The rage of cryptocurrency during 2017 made some crazy, some confused and some regretful. People were getting rich overnight. A single Bitcoin reached the peak of $17,000. But what is bitcoin?
The short story of Bitcoin
Someone under the pseudo name Satoshi Nakamoto first mined Bitcoin in 2008 and introduce the cryptocurrency to the world. It’s a currency owned by no one and is regulated by no one. It can be used by everyone to pay anything. It is done based on the peer-to-peer system – like torrent – which means this will not rely on trust.
Some of the first transactions recorded were the process of setting the value of Bitcoin. One person bought 2 pizzas from Papa John’s with 10,000 BTC, which is equal to roughly $140m USD today.
The process of selling and receiving a Bitcoin creates a block that contains hash (mathematical algorithm) which helps secure the transaction. It is then connected to the next block, creating the name blockchain. It can also be called the ledger that everybody has an access to.
Everything you need to know when buying Bitcoin
First and foremost is to confirm what you buy. Bitcoin (BTC) is never anything else. Make sure that you are not buying Bitcoin cash, BCH or any other type of cryptocurrencies.
Next, you’re off to get yourself some crypto-money. So, you’ll need a wallet to keep them. Bitcoin wallet allows you to receive and send payment with it. There are lots of types of wallets available out there. They can be both online and offline. To start with there are multiple online Bitcoin wallets out there. It’s important that you use trusted services with high security to prevent your Bitcoin from getting stolen.
Online wallets can be accessed through the web from any device that is connected to the Internet. Offline wallets or cold storage allows you to keep your Bitcoin in a ‘physical wallet’. The process requires your computer to be completely offline. This is the upper hand of having a cold storage; your Bitcoins are safer from online attack and reduces the risk of getting stolen significantly.
Whenever you want to spend your BTC, connect it to an online wallet and import the private keys (which are unique codes that secure your BTC and only you should know). Once used, it should never be re-used again. Create a new cold storage for better security.
The other method to earn Bitcoin is through mining. These days, mining is hard and even pros are finding it hard to do. It takes heat, noise and a lot of time to mine. Mining on your own will take a few hundred years for a single bitcoin, so it is not advisable.
Pool mining, on the other hand, is gaining better popularity. The majority believes that pool mining allows users to earn more. In actuality, pool mining allows you to earn BTC per minute, instead of gaining one after hundreds of years waiting. You still earn the same but spread out.
In 2017, mining becomes very harsh. Unless you invest in a better mining tool, have a garage, does not mind the noise and a fan to help cool your computer during the process, you’ll get 0.36 BTC per month. That equals to $5,200 in Dec 2017. The miner itself costs almost $2,000. There’s also the electricity bill to watch out for.
You’ve probably heard of cloud mining, a different version of pool mining. At first, it may look great with all the pros of not having to buy the equipment yourself and fighting with keeping the device cool and constant noise it makes. Cloud mining can be a great thing and a risky step on the other hand.
Trust is the biggest issue. Host providers may run away with the money you’ve invested. Some have to close down when the difficulty increases and reduces profitability to an unacceptable level. Therefore, it is important that you only use trusted cloud mining providers, such as the one ‘official’ Bitcoin main developer launched.
Mining has become a thing for experts. Buying and exchanging with dollars is a more viable option if you don’t want to waste time and energy on waiting days and months for a single BTC.
Bitcoin is a great investment to have. The rage and rise of it peaked on Dec 17, 2017, with a value of near $20,000. 6 days afterward, it experienced a slump as far as $10,400, but quickly rebound back to $14,000. The great thing about this is that many experts are positively remarking that Bitcoin is going to survive through next year and may even hit the ceiling of $20,000.
This is due to the fact that only a limited number of Bitcoin is allowed every year. This means that supply is fixed, but demand is high. What was 5,000 BTC per pizza, became a month worth salary per a single BTC. Bitcoin’s value is volatile, but a positive one. Michael Novogratz believes that a single Bitcoin can easily reach $40,000 by the end of 2018.
So, don’t want to miss out? Check out several sites that provide an exchange for Bitcoins in Etoro, Coinbase, Bitstamp and 30 others of them! If you like what you read, join the discussion and sound your opinion!
As always, happy trading from the Insider Chaining Team.