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I Don’t Exactly Know What Bitcoin Is, But I Want Some

by Terry Mansfield 2 months ago in bitcoin

There’s a lot of excitement these days about Bitcoin, a digital cryptocurrency.

Image by MichaelWuensch from Pixabay

What is Bitcoin?

So what exactly is this thing called Bitcoin?

“Bitcoin is a cryptocurrency invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. The currency began use in 2009 when its implementation was released as open-source software.

Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.

Bitcoin has been criticized for its use in illegal transactions, the large amount of electricity used by miners, price volatility, and thefts from exchanges. Some economists, including several Nobel laureates, have characterized it as a speculative bubble at various times. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about Bitcoin.”

— Wikipedia

The History of Bitcoin

“The idea behind Bitcoin was introduced to the world on October 31, 2008, by a pseudonymous person called Satoshi Nakamoto. This event happened during the worst part of the financial crisis that began that year.

Satoshi Nakamoto brought the Bitcoin network into existence on January 3, 2009, when he mined the genesis block of Bitcoin (block number 0). The genesis block had a reward of 50 Bitcoins. In those early days, Nakamoto reportedly mined 1 million bitcoins. Bitcoin mining is energy-use intensive, which helps restrict the amount of digital currency in circulation. Thus, this affects overall supply and demand, which, in turn, can affect the Bitcoin price.

Bitcoin mining is the process by which new Bitcoins are entered into circulation. The Bitcoin reward that miners receive is an incentive that motivates people to assist in the primary purpose of mining: to legitimize and monitor Bitcoin transactions, ensuring their validity. Because these responsibilities are spread among many users all over the world, Bitcoin is a “decentralized” cryptocurrency or one that does not rely on any central authority like a central bank or government to oversee its regulation.”

— Investopedia

Why People Are Interested in Bitcoin

If you’re like most people and me, you don’t understand what’s all the fuss about Bitcoin. But it’s hard not to pay at least some attention to what’s happening in the world of Bitcoin because it shows up in the news a lot, sometimes dramatically. An example of that was when Tesla and SpaceX tycoon Elon Musk purchased $1.2 billion worth of Bitcoin. Of course, such a large purchase of Bitcoin sent the price zooming up to even greater heights than it already was.

The Future of Bitcoin

The future of cryptocurrencies such as Bitcoin is still uncertain. Bitcoin proponents see unlimited potential. However, critics of Bitcoin see serious risk. While there are many skeptics, some admit that using cryptocurrency in specific applications is a viable solution.

Bitcoin has drawn increased interest from institutional investors and speculation that one day the digital currency might replace gold as a safe-haven asset. But skeptics frequently point out that Bitcoin’s volatility makes this unlikely.

Nonetheless, Bitcoin enthusiasts remain bullish about it and believe the cryptocurrency is likely to become the gold of the future. So what will Bitcoin turn out to be? Will it be the next big bubble or the gold of the future? Only time will tell, of course.

Conclusion

Even though I don’t understand Bitcoin all that well, nor do many other people, I want to get some of it because I like to speculate a bit in my investing. And also due to my fear of missing out (FOMO).

Unfortunately for me and lots of others, Bitcoin is too pricey to buy directly, so the best approach may be to purchase partial shares through an online brokerage when that option becomes widely available to the general public. Exchange-Traded Funds (ETFs} that focus on digital currencies such as Bitcoin could be the right choice and reduce the risk of ownership by diversifying the assets a fund holds.

Whatever one may think, it doesn’t look like digital cryptocurrencies such as Bitcoin are going away anytime soon, and possibly never if they make their way into the mainstream.

References:

https://www.dw.com/en/bitcoin-what-history-reveals-about-its-future/a-5668195

https://online.stanford.edu/future-for-cryptocurrency

https://en.wikipedia.org/wiki/Bitcoin

https://www.investopedia.com/tech/how-does-bitcoin-mining-work/

https://www.investopedia.com/tech/how-does-bitcoin-mining-work/

https://money.cnn.com/infographic/technology/what-is-bitcoin/index.html

https://www.forbes.com/sites/roberthart/2021/03/01/bitcoin-poised-for-massive-transformation-into-the-mainstream-citi-says/

__________________

Thanks for reading. (Copyright Terry Mansfield. All rights reserved.)

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Terry Mansfield
Terry Mansfield
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Terry Mansfield

Trying to be the best writer I can be. Specialist in eclecticism.

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