What Is A Cryptocurrency?
A cryptocurrency is a digital currency protected by encryption, making counterfeiting and double-spending practically impossible. Many cryptocurrencies are built on blockchain technology, a distributed ledger enforced by a distributed network of computers.
Cryptocurrencies are digital or virtual currencies that rely on cryptography technologies to function. They make it possible to make safe online payments without the involvement of third-party payment processors.
What is the total number of cryptocurrencies?
CoinMarketCap.com, a market research website, has publicly-listed more than 16,600 distinct cryptocurrencies. Cryptocurrencies are still on the rise. On Jan. 10, 2022, the total value of all cryptocurrencies was at $1.9 trillion, down from an all-time high of almost $2.9 trillion late in 2021.
What Is Bitcoin?
Bitcoin is classified as a cryptocurrency since it is protected by encryption on a blockchain.
Learn More: What Is Blockchain?
There are no notes to be printed or coins to be minted. It’s decentralized, meaning it’s not under the jurisdiction of any government, institution, or other authority. Bitcoin links buyers and sellers with encryption keys rather than utilizing names, tax IDs, or social security numbers. Bitcoin is “mined” by powerful computers connected to the internet, vs. being issued from the top down like conventional currency.
Unlike conventional currency, Bitcoin is produced, distributed, traded, and stored using a blockchain, a decentralized ledger system. Being the first virtual money to achieve global acceptance and success, Bitcoin has spawned a slew of other cryptocurrencies in its aftermath.
Volatility of Bitcoin
Bitcoin’s history as a store of value has been rocky; it has gone through multiple pump-and-dump cycles in its brief existence. Its value can be exceedingly unstable, which is why after breaking the $20,000 mark in December 2020, many investors poured into bitcoin, which maintained its bull run through April, when the spot price soared past $64,000. However, the price began a protracted downturn in the months following, with the spot price plummeting below $32,000 by early June.
This was something that long-term bitcoin investors have seen before. Bitcoin’s previous record high was in December 2017, when the spot price was around $20,000, and it dropped below $3,400 a year later.
So, if you’re thinking about investing in bitcoin, keep in mind that the price can plummet suddenly – and it could take years to recoup past highs.
Right now, 1 bitcoin is equal to $42,488.66 at the time of writing this article.
What factors influence the price of a bitcoin?
The value of a bitcoin is ultimately decided by how much people are willing to pay for it. There is a parallel between how stocks are valued and how they are priced in this fashion.
Satoshi Nakamoto’s protocol stipulates that only 21 million bitcoins can ever be mined. There have been about 19 million mined so far. Therefore there is a finite supply, similar to gold and other precious metals, but no true inherent worth. This distinguishes bitcoin from stocks, which are frequently linked to a company’s actual or potential earnings.
As you can see, the bitcoin graph below shows quite a few dumps and unexpected pumps. This highlights the volatility in the price of Bitcoin clearly as one bitcoin is valued in the 40k zone, which two months ago was trending in the 60k zone.
Benefits Of Bitcoin
The fact that bitcoin has so many advantages is one of the reasons behind its popularity.
Bitcoin money transfers have minimal transaction fees
When it comes to fees, it’s also worth noting that Bitcoin transactions have relatively minimal transactional fees for international transfers. Here’s the thing: most foreign purchases and traditional wire transfers come with currency fees and expenses.
Because Bitcoin transactions do not involve the intervention of the government or intermediary entities, the costs of transacting are often lower than those of bank transfers.
Bitcoin is a reliable digital currency
In today’s world, cyber-attacks are happening worldwide at the touch of a hacker’s keyboard, which puts the safety of fiat currency in doubt. When it pertains to bitcoin, however, each transaction is documented on an open distributed ledger, which means that when a malicious party attempts to make unauthorized changes, the entire BTC community will be informed! As a result, bitcoin transactions are extremely safe.
Bitcoin Transactions are Anonymous
Bitcoin transactions are confidential, which implies that only a blockchain address can be used to identify them. As a result, an individual can have several addresses, passwords, and usernames for a single account.
It’s also worth noting that Bitcoin’s payment system is entirely peer-to-peer. It means that users can send and receive payments from or to anyone on the network anywhere in the world. Unless they are receiving or transferring bitcoin from a licensed exchange, the parties to a transaction are not required to seek authorization from an authority or an external source.
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How To Buy Bitcoin?
Buying Bitcoin is very easy. Every major cryptocurrency exchange like Binance, Coinbase, Kucoin, and many others have listed Bitcoin as the top currency to trade, sell, and buy.
If you're ready to take on the risk of owning bitcoin, getting started is as simple as registering for a Paypal account. With Coinbase, for example, you can deposit funds into a virtual wallet of your choice using your bank account or Paypal account. You can then trade traditional currency for bitcoin once your account has been credited, which normally takes a few days.
The Future Of Bitcoin
Since Bitcoin's launch, more than 11,000 cryptocurrencies have been generated and are exchanged on exchanges. The term "blockchain" has become well-known, and it is being promoted as a solution to complicated problems. Institutional investors are also making a beeline for crypto-assets as a type of investment, despite their early reservations. 1 BTC has gone from a few cents to thousands of dollars and thus proved everyone wrong in the process.
El Salvador has become the first nation to recognize Bitcoin as legal tender. And many countries are expected to follow in this direction. This means that sooner or later, digital currencies are the future of the world, and it is better to get into this world as soon as possible.