Cryptocurrency becomes more popular every day, but are you in the know?
It’s a complicated subject with a lot of confusing jargon, which scares many people away. It often seems like there’s a small group of wealthy folks in the know and a lot of outsiders with near-zero knowledge.
As the use of cryptocurrency grows, getting on board is vital before you’re left in the dust. In time, there’s a good chance that you’ll need it to access some goods and services.
Bitcoin was the first functional cryptocurrency and remains the most well-known. Read these facts about Bitcoin technology to further your education.
- The Mysterious Satoshi Nakamoto Developed Bitcoin
It’s clear that Satoshi Nakamoto invented Bitcoin and released the open-source code in 2009. That’s simple enough, but the coin’s provenance gets a lot murkier from there.
Nakamoto—or someone using that name—wrote online in 2012 that he was 37 and from Japan. No evidence that he’s that old or from the country ever surfaced, but lots of speculation suggesting otherwise has.
There’s no confirmation that “Satoshi Nakamoto” is the inventor’s real name, or even that the coin is attributable to an individual. Many believe Bitcoin was instead founded by a team under that name.
Whoever Nakamoto is, the public hasn’t heard from him for almost a decade.
- One Bitcoin Is Huge
“Bitcoin” is a deceiving name if you don’t know what it is. For the most part, people think of modern coins as small units of currency.
Despite the name, one Bitcoin hasn’t been worth a few cents for more than a decade. These days, one Bitcoin goes for tens of thousands of dollars.
It’s hard to pin down its exact value at any given time. Whatever the worth is when you’re reading this is more than likely different from its value at the time of writing. As of late 2021, Bitcoin hovers at record highs around $50,000-$60,000.
- Thousands of Dollars Split Into Fractions of Cents
As big as a single Bitcoin is, each coin splits into 100,000,000 Satoshi, named for Nakamoto.
The dollar value of one Satoshi shifts as Bitcoin’s value changes. Unless the currency’s worth skyrockets beyond comprehension, one Satoshi will stay less than one American cent for a long time.
- Bitcoin Is Very Secure
In many ways, Bitcoin and other cryptocurrencies are very secure forms of money. Countless users generate it by “mining,” slang for solving incredibly complex math problems with powerful computers.
Transactions appear on a public, yet anonymized, ledger. It’s near-impossible to amass the amount of computing power, money, and effort needed to alter the record of transactions known as the blockchain.
The blockchain also makes finding users’ personal details a massive challenge. The largest privacy risk is individual failure to keep passcodes and Bitcoin wallets secure. With a wallet address or passcode, finding associated transactions is easier.
- The Bitcoin Market Is Beyond Volatile
As secure as Bitcoin is in terms of privacy, it’s much less secure in terms of its value at any given time. No central bank or government backs its value, unlike traditional money.
Bitcoin is only valued based on supply, demand, ease of access, and other coins’ popularity. For that reason, you can’t be sure that $1000 in Bitcoin today won’t be worth $100 tomorrow. That’s a drastic example, but much more likely than someone hacking the blockchain.
- You Should Diversify After Investing in Bitcoin
As you read, one of Bitcoin’s biggest weaknesses is how volatile it is. Swings of thousands of dollars are common, and swings of tens of thousands of dollars aren’t unprecedented. The good news is that, as with stocks, you can diversify your cryptocurrency portfolio with countless other coins.
Some of them don’t fluctuate nearly as much and others don’t change in value. You can exchange some of your Bitcoin for a “stablecoin” such as USD Coin, which is always worth about $1.00 in American currency.
Venturing into less common coins is a cheap way to build your portfolio. You risk little but could find yourself sitting on piles of cash down the line if the coins gain traction.
- It’s a Versatile Currency
Not too long ago, answering the question, “What is Bitcoin?” took high-level knowledge of math, coding, and insider lingo. You could only use it online and in limited markets, many of which were secret and/or illicit.
Now, anyone can use Bitcoin with no more effort than using any other money takes.
If you’re out and about, sites like bytefederal.com/ lead you to Bitcoin ATMs that make exchanges, selling and buying Bitcoin, and withdrawing cash a breeze. You can also access it with debit cards, countless apps, and shop with it on many websites.
- Banks Bet on Bitcoin
Until the last few years, only somewhat obscure, cryptocurrency-only websites and apps were the only places to buy, sell, store, and trade Bitcoin. Banks wanted nothing to do with it early on because of its volatility and small user base.
Now that it attracts hundreds if not thousands of new users every week, major financial companies like JP Morgan Chase bet on Bitcoin and other cryptocurrencies. They opened exchanges and bank accounts of their own to charge exchange fees and interest.
However, cryptocurrency platforms like Coinbase remain the preferred places to manage Bitcoin. It’s no surprise that these authorities in the cryptocurrency world—innovators and experts for the currency’s entire history—have the best and most reliable tools.
Plus, anonymity and a lack of restrictions and charges are two of Bitcoin’s biggest appeals. Long-time cryptocurrency users and platforms are beyond hesitant to do business with traditional banks.
- Governments Want a Share, Too
Governments throughout the world want a share of the Bitcoin market in the same way that banks want to profit from Bitcoin bank accounts, credit cards, and loans. They want to track who buys and sells cryptocurrency to better tax it.
In the United States, for example, yearly taxes require you to report cryptocurrency trading. Yet, Nakamoto and other innovators designed a system that laws struggle to enforce. The United States and other countries continue trying to access wallet addresses and other ways to track transactions.
Learn Facts About Bitcoin and More Valuable Tips
Understanding the basics of cryptocurrency is essential as it becomes more common. Now that you know these key facts about Bitcoin, you can move to the next level of investment and teach others about it.
If you want to pick up more valuable tips and tricks to help you get ahead in life, you’re on the right website. Read another article and learn the facts you’ve been missing.