10 Things to know about Bitcoins
You must have come across the word. Bitcoins. Mysteriously sounding expression, still in its sounding connected to coins. That is some sort of money. That is some sort of currency. Correct!
As bitcoins became this year a super hot topic across financial markets and not only, you should probably get at least some basic insight in what those forex specialist talk about.
Here is a short, lightly written list of things one should know about bitcoins.
- It is less than 10 years old.
In 2008 Satoshi Nakamoto introduced the concept of cryptocurrency to the world. As such bitcoins started to be operated in relatively low number of annual transactions. In 2009 there were less than 10 thousand transactions worldwide. Now the number exceeds 10 million.
- Bitcoins are not governed nor managed by third party.
This is typical for the “normal” kind of currency we deal with daily. Bitcoin is a peer-to-peer currency where transaction is only between the two parties involved without the administrator such as a bank or a visa or paypall system, etc. All transactions are recorded on a public ledger in the internet that is called a blockchain.
- Bitcoins as currency is real but virtual or actually digital.
You could argue that all other currencies are nowadays digital as well. Money being transferred electronically between bank accounts less and less have a form of a paper. Thus, the range of cashless transactions increases every year.
Bitcoins have no physical form and they only exist electronically, however you can make real transactions;
- Places that accept Bitcoins as means of payment;
The growing popularity of this cryptocurrency reflects the growth of places accepting it as legitimate payment. Among are travel agencies, online shops and services. Just to name few, we have Bloomberg, LOT Polish Airlines and Virgin Galactic, naturally, on the list. For more please refer to this page.
- Bitcoin value is listed and monitored like all other usual currencies;
The value of one bitcoin has gone up significantly over last months. Few years ago its peak was noted in 2013 when the value hit USD 1200. This level was also recorded beginning of 2017. However than suddenly its value spiraled up to almost USD 5000.
That is a rise by over 400 percent.
Five year bitcoin value - source www.xe.com
The return on investment seems very tempting and that is a reason financial world is giving so much attention to bitcoins nowadays. Still, as such situation brings risk of speculations, it is not recommended to use this currency as a long investment.
- Where to buy bitcoins?
There is plenty of places where you can buy bitcoins. Check the spots in your local area if you are interested. It is quite amazing seeing the variety of available places.
Other, old school way to get bitcoin is to mine them. This way has lost on popularity due to its complexity or in other words the need to have some technical or coding skills. Although some claim that is not crucial. For mining, you also have to invest in special software first. And there is also a range of different available software offering different scope of profitability.
- You can transfer money using bitcoins.
You can also exchange it for USD, EUR, GBP or any other physical currency.
The online exchanges offer the transfer to your bank account. And for exchange itself, you can use for example Bitsane.
- Bitcoin is not anonymous
All transactions are recorded online on the blockchain. That is for the sake of transaction security and record. They are permanent and can not be hidden. Your login is visible as well as the balance of the transaction. Nevertheless, the real identity of the user is kept behind the nickname. It is only revealed during a purchase to the other party or in other circumstances requiring it.
- Where are bitcoins kept?
Bitcoin is stored in online wallets. These wallets come with bitcoin addresses, which represent a destination, similar to an email address. If the wallet is lost, the money in it is gone. Therefore it is extremely important to pay extra attention to the security of your bitcoin wallet.
- Is using bitcoins safe?
Yes and no. Yes, because all transactions are transparent and recorded. Over the years bitcoins became acceptable as a payment and a transfer financial tool.
No, because its spectacular rise in value brings high risk of financial bubble. It is extremely risky to invest long term in bitcoins.
Another risk factor is that if you lose your wallet, it is gone forever. The same happens if someone steals your bitcoins by hacking into your wallet. That suggests, you should first assure the safety of your funds.