paper had been published for the cryptocurrency, which included the original software reference implementation, a program that set forth the technical standards for cryptocurrency. It also marked the starting point for Bitcoin (BTC).
Something that sets Bitcoin (BTC) apart from other forms of payment is that it’s unregulated. It’s completely decentralized; no one can control or regulate it, meaning that every transaction is irreversible and very hard to trace. This opens the door to lots of illicit and fraudulent transactions.
How are Bitcoins (BTC) Created?
A decentralized process known as “mining” is used to create bitcoins. This process is done by different individuals who use hardware to solve complex mathematical problems and then they’re rewarded for their services. This process is usually done on a higher level; it requires expensive hardware and lots of computing power.
Because it is an energy-intensive process, one of the negative side effects is that it can pollute the environment. A point brought up by Elon Musk.
Bitcoin is known to use innovative blockchain technology, a system that records data in a way that makes hacking or maliciously cheating the system nearly impossible. Each block has a certain number of transactions, and on average, 144 blocks are mined every day.
When the Blockchain was first established in 2008, the mining reward was 50 Bitcoins (BTC). The prize remained the same until 210,000 blocks were added, after which it was cut in half. The process is repeated when the next 210,000 are added. This is known as Bitcoin (BTC) halving.
What is Bitcoin Halving?
Bitcoin (BTC) halving is a key aspect of the Bitcoin Blockchain; it happens once every four years periodically. There have been 3-main Bitcoin (BTC) halving events (in 2012, 2016, and 2020), and each time, the mining reward was reduced (halved) from 25 Bitcoins per block in 2012 to 6.25 Bitcoins per block in 2020
Why Does Bitcoin Halving Happen?
The more people that participate in Bitcoin mining, the faster a block is processed and added to the Blockchain. Bitcoin algorithm has been made specifically to try and attract as many miners as possible. This causes the difficulty to reset every two weeks and helps maintain the mining time regardless of the ever-growing number of Bitcoin miners out there.
When the 21 million Bitcoin limit is reached, halving makes sure that Bitcoin (BTC) will remain scarce and in circulation.
Pricing and Inconsistency
Bitcoin (BTC) is simply not stable enough to be used as cash. It might or might not even hold intrinsic value, and this has caused lots of debates between critics, saying that Bitcoin (BTC) is not a currency but a digital asset.
Nevertheless, Bitcoin (BTC) has managed to find a way of making its way into the mainstream media, gathering lots of acceptance from top-notch corporations, which are investing millions of dollars in it.
Some prominent companies which have invested in Bitcoin (BTC) are Tesla (TSLA), BlackRock (BLK), Square (SQ), Coinbase Global (COIN), and MicroStrategy (MSTR); these are just some of them; estimates claim that 15,000 companies around the world accept and use Bitcoin (BTC).
How to Invest in Bitcoin (BTC)
Any investor looking to buy into Bitcoin can do so by using popular cryptocurrency exchanges; some of the most reputable exchanges are Coinbase, Binance, and Gemini. Bitcoin can be bought under the ticker BTC; you can also use BTC on notable digital payment apps such as PayPal and Venmo. There are also lots of BTC physical ATMs scattered around the U.S.
After purchasing Bitcoin (BTC), users store it inside a digital wallet, which stores all of the private keys needed to give access to the cryptocurrency. Bitcoin wallets can be physical in the form of a USB stick, or they can be digital in the form of an app.
Positives and Negatives of Bitcoin (BTC)
One major positive aspect of Bitcoin (BTC) is that any user can use it from any part of the world at any time within minutes. Every transaction is transparent and protected by Blockchain technology, and does not include any information about its user.
On the other side, some negative impacts of Bitcoin (BTC) include lots of inconsistent rises and falls in its price, making it unfitting for a short-term store of value. Also, it’s not being backed by banks or the government, and they will not take measures if its price begins to tremendously fall, and if your Bitcoin (BTC) is lost or stolen, no government entities will reimburse it.
Is Bitcoin (BTC) 100% Secure?
The short answer is no. Although the Bitcoin Blockchain has never been compromised, some wallets and major cryptocurrency exchanges have been hacked and thus lost large quantities of Bitcoin. Bitcoin is known to use a Proof-Of-Work system and transaction verification which for the most part makes Bitcoin safe to use for the average person.
How to sell Bitcoin (BTC)
If you own Bitcoin (BTC), you can sell it and transfer the equal value to your bank account. There are many ways to do this, and it does not require much effort. First of all, before converting all of your Bitcoin (BTC) to fiat money, you must consider some of the side effects of it. Some side effects of converting Bitcoin (BTC) to cash are:
- Taxes – every time you sell BTC and make a profit, you must pay taxes on your profit income.
- Fees – Most BTC bank transactions will require you to pay a few exchange fees.
- Speed – Exchanging BTC to cash will require you to wait a few days so that the money is transferred to your account; this mainly happens with third-party broker exchanges.
Cashing Out Methods
There are two main ways of converting Bitcoin (BTC) to fiat money and moving it into a bank account.
Third-Party Exchange Brokers
The faster, simpler, and more secure method is using third-party exchange brokers; this can be done via debit cards and ATMs and will exchange your Bitcoin (BTC) at any given rate; this is done by selling your Bitcoin (BTC) directly to another person.
Brokers are restricted by money laundering laws, so you have to withdraw currency with the same bank account you used to deposit it. The needed time to reach your bank account is usually around 3-6 days and it ultimately depends on the exchange broker.
The most famous and popular brokers for converting Bitcoin (BTC) to cash are Kraken and Coinbase. Another method of converting Bitcoin (BTC) is Peer-to-Peer platforms.
Peer-to-Peer platforms
This is a faster and more anonymous method since you to sell Bitcoin (BTC) to other people without the interference of any third-party apps; this results in faster transactions and fewer fees along the way. Using this method will usually result in getting better exchange rates compared to using a third-party broker. One of the disadvantages of using Peer-to-Peer platforms is that they are not completely safe, and should be used only if you truly know what you’re doing. Hence, it is the less popular method overall. Make sure to always be aware of scammers and ask for identification before going on with the transaction.
Is Bitcoin (BTC) a Good Investment?
In 10 years, you could potentially become a millionaire, or you could plummet to the ground and lose all of your money. As with every other investment, it has its own risks, but also it could be extremely profitable in the long term.
As we mentioned before, Bitcoin is the most well-known cryptocurrency out there, which is exactly what makes it so popular. The more people own it, the more people will want to own it; it’s a form of peer pressure. Investors believe that Bitcoin will possibly gain value over time due to its limited supply, which is capped at 21 million coins.
Some other Bitcoin enthusiasts also believe that it has the potential to become the world’s first global currency.
At the end of the day, if you believe that cryptocurrency usage will increase in the future, then it makes total sense that you should probably invest some of your money into it.
Takeaways
- Bitcoin is a form of digital currency, which skyrocketed in the last decade from a few cents to thousands of dollars.
- Bitcoin was started in 2008 by an unknown individual with the pseudonym Satoshi Nakamoto.
- Bitcoins are created through a process called “mining” which rewards users for their services.
- Bitcoin halving is an essential part of the Blockchain system; it reduces the mining reward every 4 years periodically. There have been 3 Bitcoin halving events.
- Bitcoin sparks lots of debate among critics due to its digital nature and value.
- Investing in Bitcoin can be done by using popular cryptocurrency exchanges.
- Bitcoin has lots of cons and pros when it comes to using it.
- Although Bitcoin is not 100% secure for big companies, it mostly is for the average individual out there.
- Selling Bitcoin can be done through two main methods Peer-to-Peer and Third-part exchange brokers.
- Bitcoin could potentially be the right investment for you.
