In the last week, Bitcoin reached an all-time high surpassing 20, 000 dollars per BTC.
Bitcoin was created in 2009 by Satoshi Nakamoto (an alias, not a real name). Transactions are made online with no physical institutions and no middle men. Although, bitcoin is not an acceptable currency by any country, it has become a medium of acceptance between individuals and corporate companies, so much so that one can buy things including cars, video games, and food with bitcoin.
It has also, become a powerful investment option for people who only transact in it for the sake of investments and not consumption.
But how does it really work?
There are places called ‘marketplaces.’ Many marketplaces allow people to buy and sell several cryptocurrencies including bitcoin. One needs to research properly as security is a huge lax in the trading of bitcoin.
People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.
People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.
Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured by the FDIC. So, if you mistakenly transfer a bitcoin to a wrong account, it cannot be reversed.
Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed, only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.
Everything has their pros and cons. Research and understand before investing. Put it money you don’t readily need or could do without.