What is Bitcoin?
Bitcoin Explained in Simple Terms
Bitcoin is a cryptocurrency that was created in 2009 by a person called Satoshi Nakamoto. All transactions in Bitcoin occur with no intermediaries, which means there are no banks involved. Today, Bitcoin can be used to book hotel accommodation, shop for furniture, and even buy digital games. As more merchants continue to accept Bitcoin as a means of payment, this will undoubtedly cause itsvalue to grow.
How Bitcoin Works
Bitcoin is a virtual currency, which does not need banks to store or move money. Bitcoins can be best compared to gold coins. Once you own Bitcoins, you can trade with it as if they were actual coins in your possession. You can use them to purchase goods through the Internet, or you can keep them hidden away and hope their value rises.
Bitcoins are traded between wallets. This is a small database where you keep your Bitcoin. It can be your computer drive, a smartphone or on the cloud. Although they are lines of code, they are resistant to forgery. The computational power required to forge them makes it financially worthless.
How Can You Acquire Bitcoin?
One way to acquire bitcoin is to buy it at a Bitcoin exchange. Here, you are able to buy and sell in different currencies. However, these exchanges have raised security concerns in recent years. Thus, you should not store your Bitcoins at an exchange.
Another way to acquire Bitcoin is via direct transfers. These can be done using an app on phone or your computer. It is similar to sending cash digitally, only there is no bank involved. You can also mine Bitcoin. This is done by solving complex mathematical equations with a computer. Today, anyone who solves a Bitcoin equation is awarded a few Bitcoins for their effort.
Owning Bitcoins is as secure as holding a bag of gold coins. If you take enough precautions, your Bitcoin will be secure. However, if you ignore basic security measures like strong passwords and two-factor authentication, it can easily be stolen.
One of the most secure methods of storing Bitcoin is an offline wallet. It is the recommended method for storing Bitcoin if you own more than two of them. Besides that, you need to have an offline data backup of your Bitcoin. That way, you minimize the risk of losing it.
Take Care of Your Hardware Bitcoin Wallet
If you do decide to use an offline database to store Bitcoin, you need to choose a sturdy one. Besides that, you need to store it carefully away from the elements. In short, you need to give it the same level of care that you would an expensive piece of electronic equipment. Once it is damaged, there is little chance of recovering your Bitcoin.
What do you think about Bitcoin? Are they worth investing in? Share your thoughts in the comments section.