Bitcoin is one of the most important innovations in our time that did not only revolutionize the cryptocurrency market, but it was also one of the best performing cryptocurrencies in the last ten years. Since the Bitcoin halving last year, there is a new interest in investing and trading in cryptocurrencies in general and also, of course, in Bitcoin.
The digital cryptocurrency has had a notable bull market phase that resulted in the unprecedented price of over $40,000 in January 2021. When it comes to new investors that want to trade and invest in BTC, we have made a list of crucial information that you should be aware of as a newbie to the world of cryptocurrencies.
What is Bitcoin?
Bitcoin and blockchain technology were developed by a lot of computer programmers, but as an inventor of Bitcoin is considered Satoshi Nakamoto. A mysterious figure (Satoshi Nakamoto is his/her alias) has also released the white paper ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ in 2008. Subsequently, the first cryptocurrency was released in 2009. The main purpose of Bitcoin is to transfer money over the internet anonymously. Of course, today, you can use it to purchase items online and offline, as the advantages of cryptocurrencies are now widely known.
How Does It Operate?
Bitcoin and other cryptocurrencies are powered by blockchain technology, which is the primary reason why there were any successes of Bitcoin and other cryptocurrencies. Blockchain technology is a decentralized system, which is not authorized or controlled by any institution or central authority. This also means that the data of the network isn’t stored in a central database.
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What’s more, the data entered is irreversible, and there is total transparency, which means information about the transactions is viewable to every user in the network, and users can trace back data about the transactions. Also, as the blockchain network is essentially a decentralized database, the records of transactions are distributed throughout a network of computer systems ‘nodes’.
Another appeal of the blockchain network is that it’s very secure, and if one member alters the data of the transactions, the node with incorrect information can be easily identified. A vital component of the blockchain network is the miners. They provide an additional layer of security in the network because they confirm and add new transactions to the end of the blockchain. Whenever new transactions are validated, new BTC enters the blockchain system. Miners, as users of the network, receive a block reward for working to approve blocks of transactions and because mining is costly. There’re costs related to energy and computer equipment.
How to Trade on Exchange Sites
Marketplaces, where you can obtain BTC, are called ‘trading platforms. It’s more accessible for the public to get BTC through trading sites than through mining. Bitcoin Pro is recognized as one of the first automated trading sites that use AI technology for BTC trading. The Bitcoin Pro review explains in more detail what you need to know about the technology. Otherwise, you should know that you can gain up to $1250 by trading here, on a minimum deposit of $250. Also, the system has top options for its users.
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How is BTC Used?
As we mentioned earlier, you can use BTC to buy products and services from merchants online and offline. You’ll be glad to know that there are about 15,000 companies that accept BTC. Also, many not-for-profit organizations are getting on board to accept BTC donations. You can use your BTC in Microsoft, Overstock, Wikileaks, Twitch, and other major brands.
But, in order to make investments or get BTC, you need a crypto wallet. A crypto wallet is a digital ‘wallet’ that is used to store your BTC. There are different wallets that you can use, such as mobile, desktop, hardware wallet, and web wallet. There are different risks and advantages associated with each format, so make sure to pick a wallet that is secure and suits your goals.
What Determinates the Price of Bitcoin?
There are multiple factors and events that impact the price of Bitcoin in some way. But mainly, the relationship between demand and supply affects its price because there isn’t one central institution that controls the supply of Bitcoin. Actually, bitcoin halving is an event that is tied to the supply of Bitcoin because it splits the reward that the miners get.
Afterward, the miners are less motivated to mine on the network because the costs for mining are getting higher and the reward decreasing. The event occurs roughly after four years or after 210,000 BTC are added to the network. Besides, Satoshi Nakamoto has limited the number of BTC to 21 million BTC. So, BTC has a very scarce supply, and that’s why the price is rising.