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What Is Bitcoin? - A Comprehensive Guide

 

By Nerly Shammah Aug 2, 2022

 

 

Bitcoin is a cryptocurrency, launched in 2009 by an anonymous developer, or group of developers identified by the pseudonym Satoshi Nakamoto. Bitcoin is a virtual currency that was built to play the role of money operating outside the control of the banks or government.

 

The Bitcoin network runs on a distributed ledger technology(DLT), the blockchain. Bitcoin design enables transactions to be done in a peer-to-peer manner, removing the need for third-party involvement in financial operations.

 

Made its first public appearance in 2009, bitcoin has since grown in popularity, thereby encouraging the development of several new cryptocurrencies with diverse utility structures.

 

Bitcoin.org was registered in August 2008, then on Jan 3, 2009, the first block of bitcoin was mined. The block in mention is often referred to as the "genesis block"

 

Bitcoin has appreciated in price value by more than 33,000% since its inception. November 10, 2021, precisely, marked its previous all-time high(ATH) of $69,000 at the time of writing. Currently trading at over 69% down the hill of its ATH, 42% down on a yearly trend as it hovers around $23,000.

 

Bitcoin being a highly volatile asset gives it the freedom to grow rapidly as we've observed over time. 

 

How To Buy Bitcoin?

 

There are lots of ways to get a hold of Bitcoin, mining, purchasing from exchanges, borrowing, getting passive income via Bitcoin, yield farming, and many more.

But if you're just looking to just grab and hold bitcoin, you can do that by quickly hopping on any of the listed exchanges to grab one; Binance, OKex, or Kucoin to buy.

 

Is Bitcoin Legal?

 

Bitcoin has grown from being a peer-to-peer payment system to embracing lots of ground-sized utilities. The initial idea behind Bitcoin is to have a currency that's out of the reach of the government or central banks. This, which remains the same given its basics, has had a lot more built on its technology, following the widespread developments, bitcoin has amassed great growth.

 

Bitcoin as of today is a legal tender in El Salvador, effected in June 2021 as the first country to do so.

 

Regardless, bitcoin is used around the world as it is a free currency that's readily available to anyone. However, some countries have banned the usage and mining of this currency, notably China, but this has had very limited effects on the development of its ecosystem.

 

What Are The Advantages Of Bitcoin?

 

Bitcoin coupled with its blockchain technology comes with a number of advantages which are listed as follows:

Control: this happens to be the heart of Bitcoin and many other cryptocurrencies. Bitcoin gives you control over your money, considering the nature of cryptocurrencies, excluding their price movements, the volumes of assets contained in a cryptocurrency wallet remain the same and only change by the sole decision of the owner. 

 

Investment benefits: it's a no-brainer that many people buy Bitcoin as an investment rather than a currency. This is because the cryptocurrency has appreciated greatly in price value as aforementioned, and so, one of its benefits is generating income or revenue.

 

Yield farming: Like many other cryptocurrencies, bitcoin can be pooled to earn yields, however, the process may include trading native bitcoins for a derivative asset placed as a wrapped version of the initial and so, supposedly backed by bitcoin.

 

Decentralization: this is an aspect of Bitcoin that cannot be left out. Bitcoin is built on a decentralized structure and so, its immunity to central attacks is one of its many benefits.

People often compare Bitcoin's profitability to fiat currencies, citing that centralized money only depreciates in value over time due to its central control vectors spawning from monetary policies, while at the same time causing inflation. On the other hand, bitcoin appreciates in price value over time, making costs depreciate.
 

Are There Disadvantages Of Bitcoin?

 

Often based on who is asking, if you're one that is kin to investment security and loves the government's ability to control operations in that sector, then Bitcoin may not be for you as these are the disadvantages based on your preference.

Unregulated: bitcoin is free money, there are no regulatory bodies controlling the affairs of Bitcoin circulation or the network operations.

 

Volatility: bitcoin appreciates so much in price value over time because it's highly volatile in nature. This means that the Bitcoin price rapidly moves up or down in the short and long term, the direction cannot be determined nor controlled.

 

Payment restrictions: although the cryptocurrency has a number of stores that accept it as a means of payment for trade, it's currently not universally accepted as a payment system, and so being all in would require timely conversions to fiat in order to carry out daily trade payments.

 

Security: the bitcoin network is highly secured by design, while crypto doesn't revolve entirely around its network, the usage of digital systems like cryptocurrency exchanges, and cryptocurrency wallets are at risk of attacks. 
 

Is Bitcoin A Good Investment?

 

Bitcoin is a virtual currency with quite a history including vital developments and the adoption process, but also, bitcoin has had a sizable amount of critics that are mostly drawn from its unregulated nature and price volatility.