Even just a few years ago, Bitcoin was a term reserved specifically for nerds and technophiles. Nowadays, everyone and their grandma has heard about bitcoin. But that doesn’t necessarily mean that they understand it or what to do with it.
This article will give you a quick outline of what bitcoin is and how it works, as well as a few reasons why you should invest at least some of your money in bitcoin.
What Is Bitcoin?
Bitcoin is the name of the first currency built using blockchain technology. The blockchain and bitcoin were both developed by Satoshi Nakamoto, an elusive and enigmatic character (or characters) who still have not yet been identified.
Nakamoto succeed in creating a decentralized currency system that took power away from the banks and encouraged privacy and user control. The cryptocurrency market has risen above $2 trillion in value and has, indeed, shifted the international financial market in numerous ways.
Currencies that operate on the blockchain are known as cryptocurrencies due to the encrypted nature of the technology used to support them.
What Is Blockchain?
Blockchain technology has been called a lot of different things, ranging from the “wave of the future,” to disruptive technology, to a scam and ponzi scheme. Nearly a decade after its inception, however, nobody in their right minds could suspect the blockchain and cryptocurrency of being a scam.
Or at least, very few people are. Who knows, though? Perhaps Nakamoto, The elusive creator of the Bitcoin who nobody can identify, has a secret in his back pocket that could allow him to shut down the entire blockchain? It’s unlikely, but so is the existence of Bitcoin on its own.
Regardless of what it has been called, blockchain is a work of sheer genius that allows for the use of decentralized currency. What this means is that the currency is both created, transacted, used, stored, and shared only between users. There is no centralized organization like a bank to set rules or charge fees. The fees that are charged either go to pay those who are committing their time and energy into “mining” coins or towards the function of the blockchain itself.
How Does Bitcoin Work?
The whole process behind bitcoin and the blockchain can be tricky to understand.
Basically, bitcoins are created by computers solving incredibly complex math problems. Each time this problem is ‘solved,’ a new bitcoin is created. To incentivize people to continue solving these problems, transactions on the blockchain cost a small fee which is returned to the person solving, or ‘mining,’ bitcoins.
The amount of computer power and energy required to mine a single bitcoin is a deterrent to many people. Plus, to ensure that the value of bitcoin continues to increase or, at least, remains somewhat stable following the creation of the last bitcoin (which shouldn’t be until nearly a century has passed) the transactions will become increasingly more complilcated.
Whenever someone sends or receives money, that data can be seen on the blockchain. However, the identity of each person is extremely hard to identify. It’s not 100% impossible to discover who’s behind each transaction, but it takes a lot of time and effort. So you can see how much money is being transacted, but unless you’re extremely dedicated and talented, you won’t be able to put a face to the transaction.
Why Invest In Bitcoin?
There’s no doubt that Bitcoin was the best possible investment for anybody to make in the last decade. Early Bitcoin investors have become millionaires, even billionaires, simply from investing a few hundred dollars. Anybody who bought Bitcoin when it was worth $10, for example, will be doing quite well for themselves nowadays – as long as they can remember the addresses where their bitcoins were stored. Even if you only bought one Bitcoin, it would now be worth more than $50,000.
Even people who didn’t get in at the beginning still made a profit. In fact, anybody who put any money into Bitcoin between 2010-2018 will have turned a profit.
Nowadays, bitcoin is nearing mainstream adoption, and has just gone through another large price spike. It’s quite likely that this will happen at least once more, but it’s also unlikely that we’re going to see the extreme gains that we once did with bitcoin. It’s probably a smarter idea to invest in other cryptocurrencies.
Bitcoin has served an incredibly important function and has completely changed the way that the financial world operates. However, it’s already starting to grow old. Bitcoin is slow and clunky. It’s like comparing an original PlayStation from the early 90’s to a modern PlayStation 5.
Many of the newer cryptocurrencies work to solve the problems that are inherent to Bitcoin itself. The only issue is choosing an investment. There are tens of thousands of coins to choose from. The Best way to figure out where to put your money is to do your own research.
Five Reasons to Invest in Bitcoin
Here are five of the best reasons for you to invest in Bitcoin
1. Nobody has lost money over the long term
This is not something that can really be said about any investments, or at least not many. Anybody who invested money in Bitcoin prior to 2018-2019 and held it will have made money. That’s not to say that nobody has lost money on Bitcoin. Thousands of people have.
However, most of these people – often referred to as paper hands in the investment community – are the type who panic sell. They will buy cryptocurrencies at a certain price, see the price start to drop, and freak out, selling their investment before the price has a chance to rise again.
Investing in the cryptocurrency market is a highly emotional and psychological process. You have to learn to control your emotions and oftentimes act against them.
For example, most people instinctively move to sell an investment when the price drops. A good investor will use this ‘dip’ as an opportunity to buy more. On the other hand, many people see the price of an investment rise and move to buy a bunch more. Really, this would be a good time to sell off some profits to use next time the currency dips. If you can do this, you may see some success in the crypto market.
2. You are supporting your own sovereignty.
Bitcoin was originally developed so that people could maintain more control over their money. The lack of a centralized authority controlling the money means that nobody has access to your cryptocurrency except for you.
You don’t have banks to answer to. There are no taxes aside from the fees that you have to pay when moving money around. Bitcoin represents the way that money should be, and if enough people adopt it into their lifestyles, it could shift the financial future for everybody.
3. There are lots of interesting uses
The immense capabilities of blockchain technology are only beginning to be understood. People aren’t just using bitcoin to buy acid on the Dark Web anyore. The sheer potential of this technology and how it could affect the daily lives of people all over the planet is astounding.
Blockchain developers are starting to develop all sorts of different technologies that can be profitable and help to keep money in the hands of the users rather than the centralized authorities running the whole financial game at present.
For example, blockchain gaming is an increasingly popular commodity. People can earn cryptocurrency by playing games on the blockchain. They can then take the cryptocurrency that they earn from playing these games and use it to purchase unique, in-game items that will only ever belong to them unless they choose to sell them. These type of unique items are known as NFTs.
NFTs don’t only exist in the gaming world, however. All sorts of NFTs are being developed. Artists are making original pieces that they sell as NFTs for example. Imagine the value of an NFT produced by a popular musician or artist. To be the only person in the world to own a unique copy of their art would be a great feeling.
4. The investment potential is still incredible
Investing in Bitcoin itself could still in that you a good amount of money. However, there are lots of other areas in the cryptocurrency space that could net you even more cash if you invest in them early.
One of the biggest ways to make cash at the moment is through initial coin offerings, or ICOs. These are opportunities in which the creators of a cryptocurrency offer the coin at a lower price to early investors. This allows enough of the supply to begin circulating so that the company can begin to operate and show what their currency is capable of.
As the ICO progresses into public release, the value of the coin will thus increase. Early investors will usually make a nice return.
People can also make money by investing or earning NFTs, as discussed above
5. Following the bitcoin price is exciting
Absurd fluctuations in the price of Bitcoin are one of the reasons that it has become so popular. This is also the reason that it’s both extremely risky and extremely profitable to invest in Bitcoin and other cryptocurrencies.
Compared to conventional stocks, which raise a ruckus if they shift as much as a few percent in a single day, the price of cryptocurrencies often fluctuates 10, 20, or even 30% or more in the same day. These extreme price fluctuations are what makes Bitcoin and other cryptocurrencies a great way to make money. Skilled investors can reap massive profits simply by moving money from one cryptocurrency into another.
Conclusion
Bitcoin and the various other currencies developed using blockchain technology represent an astounding shift in the global financial market. No longer is all the world’s money controlled by a small few. Cryptocurrency allows for the creation of currency that belongs exclusively to those who are transacting with it.
The number of use cases for such a currency are seemingly infinite. As more and more ountries move to adopt bitcoin and blockchain technology, nobody can be certain what the future can hold. One thing that you can be certain of, however, is that yesteday was the second-best time to buy bitcoin. The next best time is today!
