If you have been following my blogs on thebitcoinmagazine.org, you must know how big of a fan I am of Bitcoins. However, if you are new and want to learn something about bitcoin, then this is just the article you need.
Through this article, I will be telling you everything you need to know about Bitcoins, from their history to their present status in 2021. This article is going to serve as the beginners guide to bitcoin.
Even though you don’t exactly know what a Bitcoin is, I am sure you have heard of it on the news channels and on social media. As the name suggests, it is indeed a coin, but a virtual and digital one.
Bitcoin was founded by Satoshi Nakamoto in 2009. Rumors have it that the name Satoshi Nakamoto was an alias and that the person who actually invented Bitcoin is an American.
Bitcoin Mining 101
The only way to produce Bitcoin is by Bitcoin Mining. Very powerful computers perform Bitcoin mining, and it takes up a lot of computation energy and resources to mine a Bitcoin.
For now, the mining cap has been set to 21 million. After that, a miner will not be able to earn rewards by mining Bitcoins. For mining, the powerful computers need to solve complicated mathematical problems, and only then is Bitcoin mined.
Pros of Using Bitcoins
The popularity of Bitcoins has taken a surge since 2020. There are numerous reasons behind it.
1. Bull Run Amid COVID-19 Pandemic
Amid the coronavirus pandemic, Bitcoins performed really well, so much so that it reached around 35,000. But the beginning of this success story is not half as pleasant. When the Government nationwide lockdown was announced, the Bitcoin market crashed as the investors panicked.
They thought that the time of Bitcoin was over and started selling off their Bitcoins; this generated a bearish market, and the price came down to $3000, but the big whales in the crypto market knew the wonders that Bitcoins could do and held onto their Bitcoins and went a step ahead to buy more Bitcoins.
Soon the small investors joined the trend, and a bullish market was generated. The prices of Bitcoins broke the roof, and it is still breaking the roof to date. At the time of writing this article, the price of one Bitcoin is a whopping $39,850.70.
2. Acceptance From the Government
Bitcoin is becoming popular with each passing day because governments of many nations have slowly started to accept the potential that Bitcoins carry. Bitcoin was already legal in some highly developed tech-oriented countries like South Korea and Japan.
Countries like Germany and the US have followed their tail and legalized Bitcoins. Bitcoin is considered as an asset in the United States, and investors holding a significant amount of Bitcoins are obliged to pay hefty property taxes on their Bitcoin holdings.
Some countries are also launching their own Central Bank Digital Currency to tackle the rising popularity of Bitcoins. All these factors have led Bitcoins to make headlines in the mainstream media.
3. Based on The Blockchain Technology
Bitcoin and all other cryptocurrencies work on Blockchain Technology. Blockchain is a method of information sharing that uses the concept of the distributed public ledger. The Blockchain technology provides a lot of transparency during transactions.
All the information, events, and transactions are stored in blocks that are connected with each other. Hence, the name, Blockchain. Whenever you make a transaction using Bitcoins, it stays on the Blockchain network forever. But do note that the Blockchain technology works on an ‘add only’ basis, which effectively means that data can only be added in the Blockchain network.
It cannot be edited or altered. Currently, Blockchain technology is the most sought-after technology. Many industries such as the healthcare industry and a few other tech industries are making plans to implement Blockchain technology in their industries.
4. Substitute to Fiat Currencies
Bitcoins can serve as a very good substitute for fiat currencies. In Germany, Bitcoin is used as a substitute for fiat currencies. In Japan, you are going to find a Bitcoin ATM in every hook and corner; the same is the case with South Korea and Finland.
Fiat currencies are prone to inflation since more fiat currencies are brought into circulation each year by the Government. Bitcoin is inflation-free since there only ever will be 21 million that can be mined.
5. Facilitates Digital Payments
These days, Millennials do not like to carry cash for making payments; they want everything done with the touch of their phones’ screens. Bitcoins have facilitated digital payments to a large extent.
Firstly it is used to user encrypted; secondly, it is decentralized, which means no government can intervene in what you are doing with your Bitcoins. Whatever you do with your Bitcoins is up to you; you are not obliged to send an account of your spending to the Government or any regulatory body.
Cons of Using Bitcoins
While there are several advantages of investing and transacting in Bitcoins, it comes with its fair share of problems.
1. Not Accepted in Most Parts of the World
While Bitcoin is widely legal in the European nations and some eastern Asian countries, it is still illegal in most countries, especially African countries.
Bitcoin is a digital currency; it is intangible; therefore, one can tell for sure how much one owns. Before transacting, it needs to be converted from exchange to actual fiat currency.
3. Not Backed by Any Central Authority
Since any Government does not back Bitcoin, no one can guarantee the value of a Bitcoin. It all depends on how the market performs.
There you go, now you know everything a beginner needs to know about Bitcoin. The advantages of transacting and investing in Bitcoins outweigh the disadvantages. 2021 is the perfect time to invest and trade in Bitcoins.