What Is Bitcoin? Should I Invest my Money in it 2022?

Bitcoin is generating news these days not only because it was the first cryptocurrency, but also because it is ranked #1 in the list of top cryptocurrencies, like a boss.

The frenzy for bitcoin and cryptocurrencies began when the market reached new heights, particularly in coins such as Bitcoin and Dogecoin, and then a stumbling block arose in the form of a downturn, during which many individuals lost money and others earned tremendous profits because they got in early.

What is Bitcoin

As more individuals get interested in this new sector, it frequently produces too much complexity, putting you in doubt, especially for newcomers.

That is why I prepared this book to take you to the paradise of cryptocurrency, where I will teach you all you need to know about bitcoin. How does it function? In our quick guide, we explain how to purchase and trade bitcoin.

What is Bitcoin?

Bitcoin is a digital currency that you may purchase, trade, or sell digitally using Blockchain, a decentralized ledger technology that eliminates the need for middlemen such as banks and governments, as well as any third party. Decentralized technology really aids us in making it hack-proof and digitally rare.

Essentially, this digital money is neither endorsed nor produced by the government, and all bitcoin transactions worldwide are recorded on a public ledger available to all.

It was founded in 2009 by a pseudonym named Satoshi Nakamoto, and the first online transaction was made using bitcoin on May 22, 2010, by a man named Laszlo Hanyecz.

Who bought two Papa John's pizzas for 10,000 bitcoins, which were worth 0.0025 cents per coin in 2010 and are currently the most expensive slices ever purchased?

In 2021, one bitcoin is worth around 39,554.40 USD as of August 2nd, 2021.

Is Bitcoin a genuine currency?

It is, as I have stated, a decentralized currency. Nobody has any control over it. It is not actual money in the sense of dollars, rupees, or any other country's currency. It is a blockchain-based digital currency.

Cryptocurrency is a type of virtual money that is based on software. Unlike centralized money, which is controlled by the government, cryptocurrency is decentralized. The network determines its value depending on supply and demand.

Origin of Bitcoin:

1982-1997 – Prior to 2008, the history of bitcoin and cryptocurrencies could be traced back to 1982-1997, when computer scientist David Chaum developed the concept of E-cash, which was a payment method in which other parties could not access the details of the transaction.

Chaum recommended that this notion be implemented by DigiCash (an Amsterdam firm), and Digicash workers and ventures welcomed the idea, but the proposal was never turned into an action plan, and Digicash went bankrupt in the late 1990s.

1998 – In 1998, two people proposed the concept of cryptocurrency, but for various reasons, neither notion was realized.

2008 – Finally, in August 2008, bitcoin.org was registered, and two months later, Bitcoin: A Peer to Peer Electronic Cash System was released as a whitepaper.

The person who wrote this document is said to be Satoshi Nakamoto, although it's a closed book because Satoshi Nakamoto is an alias name. This white paper had the same tactics and guidelines that had been suggested in 1992-1997 and 1998 but had not been implemented.

2009 – The initial bitcoin blocks, known as genesis, were mined in 2009.

Going forward, The bitcoin software was launched on January 9th, and the first Bitcoin transaction occurred on January 12th, when Nakamoto delivered 10 bitcoins (BTC) to computer programmer and developer Hal Finney.

2010 – As previously stated, the most expensive slice of pizza was purchased using online bitcoin in 2010.

2011 – 2011 was a high-low year for bitcoin, as it reached a milestone of passing $1, and then several renowned publications and newspapers began writing pros and drawbacks, causing it to rise to $30 and then fall down to $10 because people began spending bitcoins on the dark web, causing nasty rumors to fly high.

2012 – Despite the ups and downs, 2012 was a good year for crypto, as it reached the $100 barrier and was on its way to becoming one of the world's top digital currencies.

2013 – Bitcoin's crossing of the $1,000 milestone in 2013 was one of its most important years.

2014-2016 – Between 2014 and 2016, Bitcoin was heavily smashed, causing him to fall below $1,000. He tried hard to rise again but failed until 2016.

2017 – It crossed the 1000$ barrier once more, reaching 3000$ by June of 2017.

2018 – The year in which all bitcoin users, particularly those who held it in the hope that it would rise, saw a harsh strike down throughout the year.

These are the periods when bitcoin swings up and down, but it is presently just climbing up the moon with few minor crashes.

How does bitcoin work? 

Bitcoin is based on a digital ledger technology known as the blockchain, which is linked with tens of thousands of computers known as nodes, which are decentralized in the sense that no one can control or manage the node, thus it stores all transaction data into distinct blocks in the blockchain.

As previously said, Bitcoin is built on decentralized technology, which means that thousands of nodes must ensure that the transaction the sender is performing is genuine, and if any of the nodes do not agree to the transaction, all of the other nodes will also halt the transaction…

These nodes verify the correctness using two criteria –

If the sender or recipient has permission to send or receive.

If the sender has that much money, he'll send it.

Every 10 minutes, all recent valid transactions are transmitted from the decentralized network to data blocks on the blockchain.

Because blockchain is decentralized, it is not controlled by any one person or organization, but anybody with a special connection may work on it, and as more people update and modify it, your copy is also updated.

This may appear to be hazardous, but it isn't as if you wish to make any modifications or add any blocks to the blockchain; it only requires unique codes to distinguish user wallets.

Mining of Bitcoin

Bitcoin mining is the process of solving a computer problem in order to control the ledger of transactions, which adds and records transactions throughout the blockchain network.

What is Bitcoin

Several types of hardware can mine bitcoin, but some produce more bitcoins than others. Application-Specific Integrated Circuits (ASIC) and very powerful equipment such as Graphics Processing Units (GPU) may speed up mining and produce more bitcoins. These pieces of hardware can conduct compute work, but miners can validate blocks on the blockchain.

These miners are compensated as a rule of the deflationary bitcoin, which rewards bitcoin for the creation of one block. Every four years, the number of bitcoin miners receive as an incentive is decreased by half. In 2009, miners received 50$ as a reward for creating a new block; in 2012, it was reduced to 25$; in 2016, it was cut in half to 12.5$; and in 2020, it was cut in half to 6.25$. According to this timeline, by the end of 2140, miners will earn 0$, transforming bitcoin into a deflationary currency.

How can you buy Bitcoins?

Buying and trading bitcoin and other cryptocurrencies are now quite straightforward. There are several reputable exchanges where you can purchase and sell bitcoins. Binance, WazirX, and Bitbns are my preferred exchanges for buying and selling bitcoin. Before investing in bitcoin, you should have or seek the following items:

What is Bitcoin
  • Bank account details
  • Identification documents for individuals
  • Internet connection that is secure

You must have these items on hand while investing in bitcoin.

Follow the below given steps to invest in Bitcoin : 

STEP 1: Create an account on a bitcoin exchange — You must create an account on a bitcoin or cryptocurrency exchange, and we personally suggest Binance for any degree of trading expertise you have.

STEP 2: You must first create an account on Binance. Enter your email address and create a strong password for your account.

STEP 3: In order for your account to be verified. You must adhere to the directions. Enter the code that was provided to your email or cell phone number. Once you've been authenticated, you're ready to buy any cryptocurrency on financing. On Binance, you can also trade many prominent cryptocurrencies.

STEP 4: Purchase a bitcoin wallet – You just need a digital wallet to hold your bitcoins, regardless of whatever exchange platform you use.

Your wallet might be a hot wallet (attached to an internet connection) or a cold wallet (disconnected from an internet connection). It could also be a Custodial wallet (a third-party trustworthy person can keep the user's private key) or a Non-custodial wallet (User holds the keys itself safely).

You now have a hot digital wallet after completing the Binance account creation process.

STEP 5: Connect your wallet to your bank account — Once you've obtained a bitcoin wallet, you must connect it to your bank account so that you may pay using fiat currencies.

STEP 6: Place your bitcoin order — You are now ready to buy bitcoins using the Binance app. Simply mouse over the cryptocurrency you want to purchase, and then input the amount of money you want to spend, and it will tell you how much cryptocurrency you'll receive. Alternatively, you may input the quantity of bitcoin you wish to purchase and it will divide the amount to be paid.

Following the payment, you received BTC in your Binance wallet.

Congratulations!! You've successfully bought Bitcoin.

How will you be able to use Bitcoins?

Although there are very few retailers who take bitcoins, you can use them to make purchases as an investment alternative. Many large corporations, like Paypal, Pizza Hut, Expedia, and Microsoft, accept bitcoin as a payment mechanism, with Paypal, in particular, converting cryptocurrency into flat cash. While some just hoard bitcoins and profit when the price rises in the market.

Should you buy Bitcoin? 

If you contact a certified financial planner (CFP) or a financial adviser, they will push you to purchase if the customer is passionate about it. If someone chooses to invest in bitcoin in the future, it did not work out well and dropped, then they must also be prepared for the hazards. As a result, before investing in any asset, people should consider measured risks. In real life, there is a saying that goes, “Don't put all your eggs in one basket.”

This remark is often used in the stock market, and it also applies to bitcoin. Diversify your money into several chunks to invest in multiple cryptocurrencies rather than putting all of your money into one. Have a well-diversified successful portfolio to help you cope with losses.

Now, let's look at some general Bitcoin and cryptocurrency-related FAQs. It will broaden your understanding of BTC.

Q1. What is the history of bitcoin?

Satoshi Nakamoto mined one of the first blocks (block no. 0) on the blockchain on January 3, 2009, and was rewarded with $50.

Q2. Should we purchase bitcoins? Is it a wise move?

Bitcoin is an excellent asset investment if you want to earn money in both the short and long-term markets.

Q3. Why was bitcoin created?

The major objective for the creation of bitcoin was to adopt a decentralized system for fiat currencies, in which the obligations are passed on to the currency bearer.

Q4. How long does it take to construct one block?

A new block normally takes 10 minutes to produce.

Q5. What exactly does the phrase HODL mean?

Hodl is a phrase used to persuade people not to sell their assets during a slump and instead hodl them for a long-term benefit. Hodl is a misspelling of hold, which implies “Hold on for dear life.”

Conclusion :

Bitcoin is a vital volatile asset that swings highs and lows in the market, thus it may provide large rewards while also putting you in jeopardy of becoming bankrupt. Learning the appropriate strategies before dabbling in the crypto business is a fantastic gesture, and make sure to have a diverse portfolio to keep you balanced in market instability.

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