- Great development team
- Fast, secure transactions- By using Bitcoin, you can always be assured of Private, secure transactions anytime. The ease of transacting with this cryptocurrency is hard to overlook. The processing time is faster compared to overseas transactions done in any fiat currency.
- Growth potential-The high profile investors and tycoons say Bitcoin value will surpass that of USD in the future. Its limited supply gives it a shield to counter market volatility and inflation.
- Privacy- Bitcoin transactions are largely anonymous in nature as your credit card number and similar data are not used. No traditional banks are involved in such transactions.
- High liquidity- Bitcoin enjoys the early mover’s advantage in the cryptocurrency sector. It is supported by major crypto exchanges, many online brokerages, and private entities, globally. So, exchanging Bitcoin for fiat money or gold is simpler.
- Limited accessibility- Bitcoin is referred to as “digital gold” owing to its capping on the maximum amount of coins. Its supply is around 21 million coins and out of that 17 million is in circulation. On the contrary, bank-controlled currencies can be produced in abundance. This limited supply factor makes it an attractive investment.
- Volatility- Since its inception, Bitcoin price has surged and then collapsed drastically, a number of times. This price volatility makes things tough for those who invest in Bitcoin as an asset.
- Hacking woes- while the proponents of Bitcoin vouch for its safety protocols, Bitcoin hot wallets have often been targeted by hackers. A few high-scale hacks have also taken place. A 2019 hack resulted in Bitcoins worth $40 million getting stolen from Binance.
- Limited usage- While some big companies like Dish Network, Twitch, Microsoft, and AT&T accept Bitcoin payments, mass-scale adoption is still far away.
- Not much additional usage- Apart from serving as an alternative digital currency and investing asset, Bitcoin does not offer additional usage scopes. It lacks smart contract features which rival Ethereum has, for example.
- Hardships in mining- Nowadays, mining Bitcoin requires the usage of powerful computers and huge amounts of electricity. The mining reward has also been reduced compared to the early days.
Cryptocurrencies are in high demand despite the skeptics and dearth of a globally accepted regulatory standard. While you will find many new crypto tokens are being unveiled almost every month, the importance of the first generation crypto coins has not diminished much. As it is, Bitcoin is the token that started it all! This is among the most widely used cryptocurrencies, globally. It is a decentralized digital currency that eliminates the need to rely solely on fiat currency and uses a P2P computer network for carrying out transactions online.
The basics of Bitcoin
Fiat money such as INR or USD is regulated and governed by governments of respective nations. These currencies are circulated through the mainstream banking systems and financial entities. Bitcoin, however, is not under the regulation of any govt or baking system at all. It is run by a secure peer-to-peer technology and a network driven by software-based cryptography. So, this digital currency is backed by code rather than objects of physical value or trust in the banking systems or government’s.
A brief history of Bitcoin
Known as the first cryptocurrency, Bitcoin was unveiled back in 2009, at a time when mass concept about cryptocurrency was fuzzy. The person who launched the Bitcoin white paper is referred by the pseudo name Satoshi Nakamoto. The Blockchain network powering Bitcoin was unveiled in January 2009. It was listed on exchanges by 2010. It was from 2011 that people started using it seriously as an alternative form of digital currency and the roller coaster ride of its price rise and fall started, which is still going on.
Since its humble beginning, Bitcoin has grown from strength to strength- over the last decade. It is now accepted by major technology vendors and financial institutions across the world and entities like PayPal, Microsoft support it too. Over the years, the value of Bitcoin has grown and nosedived several times and the pattern had been very drastic.
How does Bitcoin function?
Every single unit of Bitcoin or BTC is a computer file that is kept in a digital wallet. Bitcoin is powered by Blockchain, a secure open-source code network. Each transaction is called a block. It gets locked to the code. People who perform the transactions using high-speed computers on the peer-to-peer platform are called miners. Miners are paid in BTC for their endeavors. Each transaction adds a block to the chain which is ever-growing. It is a proof of work process in which each transaction is recorded in a permanent way. Since every Bitcoin transaction made is recorded on a public ledger, the transactions are hard to fake or reverse.
It can be compared to something like a Google Doc which anyone can access. The thing is there is no owner and anyone with a link can contribute to it. As other users update the document, your copy also gets updated. While anyone can edit the Blockchain, it does not make the network less trustworthy and unsafe. Before adding a transaction block to Bitcoin Blockchain, it has to be authenticated by a majority of Bitcoin holders. The unique codes deployed to recognize transactions and users’ wallets must adhere to the apt encryption pattern. These codes comprise long, random numbers which are really hard to produce fraudulently.
Bitcoins are stored in online or cold/offline wallets. You can purchase Bitcoins from a number of sources including several Cryptocurrency exchanges, Investment brokerages, Bitcoin ATMs, and also through Bitcoin mining. The last option however is only meant for serious users with the required technical skills and resources.
Is Bitcoin a viable Investment?
Bitcoin is the first cryptocurrency ever created. There is no denying the reality that despite the emergence of several rivals in this sector, its value and market share have not reduced. In fact, it continues to be the most valued digital currency as far as market capitalization is concerned. So, it is natural that it attracts different types of investors. Celebs and tycoons like Richard Branson, Elon Musk, and Jack Dorsey have promoted Bitcoin which indicates its worth is not going to be diminished anytime soon. The Covid 19 pandemic has proved to be a catalyst for its growth, post-2020.
Investing in Bitcoin can prove to be rewarding. However, you have to be aware of the potential pitfalls. The volatility factor is akin to that of the stock market and that will remain. Based on which platform and exchange you use to buy and sell Bitcoin, paying additional fees will be required as well. Still, investors seeking diversification of their portfolios may consider it. For beginners, seeking the advice from seasoned crypto investors and traders can be useful in this regard.