Bitcoin basics

Bitcoin basics

Cryptocurrency transactions are characterized by their high processing speed. And almost immediate effectiveness in general terms. This was one of the reasons for its creation in the first place, to streamline the slow processes of banking transactions. Also, after adding a new transaction to the blockchain, it becomes irreversible. Additionally, the irreversibility of transactions helps prevent falsification of records and fraud in the system, thus helping to avoid possible scams.

Privacy is one of the main advantages of cryptocurrencies. You do not need to provide any personal data to use the system, which allows you to remain anonymous and hide your costs. In other words, neither financial institutions nor marketing companies, not even the person with whom the transaction is being carried out, can know their identity or the amounts or terms of their operations unless the user himself discloses it.

You are the only owner of your money.

Access to cryptocurrencies in the wallet can only be obtained by providing a private key, which only the owner has. This means that no one can cancel coins from the account or freeze their movements. Cryptocurrencies can become a way to protect your capital. The coins in the cryptocurrency wallet remain subject only to the user and become financial insurance.
Reliable data protection

When paying for goods and services, with methods such as credit cards, debit cards or other means, the buyer always risks their data, which can be intercepted at the time of payment or stolen from the seller and then used against the seller to steal your money. In cryptocurrency transactions, no personal data is transferred to the seller, so you can be sure that the information will remain in his possession and will not fall into the hands of strangers.
Cryptocurrencies are not sensitive to inflation.

Cryptocurrencies have a sophisticated inflation prevention mechanism. For example, in the Bitcoin network, inflation is avoided thanks to certain characteristics:

Limited edition of 21 million pieces, not adjustable.
New coins are issued strictly once every 10 minutes.
Every 4 years, the issuance of coins is cut in half.

There are similar methods in each cryptocurrency network, allowing you to predict in advance how many coins will exist in a certain period.
Simple and affordable

Many people mistakenly think that cryptocurrencies are too complicated to learn and use, but that doesn’t have to be the case. They are available to everyone, and anyone can start using cryptocurrencies, even without technical knowledge or understanding of the system. But yes, you should know that they are not without risks.

To get started, you need to open a cryptocurrency wallet, get some coins, and access the internet. Cryptocurrencies are open and accessible to everyone, including people living in disadvantaged regions where other financial services are unavailable.
At the moment, cryptocurrencies like bitcoin are giving a lot to talk about, not because they have exploded but because they have fallen 45%. You may be thinking of leaping this investment because perhaps your children already have it and made a fortune, which caused you a strong attack of “FOMO” (fear of missing something). Could now be the ideal time to buy?

Bitcoin basics

The first time I wrote about the basics of bitcoin was in 2017. Frankly, I expected to be more critical, but in the end, I ended up having more respect for digital currency than expected.

Bitcoin was launched in 2009 and is the most widely adopted cryptocurrency, with a total value of more than $ 667 billion. Unlike the currencies created by governments, such as the US dollar, there is a limited number of bitcoins: 21 million. The Investopedia website indicates that 18.6 million bitcoins have been “mined,” leaving about 3.4 million undiscovered.
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How bitcoin works

Bitcoin is a cryptocurrency, meaning it is not backed by any government and only exists electronically. Although it is increasingly common to buy things with bitcoin, if you want to realize the profits, you must translate it into dollars.

To create a bitcoin – a process called “mining” – you must be able to solve increasingly complex mathematical problems. Bitcoin mining requires a computer s extremely fast and sophisticated software, as well as an enormous amount of electricity. Bitcoin is limited to a total of around 21 million coins.

Bitcoin transactions are secure because they use blockchain technology, a type of database that stores information sequentially between many different computers. Transactions can be viewed at all times and are available to everyone.

To use bitcoin, you need a “wallet,” a computer program that allows you to transfer bitcoin between users and your bank. Your wallet has a password; if you lose it, you lose your bitcoins. There is no “reset password” function if you forget it.

You can get a bitcoin wallet at various sites, for example, CoinBase, Binance, and Trezor.

To verify what I was told about how to buy Bitcoin, in October 2017, I invested a derisory $ 200. Today, it is up about 800% and is worth about $ 1,800. Yes, I wish I had bought a lot more. Indeed, with the rise of cryptocurrency, my bitcoin-addicted brain was constantly harassing me to abandon my indexed stock funds in favour of bitcoins. I fought with all my might against that irrepressible desire to get rich quickly.

Others were not able to resist. CBS reports that there could be 100,000 millionaires in Bitcoin, though there may be fewer now with the drop. Some made hundreds of millions of dollars from bitcoin. Surely you or your children have also heard about those anecdotes of recent wealth.

So the death of bitcoin has been greatly exaggerated. In 2017, JPMorgan CEO Jamie Dimon called Bitcoin a “fraud” that would eventually explode into a thousand pieces. Dimon said the bitcoin craze was reminiscent of the speculative tulip rush in the Netherlands in the 17th century. “This is worse than the tulip crisis. It is not going to end well. Someone is going to be killed.” It appears that 100,000 millionaires in bitcoin did not listen to it.
6 arguments in favour of buying bitcoins

Many arguments support the purchase of bitcoin, including:

Our fiscal and monetary policy will cause the value of the dollar to drop or fall sharply. Now that is starting to drive high inflation.
Unlike paper money, more than 21 million bitcoins will never be discovered. Furthermore, an estimated 3.7 million bitcoins have been lost, meaning they will never be found without the private key. Therefore, there may never be more than 17.3 million Bitcoins in circulation.
Bitcoin is becoming more common, and more firms are adopting its use for transactions. Financial websites and programs now regularly display the price of bitcoin alongside traditional stocks, bonds, and gold.
The blockchain technology used with bitcoin is a decentralized and secure method for conducting transactions, thereby omitting the normal fees charged by banks and financial institutions.
It is the new and digital version of gold. Gold has been a valuable resource since around 550 BC. Bitcoin is only 12 years old, but it is widely adopted and easier to use in transactions.
It is possible to buy bitcoins on sale. On April 13, the price of bitcoin reached an unprecedented high of $ 64,899. On May 19, it fell to an overnight low of $ 35,718, a 45% discount for shoppers.


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