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Bitcoin – said to be the largest cryptocurrency by market capitalization – has revolutionized the way people think about money and financial transactions. It was launched in January 2009 by an anonymous developer using the pseudonym Satoshi Nakamoto.
It was created to function as peer-to-peer electronic cash. Bitcoin operates outside the control of any person, group, or entity, allowing for peer-to-peer transactions without the need for a third-party intermediary. In this article, we’ll delve deeper into the concept of Bitcoin and explore its growth over the years.
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The below statistics represent Bitcoin’s daily price movements from April 2013 to March 2023.
How to buy Bitcoin?
Bitcoin price is too high, and not everyone can afford it, but one can purchase parts/ portions of Bitcoin in exchange for US Dollars.
Process of buying Bitcoin:
To buy Bitcoin, one can follow the process given below
- Sign up for a cryptocurrency exchange
- Link a payment method
- Place an order
- Move it to a digital wallet
Alternatively, one can buy Bitcoin from a Bitcoin ATM or through a peer-to-peer exchange.
Is Bitcoin risky or risk-free?
Bitcoin is not a risk-free investment. Many risks are associated with it, such as market risks such as volatility and price fluctuations and cybersecurity risks like hacking and theft.
“Market Risk is one of the biggest risks associated with Bitcoin,”
“Bitcoin always reacts inversely to the interest rates,”
So, whenever the Federal Reserve, the central bank of the United States, raises interest rates, Bitcoin takes a dip because investors lean towards safer and stable investments.
How to Keep Bitcoin Safe?
There are two main types of Bitcoin storage:
| Hot Wallets | Cold Wallets |
|---|---|
| These are online wallets | These are offline wallets |
| Connected to the internet | Not connected to the internet |
| Used to store small amounts of Bitcoin for everyday use. | Used to store larger amounts of Bitcoin for long-term storage. |
| Convenient and accessible from anywhere. | Not as convenient to access as hot wallets. | More susceptible to hacking and theft. | Less vulnerable to hacking attempts; more secure option. |
| Come as desktop or mobile applications, web-based wallets, and exchange wallets. | Come as hardware wallets, paper wallets, or even offline computers. |
He says that Cold wallets (Offline) are not connected to the internet and are secure from hacking, but it would be less convenient when compared to hot wallets. Cold Wallets can also be subject to theft or loss.
“Lose a device or drive or misplace your private key, you have a problem”
Hot Wallets are more convenient as one can use cryptocurrency from anywhere if he/ she has an internet connection, but they are more subject to hacking.
“A prudent strategy is to use a combination of hot and cold storage, with most assets being held in cold storage”
Bitcoin Pros
- Bitcoin transaction does not require personal information, such as credit card number or name. So, privacy is maintained.
- The transactions are cost-efficient and fast, making it possible for individuals to make transactions anywhere and anytime. This cuts down the time and expense associated with the transactions.
- Due to the financial crisis, many investors eagerly embrace an alternative form of currency that is decentralized and outside the control of traditional banks, governing authorities, or any other third parties.
- A few investors, who buy and hold the currency, believe that the value of Bitcoin will increase as it continues to mature, and there will be greater and more widespread trust.
- Bitcoin uses a particular algorithm and cryptographic protocols, making fraud impossible.
- Bitcoin is one of the easiest methods to commence an international transaction. It doesn’t charge any additional fees and helps in the immediate settlement of payments to the receiver.
Bitcoin Cons
- Bitcoins can technically lead to scams and fraud. Also, Bitcoin is difficult to understand for the common man. This can trick people into purchasing Bitcoins from fake websites and apps run by scammers.
- Bitcoin is very popular in the black market and among criminals. Bitcoin can be used in cyber hacking, drug deals, and black-market deals as it is completely anonymous.
- There are no refunds in Bitcoin. The transactions take place between the users without the help of an intermediator. As a result, it cannot be transferred back.
- Many other future cryptocurrencies may replace Bitcoin, which can disadvantage Bitcoin while retaining a better-secured network.
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