Bitcoin is a virtual or digital currency that operates on a decentralized peer-to-peer network known as a blockchain. It was initially built to eliminate the need for central financial authorities like governments and banks and has since become much more than that. Bitcoin is used as a store of value, a trading commodity, a currency, and even a hedge against inflation despite its volatile price movements.
Bitcoin was the first ever cryptocurrency created by a person or group using the name Satoshi Nakamoto in 2009.
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A blockchain is a ledger distributed among nodes or users. It is a shared database used to store data. The data within a blockchain is encrypted and cannot be changed. The immutable nature of Bitcoin’s blockchain is one of the reasons why those who own, trade, invest in or use Bitcoin trust it.
Transactions in a blockchain lead to information from a previous block related to that transaction being copied into a new block before being encrypted and stored. Miners or validators in the network must validate all transactions to ensure the integrity of the blockchain.
Once they do this, a new block opens and a new Bitcoin is created. The Bitcoin is awarded to the person who verified the transaction and thus the data within the block.
The Key Features Of Bitcoin
Bitcoin has a few features that enable it to work as it does. The first is the blockchain network we have discussed above, and the second is the decentralized nature of this blockchain. Both of these ensure Bitcoin can only be controlled by miners and everyone else participating on the network.
Remember, they cannot change the information inside the blockchain until a transaction is completed and verified.
The third is Bitcoin’s limited supply. The maximum number of Bitcoins that will ever exist is 21 million, making it a deflationary currency.
Fourth, Bitcoin is borderless and digital. Users can send and receive Bitcoin to and from anywhere in the world because it is a digital currency not controlled by an external or central authority.
Since there are few bottlenecks during these transactions, Bitcoin transactions are typically fast, seamless, and inexpensive. The digital and borderless nature of Bitcoin also gives its users complete anonymity because you only need a wallet address to send and receive Bitcoin.
How to Get Bitcoin
There are various ways to get bitcoins. The first and most common is buying Bitcoin on an exchange. There are two types of exchanges.
A centralized exchange requires that you open a wallet with them and deposit your cryptocurrency before trading it or selling it to another party. A decentralized exchange does not require this, and users can trade and exchange Bitcoin directly for cash or other cryptocurrencies. Trading platforms such as easyMarkets are decentralized because they make it possible and even easy for people to trade Bitcoin with each other.
The other option is mining, although this is less popular than a few years ago. Mining verifies transactions on the blockchain as discussed above, rewarding miners with bitcoin. Because of the high profits and meteoric increase in the price of Bitcoin, mining has become very competitive and resource-intensive.
Another reason for the fall of Bitcoin mining is that it involves using specialized hardware to solve complex mathematical problems, and this hardware has become increasingly expensive over the years. With the high competition and Bitcoin becoming harder to mine, you need more hardware than before. This is an expense not many people want to incur.
You can also buy Bitcoin through P2P trading platforms. They are very similar to decentralized exchanges, but the buyer and seller have to agree on the price among themselves instead of using the prices presented by the platform. They also have the unique advantage of letting sellers and buyers agree on whatever payment platform they are both comfortable with.
It is also possible to earn Bitcoin. Although not that common these days due to the high value of Bitcoin, you can earn Bitcoin by providing products and services. Some online platforms even offer opportunities to earn Bitcoin through tasks, freelance work, or participating in certain online activities.
Lastly, you could get Bitcoin from a Bitcoin ATM. There are Bitcoin ATMs that allow you to purchase Bitcoin using cash or credit/debit cards. As with buying Bitcoin on an exchange, they allow you to convert fiat currency into Bitcoin directly and deposit it into your digital wallet.
Bitcoin is revolutionary technology because it has changed how we think about currencies, payments, investments, and stores of value. Bitcoin also provides people with various opportunities like trading or investing that allow them to build an investment portfolio around the cryptocurrency. Just remember that cryptocurrency investments are very risky, and there is a real chance of losing some or all of your investment.