If you bought $5 of Bitcoin seven years ago, it would have been worth $4,4 million today.
Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men, meaning, no banks! There are no transaction fees and no need to give your real name. More merchants are beginning to accept them: You can buy literally anything with Bitcoin.
A key factor about Bitcoin is that there is a mathematical limitation to the number of Bitcoins that can be created, which means, no printing money, so the rules of economy work perfectly. Where there is a limited supply of something, and the demand goes up, the price goes up along with it. There can only ever be 21 million Bitcoins.
At first, Bitcoin didn’t really catch on, and it was solely the domain of the early adopters. There were very few businesses which accepted Bitcoin as a payment method, and it was something which was almost frowned upon by most governments. As more and more businesses and governments accepted Bitcoin, it gradually went up in value, more and more people were starting to embrace the idea of a decentralized currency, and as more people jumped on board, the price began to rise. At the beginning of 2017, the value of Bitcoin spiked after gaining legitimacy in countries like Japan.
Why buy Bitcoin?
Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
Where can I get it?
Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Mt.Gox is the largest bitcoin exchange.
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 25 bitcoins roughly every 10 minutes. To understand this better, go here; https://www.coindesk.com/information/how-bitcoin-mining-works/
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.
Where is it heading?
No one knows what will become of bitcoin. It is mostly unregulated, but that could change. Governments are concerned about taxation and their lack of control over the currency.
Although the increase in the value of Bitcoin has been spectacular, it remains a volatile investment and should be approached with caution and on good professional advice. -Ed