Bitcoin, as the very first cryptocurrency, has slowly crept into everybody’s vocabulary and consciousness in recent years, with many people inquiring about how to invest in it. Yet, not many among us are already cognizant of what cryptocurrency is. Despite the growing popularity of Bitcoin, many are still at a loss as to what this new thing called “cryptocurrency” is.
The term cryptocurrency sometimes sends shivers down the spine of those who don’t want to engage in mumbo-jumbo types of activities. The mere fact that it is prefixed with “crypto” readily gives this word a tinge of arcane exclusivity. Hence, those who are uninitiated to it would definitely have qualms about dipping their hands into this esoteric currency. But, are cryptocurrency and Bitcoin really incredibly difficult to understand if you are not gifted with a keen insight into this seemingly enigmatic currency?
I guess, at the onset, even the above-average would be perplexed by how cryptocurrency operates and would surely find it hard to decipher its inner workings. But upon closer scrutiny, these people would soon understand that cryptocurrency is a reactionary measure against the highly centralized banking systems and electronic money. In fact, Bitcoin is the very first decentralized cryptocurrency. Since the introduction of Bitcoin in 2009, there are more than 4,000 alternative coins or altcoins that have appeared.
The Underlying Technical System of Cryptocurrency
The technical system that underlies cryptocurrency was created by an individual or a group known as Satoshi Nakamoto. As opposed to fiat currency or printed money, cryptocurrency offers safety, integrity, and ledgers that are mutually maintained by non-affiliated distrustful parties that are casually referred to as “miners.” There is not a single administrator of cryptocurrency, and Bitcoins are usually sent from one user to another without necessitating an intermediary. Moreover, you can verify every transaction via the network nodes using cryptography. These transactions are also recorded in a blockchain or publicly distributed ledger.
To thoroughly understand Bitcoin, you should learn about blockchain. Blockchain is simply a public ledger that records all Bitcoin transactions. As a chain of blocks, each of these blocks contains a hash code of the previous block that leads to the genesis block. Via software applications, these blockchains are broadcast to the Bitcoin network. This process is indeed a novel solution in lieu of a centralized authority. Users or owners of Bitcoins can send Bitcoins to many recipients via a single transaction.
Investing in Bitcoin
The primary way to invest in Bitcoin is to buy currency and hope that the currency will appreciate. If you decide to invest by buying, you must figure out if the time is ripe for buying. If ever you decide to buy, you should move your Bitcoins into your very own wallet. You should also ensure that you only buy from reputable exchanges.
Another good tip is that you should never invest something that you are not willing to lose in order to mitigate the risk of loss. Aside from investing by buying, you can also trade Bitcoins. Trading is not the same as holding and buying. You can also invest in mining Bitcoin but this is a more expensive option that you may not be willing to take. Lastly, you can invest in Bitcoin companies. These companies promise to double your investments and provide you daily interest.Opinions expressed here by Contributors are their own.