Bitcoin continues to surge: Here’s what you need to know about the cryptocurrency
Published on: March 24, 2021 08:46 (EAT)
The crypto market recently witnessed a vertiginous rise in the value of Bitcoin, which came after the cryptocurrency had been gradually gathering strength over the course of last year. On Sunday, the start child of cryptocurrencies managed to cross the $61,000 mark, leaving many skeptics and cynics stunned. Bitcoin has reported astronomical growth over the last decade. This value of this digital currency that was only worth a few cents at the beginning of its life, has managed to skyrocket recording new all-time highs. Once subjected to heavy criticism by spectators and financial professionals alike, Wall Street seems to have changed its tune with many major firms joining in on the bitcoin hype. After years of skepticism, Bitcoin seems to finally be gaining mainstream credibility. And in its wake, many interested parties don’t want to miss out. Since it looks like bitcoin might actually be here to stay, it is best to get comfortable with the topic. Here is a quick run down to get you started: What Is Bitcoin? Initiated in 2009, Bitcoin was the first digital asset that inspired the creation of an entire ecosystem of cryptocurrencies. It has an anonymous creator that used the alias of Satoshi Nakamoto when he presented the idea for such a currency online. Bitcoin makes use of blockchain technology and is a decentralized currency. This means that, unlike traditional fiat money, bitcoin is not under the control of a central authority such as banks or the government that could potentially interfere with transactions. Its decentralized nature also cuts out the need for any intermediaries or middlemen, reducing transaction costs significantly. Bitcoin is essentially electronic money and hence, does not have any physical existence but rather exists digitally. How Do You Buy Bitcoins? There are a few ways to land yourself some bitcoins. One of the ways to acquire bitcoins is mining. This activity is similar to mining gold but instead of hardcore machinery, highly expensive hardware along with specialized software is required to solve complex mathematical algorithms and verify bitcoin transactions. As a reward, a specific number of bitcoins are gifted to the miner. If walking down such a path is out of the question for you, consider asking any friends or family if they’ll spot you a fraction of a bitcoin. However, perhaps the most straightforward way to get your hands on your very own bitcoins is to buy them through an exchange. A number of Crypto Exchanges are available that allow their users to exchange any local currency into bitcoins at the market rate. Often, you may be required to link an existing bank account which allows for the transfer of funds between the two parties. In addition to that, since the purchase of a single bitcoin may be too expensive or risky for a potential or novice investor, only a part of the coin can actually be bought. Like most fiat currencies which can be used in fractions such as the use of pennies, nickels, or dimes, similarly only a fraction of bitcoin can also be bought. One bitcoin has eight decimal places that you can buy a fraction of bitcoin equivalent to 0.00000001 BTC. The smallest unit is referred to as the Satoshi, which has been named after its mysterious creator. Where Do You Keep Bitcoins? Bitcoin is stored in a digital wallet, which can either exist on the cloud or your computer. It’s like having a virtual bank account But unlike bank accounts, the bitcoin that are stored aren’t insured by the FDIC. Like fiat money is kept in bank accounts, similarly, bitcoins are stored in a digital wallet but bitcoin isn’t insured by the FDIC. Digital wallets allow their users to store, send and even receive cryptocurrencies from other people. You normally have the option between two types of wallets for storing bitcoin: hardware wallets and online wallets. There are quite a few online companies and platforms that offer bitcoin wallets. These are cheaper and much easier to acquire. On the other hand, if you’re planning to hold a valuable amount of bitcoins, choosing to opt for a hardware wallet may be a wiser decision. Generally, hardware wallets are smaller, offline systems that store the private keys of your bitcoin funds, and they are considered to be the safer option as well. How To Trade Bitcoin? Once you’ve got your hands on some bitcoins, you may choose to trade them. There are a number of trading strategies you can adopt in order to get more lucrative results. These include HoDling, which includes holding the coins for a longer-term, day trading, and trend analysis. Day trading is perhaps the most popular option among traders. This is largely due to the easy availability of trading platforms and software. These platforms, such as Bitqt app, use advanced technologies such as AI( Artificial Intelligence) and ML( Machine Learning) in order to construct powerful and effective algorithms that are, in turn, used to take advantage of the crypto booms that result from the volatility of the market. Since they are capable of automatically trading, many investors pursue bitcoin trading as a side hustle.