Bitcoin is a word that most people have heard, but may not fully understand. Though it may seem complicated, the concept behind bitcoin is actually quite simple and can be understood by anyone. The technology is growing in market share and has become a popular way for people from all walks of life to make a little extra money. Here are the main facts that any novice bitcoin users should learn before deciding to make an investment in the cryptocurrency.
What Exactly is a Bitcoin and How Does it Work?
Bitcoin is a new form of currency that is accessible to people all over the world via the Internet. It first hit the market in 2009 and has grown in popularity since that time, with people from many different countries choosing to invest in it instead of other kinds of investments, like gold, national currencies, property or stocks. Bitcoin can be a preferable investment because it is not tied to any one country or political party, can jump in value quickly, and is easy to sell when the user no longer wants to own it.
How is Bitcoin Different From Other Currencies?
Bitcoin is a different kind of currency than others because it is based on a peer-to-peer payment system. Purchases and transfers of the money are protected from hackers and unwanted eyes by cryptography. Users who want to buy, sell or transfer money simply use a network to conduct transactions within a public database.
Certain people, called miners, are used to verify transactions into the database. In exchange for their services, miners get a fee or portion of the bitcoins transferred. Another way to get bitcoins is to accept them as a form of payment for work performed or services sold. Some people choose to accept this form of payment because bitcoins can appreciate in value from day to day, so a payment received one week can end up being worth more in the next.
Bitcoin is not the only cryptocurrency on the market. There are more popping up each day, with new names, distinct advantages and potentially some disadvantages. New users should not assume that any kind of cryptocurrency is synonymous with bitcoin, and check the valuation and conditions of the actual currency before investing.
How Do You Get Started With Bitcoin?
Before a user can start buying or selling with bitcoins, they need a bitcoin wallet. This can be installed on a laptop, desktop or mobile phone. This creates a unique bitcoin address for sending or receiving payments. The user can give this address to anyone who is sending them money, but it is only good for one use. A new address must be created for any new transactions made in the future.
Learning the basics of how bitcoins work and when they can be used is a great way to earn more money through investments or simply stay on top of the most popular topics on conversation in the coming year.