techsupport Bitcoin and cryptocurrencies are on everyone’s lips. Tech Support Reviews explains what this virtual currency is, how it works, and how to invest in Bitcoin, a coming year that will again be an actual roller coaster ride for cryptocurrencies.
Virtual currencies appear as alternatives to traditional fiat currencies and have their maximum exponent in Bitcoin. Cryptocurrency has become one of the top long-term investments (risky, yes). Anyone who invested 1,000 euros in 2010 would be a millionaire today.
At Finest, we’ve also created a section where you can see information about different platforms to buy bitcoins or cryptocurrencies, compare them, and decide which is best for you. Here, you can see other platforms where you can buy bitcoins.
What Is Bitcoin?
In other words, what are bitcoins, and how do they work? Bitcoin is an intangible and independent virtual currency. What distinguishes this cryptocurrency from a common currency such as the dollar or the euro is that it does not belong to any state. They are decentralized currencies as no central bank, government, financial institution, or corporation can act on them.
In the case of the euro, the central bank can intervene by spending massive amounts of money or by influencing the exchange rate. It is not possible with Bitcoin. In addition, its creators have already set a limit on the number of bitcoins in circulation. They will reach 21 million in 2030, and there will be none.
The control rests with the Bitcoin users. They are the ones who validate every operation through the exchange (point to point P2P) without the intervention of the state or any institution. Its structure itself makes it impossible to manipulate its value. To make a change, the entire user community must approve it.
Bitcoin is the initial electronic currency that manage to get implante with some credit but not the first to emerge. What sets Bitcoin apart from other attempts is its blockchain technology.
Origin of Bitcoin
August 2008 marked the birth of Bitcoin with the registration of the bitcoin.org domain.
In January 2009, the Bitcoin network was officially born with releasing a customer’s first open-source code.
Two months later, in October, the first document explaining the virtual currency design was published. At this moment, the first block of bitcoins with 50 price bitcoins is extracted, and the first delivery of this coin occurs – later, we will explain what bitcoin mining is made of.
In October 2009, the first transaction in dollars was carried out at a $ 1,309.03 BTC (Bitcoin) price for one dollar.
The first exchange of Bitcoins for dollars will occur in 2010 at 1 BTC for 0.003 dollars. Also, in 2010, Mt Gox was founded, one of the largest Bitcoin brokers that later became famous for participating in the biggest scams involving this virtual currency.
In May 2010, the first purchase made in Bitcoins. Specifically, 10,000 BTC were paid for two pizzas. We can say that these are the most expensive pizzas in history. At the current price, we’re talking about $ 30 million for two pizzas.
Other cryptocurrencies began to emerge in 2011, and Bitcoin’s growth continued until 2013 when it received a new boost, and its price hit $ 3,000.
More about Bitcoin
In the year 2013, the EU exempted transactions in this virtual currency from VAT, while the technology that enables mining and obtaining bitcoins is advancing faster.
Legislation on Bitcoin as a payment method was not started until 2015 – remember that this is its primary function. It raises the rank of a payment method.
But the real boom in Bitcoin won’t come until 2017. It’s the beginning of the year when it surpasses $ 2,000 and even $ 3,000 per BTC. According to the experts, the reason BTC would lose its value as a means of payment and preserve as a financial asset, much like investing in gold.
In 2017, Bitcoin exceeded $ 20,000 in value, marking a milestone.
In 2018, volatility hit virtual currency and recorded a decline of more than 80% from its high of around $ 3.00.
Between 2019, the value of Bitcoin stabilized over at around USD 8,000.
In 2020, Bitcoin became an investor ally with the coronavirus crisis and was trading at nearly $ 30,000 by the end of the year. As of now, Bitcoin has hit over $ 46,000.
In 2021, the cryptocurrency broke all of its records. The reasons include, for example, the purchase of Bitcoin by Tesla, which has invested $ 1.5 billion in the cryptocurrency.
There is also another relevant question: How many Bitcoins are being mined? The 18.8 million Bitcoin units mined have already been exceeded, bringing us closer to the maximum threshold of 21 million Bitcoins created. Another exciting feature is that Bitcoin has a fixed limit of 21 million coins.
Indeed, its production and value are based on the law of supply and demand. It initially assumes that this limit will reach in 2030. However, the estimates are getting longer. As there are fewer Bitcoins every day, mining them becomes more complicated.
How does Bitcoin work?
Bitcoin is another means of payment like the euro and an asset to invest in for the end consumer, such as a share of oil. So is it safe to invest in bitcoins or not? With this question in mind, it’s good to know that technology is behind this entire market, enabling the system to be reliable.
It is the blockchain technology or blockchain that, among other things, avoids double-spending of the currency, meaning that someone can spend the same bitcoin again.
In summary, the Bitcoin network is a public accounting system for which every user keeps a copy. Every time someone makes a transaction, it is stored on users’ computers in an avoidable manner, known as double-spend.
How To Invest In Bitcoins
Another formula for getting bitcoins is to invest in virtual currencies. In other words, speculate on cryptocurrency as you speculate on gold, oil, or other stocks.
How Do I Buy Bitcoins
To buy bitcoins, go to one of the bitcoin trading platforms. For those already investing in the stock market, the way it works will be similar, albeit slightly different, to that of a broker.
These platforms, where virtual currencies are stored, are called Bitcoin wallets. There are different kinds of Bitcoin wallets based on topics like security and usability.
The first is the Bitcoin wallets for PC, which you can download as a program for your computer. The second is the online wallets with virtual currencies for mobile phones or computers; it doesn’t matter. The second is the most secure, and it is the hardware wallet. In other words, it is a physical device that stores the virtual codes of your cryptocurrencies.
As a user, one can use one or more virtual wallets that contain your backup passwords and your encryption system. In this context, it is common for online wallets to request double password confirmation via SMS.
Which Bitcoin Wallet Should You Choose?
The market for Bitcoin wallets is enormous. The Bitcoin Wallet you choose depends on the use you want and the number of Bitcoins you have linked to your user address. Virtual wallets are suitable for small amounts because they are much faster. On the contrary, they are not recommended for storing large quantities. Of course, when you work with these wallets, it is essential to save the private key they give us, as it allows us to restore the bitcoins later.
As a rule of thumb, the higher the number of Bitcoins on your balance, the more advisable to have a physical wallet and not constantly connect to the network. The danger at this point is what will happen if the device breaks. Again, the solution is to write down on paper and locate the private key or address of the account.
When choosing a cryptocurrency wallet, there is a difference between the popular wallets with their public and private keys.
The bitcoin platforms, wherein the end of the web holds the money, not you with your own. Key.
The most popular wallet is Coinbase, which is very simple and intuitive to use but has significant fees every time you buy, sell, or transfer bitcoins. Since it’s a platform or exchange, the security of your bitcoins depends on their encryption, not what you do. You include a third party with all the data on your bitcoins.
On the other hand, Kraken is slower in executing orders and deposits that need to be made via wire transfer for large amounts but has lower commissions. If you’ve invested in the stock market, it’s not much different from a stockbroker or mutual fund supermarket.
How To Trade Bitcoins
Once you’ve selected your Bitcoin portfolio, the process is similar to buying and selling stocks. The difference is that the order process takes more or less, depending on the payment method.
But as with an ordinary broker, you can enter your portfolio and see the development of Bitcoin and its conversion into euros. What changes is that there is no need to buy one whole bitcoin; choose the investment amount. That will be reflected in the part of Bitcoin.
With these Bitcoin trading platforms, the transactions are controlled by a third party, the venue. That is, the security depends on them, and they are the ones who have the Bitcoin’s private keys.
Critical Comment
Risk Warning: Buying, selling, holding, and participating in trading in cryptocurrency futures contracts are activities that are subject to high market risk. The unpredictability and volatility of the price of cryptocurrencies can result in a significant loss. Tech Support Reviews is not responsible for any losses you incur due to price fluctuations when buying, selling, holding, and using cryptocurrencies.
