Understanding Bitcoin And Its Importance In Investment

December 23rd, 2019

The word Bitcoinhas been an important part of our lexicon for a few years now. It is often used when we talk about finances, online trading, virtual banking, and cybersecurity. Ever since its launch in 2009, Bitcoin has revolutionized the way we work online. There have been many radical changes in the way money is exchanged online because of Bitcoin. When it was introduced, people dismissed digital currency as a fad that will only be used by nerds and a niche group of people. But soon Bitcoin took over the world and was being used by big corporations and all kinds of individuals who saw it as a safe, easy, and exciting money exchange format. Today Bitcoin is used globally and more and more governments are accepting it within their fold.

Why are there so many misunderstandings about Bitcoin?

However, despite its global acceptance and appeal, Bitcoin still suffers from many misconceptions. People have great misunderstandings towards this digital currency and hence are apprehensive about its usage. One of the main causes of why it suffers from the bad press is because Bitcoin has been used by cybercriminals extensively over the years. Since Bitcoin provides great levels of anonymity, it is conducive for criminals to use it for covering their tracks. It is also easier to launder money in Bitcoins because of the encryption that Bitcoin uses. This encryption is very hard to decode and hence one’s tracks are hard to follow. Criminals enjoy this kind of coverage and indulge in malpractices more freely than they would in different formats.

A Bitcoin user does not need to disclose their identity for transactions, and only information that is needed or made available is a username. Since this user name is never identifiable, the privacy of the user stays intact. People often use different email ids to aid the Bitcoin usernames in case a hacker chooses to trace their username. Another reason why Bitcoin has failed in gaining the support of the common man is that it is hard to understand by common people. The technology behind the concept of digital currency is complex. The definition and explainers that revolve around Bitcoin are complex and hard to grasp. Only people who are tech-savvy and have worked in IT, cyber science, or engineering can be comfortable around the language that surrounds digital technology. This is one reason why non-specialists steer clear of cryptocurrencies and feel uncomfortable with it. The fear of getting duped runs deeper with cryptocurrencies, particularly amongst people who are not digitally literate and have very limited knowledge or the internet.

If people are educated around digital currencies, then it will not only ease the complexity that surrounds Bitcoins and its other alternatives but at the same time, it will also make people more aware of digital currency. This awareness will help people expand their investment options and be safe when it comes to getting duped.

What is Bitcoin?

Bitcoin is a cryptocurrency that was launched in September 2009 via an open-source website. The real creators of Bitcoin are unknown and a pseudonym of Satoshi Nakamoto is used to refer the creator or creators of Bitcoin. It is believed that its creator was a Japanese person. Bitcoin, as a currency, does not have a central bank. It is highly decentralized and needs intermediaries. People exchange and trade Bitcoins on a peer to peer basis only.

All bitcoin transactions take place via nodes that are then verified by cryptology. The data related to them is stored in a blockchain which is basically a public ledger. Bitcoins are exchanged for different goods and services, just like regular money. The first thing brought by Bitcoin was a pizza, and since then we have come a long way about its usage. Bitcoin can be converted into currency and subsequently transferred into a band account.

Is Bitcoin a good investment or not?

The prime question that surrounds Bitcoin is whether or not it is a good investment opportunity. There are no absolute answers to this question. The answer to the profitability of Bitcoin as an investment is best answered and depended on how you invest it. Like all investments, a calculated and smart investment will yield good results, regardless of the asset.

Just like gold that is available in a limited quantity, Bitcoin too is limited. This is the main feature that distinguishes it from paper money which is unlimited. Since there are only 21 million Bitcoins in the world, their value is set to remain high as they cannot be expanded beyond a set number. This scarcity and limit on Bitcoin mining mean that it will continue to be relevant for a long time. In the last 10 years, Bitcoins have proved to be a good investment and this happened despite this being a new technology that was surrounded by huge suspicions.

There have been many changes in the technological as well as the social front when it comes to cryptocurrency. With its popularity, governments around the world are looking for ways to bring digital currencies under their wing Klosterladen Birnau. This can mean both good and bad things for Bitcoin investments. Either, the Bitcoin market will exponentially grow, or it will be replaced by state-run cryptocurrencies. If countries legalize and support trades and transactions incryptocurrency such as Bitcoin, then more people will use it because it has state approval but if the governments replace private digital currencies with their own, then the Bitcoin market will go to other alternatives that have government support. The exact turn of events can only be confirmed in a couple of years.

Countries like China, Russia, Japan, and the United States of America have accepted Bitcoin, but at the same time, they are along with India looking to develop their own government-owned digital currency. Although the likeliness of it is rare, the threat of a state-sponsored competitor looms large on Bitcoin. The real consequences of these developments will only be clear in the near future.