Unless you have been living under a rock, you might have heard of the mighty Bitcoin. What started as something of very little value has now reached unbelievable prices.
There are over 13000 cryptocurrencies today. Bitcoin, one of the first-ever cryptocurrencies, remains the most popular one. However, understanding Bitcoin is not a cakewalk. Understanding what Bitcoin is precisely and how it works is pretty tricky.
A lot remains unfamiliar about Bitcoin, even when it is being traded in such large volumes. Who created Bitcoin? How many bitcoins are there?
This article will explore all the crucial information about Bitcoin. Some commonly pondered questions are also mentioned.
What is Bitcoin?
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Bitcoin has been referred to as many different things over the years. But in essence, it is a digital phenomenon consisting of various protocols and processes.
Bitcoin is a decentralized digital currency; you can think of it as a virtual version of cash. The creator of Bitcoin defines it as an electronic payment system that is based on cryptographic proof.
You can buy, sell, and exchange this digital currency without any intermediary. Some businesses allow users to buy products and services with cryptocurrencies, while others
ban the use of it completely.
Who Created Bitcoin?
The true identity of the creator of Bitcoin is nothing short of an enigma. In 2008, the first paper describing Bitcoin and blockchain was published by an entity called Satoshi Nakamoto.
Interestingly, the real identity of Satoshi Nakamoto has never been revealed. It remains unknown whether it was an individual or a group of people that developed Bitcoin.
According to Nakamoto, the primary issue with conventional currencies is that they function on trust. The central banks have to be trusted not to debase the currency. However, this trust has been breached several times.
In 2009, the Bitcoin network was launched, and the paper was released publicly. Satoshi Nakamoto continued to work on the project along with other developers until 2010.
In 2011, he communicated to a fellow developer that he had now moved on and the future of Bitcoin was in good hands. Just like that, Satoshi Nakamoto disappeared as abruptly as he had first surfaced.
How Many Bitcoins Are There?
The total supply of bitcoins is limited to 21 million. So far, there are about 18 million bitcoins in existence, but this number keeps changing very frequently, based on when new blocks are mined.
Is Bitcoin Legal?
The legal status of Bitcoin varies from country to country. As of June 2021, it is legal in the United States, the United Kingdom, Japan, and many other developed countries.
In The U.S., the IRS has shown interest in Bitcoin and has even issued guidelines for taxpayers. However, some countries have placed restrictions on bitcoins.
In China, it is not illegal to hold bitcoins; however, their use is heavily restricted. In India, banks are banned from dealing in Bitcoin, but the overall legal status remains unclear.
Is Bitcoin Safe?
The cryptography technology behind Bitcoin is based on the SHA-25 algorithm. It is almost impossible to crack this algorithm as the U.S. National Security Agency has designed it.
Since every Bitcoin transaction is recorded publicly, it is difficult to copy or make fake bitcoins and spend Bitcoins that you do not own. However, the lack of a central authority means that an accidental transaction cannot be rectified.
As the popularity of Bitcoin is on the rise, so are scams. Therefore you must be diligent while dealing with Bitcoins.
How to invest in Bitcoin safely?
It is vital to invest and manage your money and cryptocurrency through a secure exchange.
You need to understand blockchain technology first to understand how Bitcoin works.
Blockchain refers to a linked body of data that consists of units called blocks. These blocks contain the information and details of every transaction. Such as date, time, buyer, seller, value, and a unique identifying code.
As soon as a block is added to the blockchain, anyone can view it, creating a public ledger of cryptocurrency transactions. Since blockchain is decentralized, it is not controlled by anyone.
Bitcoins are brought into existence, and the system is maintained by a mining process. Mining did not require heavy investment earlier, but powerful equipment are essential to crunch complex calculations.
Frequently Asked Questions
Let us address some of the most commonly asked questions about Bitcoin.
Can You Lose Money On Bitcoin?
While cryptographic systems are pretty safe, you can lose money since the market is highly volatile. Moreover, if you lose your wallet’s password, you might lose access to your bitcoins permanently.
Before entering the crypto market, you should do proper research to understand the ups and downs. Buying or selling based on trends like celebrity tweets might harm your finances.
Is Bitcoin A Good Investment?
For the most part, investing in cryptocurrencies like Bitcoin is as risky as it is profitable.
Bitcoin was launched with a long-term objective. While its success is not a given, the early investors stand to earn enormous amounts over the long term. However, the success largely depends on the widespread adoption of bitcoins.
What Is The Minimum Amount To Invest In Bitcoin?
There is no such thing as a standard minimum investment amount. You can invest as much or as little money as you want. However, the platform you use for investing might have a minimum threshold.
Can 1 Bitcoin Make You A Millionaire?
The value of bitcoins is constantly changing. While the market value of a single bitcoin is relatively high at present, it will not make you a millionaire.
If you remain patient and hold your bitcoin for a long time, theoretically, it might be valued at a million dollars sometime in the future.
Finishing Notes
The advent of Bitcoin was just the start of significant development. Today, there are many cryptocurrencies on the market.
While the lack of a central authority makes Bitcoin a trusted system, it is also one of the most significant drawbacks. There is nobody to listen to your concerns and solve them at the earliest.
With the value of bitcoins going up and down so rapidly, it is difficult to predict what the future holds for cryptocurrency.
