UNDERSTANDING THE BASIS OF BITCOIN AND CRYPTOCURRENCIES

 

Almost everyone has heard of this internet  money called Bitcoin but what most of us do not know is how it actually works and so there are many misconceptions about it. This post is meant to briefly explain what Bitcoin and other cryptocurrencies are and how they work.


Bitcoin always abbreviated as BTC has become very popular over the years and driving attention to the whole cryptocurrency market. Bitcoin is the first cryptocurrency to hit the internet which was introduced in 2008 to serve as an electronic peer to peer payment system. This means people could share cash anonymously with friends from where ever they are without the involvement of central body like the bank.

 

If I make a bank transfer to a friend, the transaction will have to be processed by a bank and they will keep record of the amount I have sent. If the banking system has a problem, my transaction may not go through. But with crypto, the transaction just lies between the two of us, my friend and I hence the name PEER to PEER and there’s no limit to how much I can spend unlike in the case of banks when you sometimes have limits.


Because of these attributes of Bitcoin as a cryptocurrency, a lot of people prefer using it for transactions and even now most online stores accept cryptocurrency as their payment method which is massively increasing the adoption of cryptocurrency. I paid for the domain name of this website using Bitcoin

A lot believe that there is a weakness in the fiat(physical money) and the banking system in general that cryptocurrency has come to solve. As the price has been increasing also over the years, people have seen a bigger investment opportunity and they have acquired some to keep for long term gains.


Are there other cryptocurrencies.

I mentioned earlier that Bitcoin is the first cryptocurrency but it’s not the only cryptocurrency. There are numerous cryptocurrencies now introduced, over 9,000 coins and most of them having use cases.

All cryptocurrencies are built on the blockchain network. This network records transactions as blocks across shared computers linked together which means it’s not only one person that has access to the recorded transaction. This helps in decentralization and transparency. 

There is term generally given to other cryptocurrencies aside Bitcoin which is “Alt Coins” I believe you have heard that before.


The price of Bitcoin was around $500 in 2016 and in 2017 it was able to cross to $1000 but as of the time of creating this post, 1 BTC was equal to $50,000. Before 2010, you could actually buy 1 BTC for less than a dollar. Amazing right!


You can see how the price has increased over these few years. So many factors have driven the price this higher and crypto analysts have even predicted that the price will rise more in the coming years.


There are numerous alt coins that also had a lot of price increase since their time of introduction. Most of such coins are developed to solve problems like security problems, facilitate payments, and several use cases. There are some coins you can to friends with almost zero fees. 

If you are a beginner in crypto, you can monitor the price of coins from CoinMarketCap and CoinGecko. You can check price change in 24 hours, 1 week, 1 month, 1 year and so on. This helps you identify the trend of price movement for a particular coin. 


Before you invest in any coin, you will need to do more background checks on the coin to be able to identify the potential of the coin and hence it’s chance to grow in future. There are so many factors that drives the price increase of coins but a main one is how it is largely adopted. As there is huge demand for such coin which has limited supply, there will definitely be an increase in price.


Every coin has its total supply and market cap. These info can be gotten from the websites I have shared already for monitoring prices of coins.These are some of the things to look out for in a coin before jumping it.


How do you acquire Bitcoin.

As I said earlier on, the basis of cryptocurrency is decentralization. You can control all funds on your phone or computer. You just need to download a wallet that will store you coins for you. There are numerous legit wallets on playstore(Android) and App Store (iOS). Always check review of app before downloading. Few good ones I have used include Coinbase, Blockchain app and Coinomi. These wallets just hold your funds for you and you can also enter there to send/receive. We also have hardware wallets you can use to store your coins.


One important thing to note is that since it’s just you and your funds, if you’re not careful and loose everything, there’s no one you can report to you will have to be extra careful dealing with cryptocurrencies because people have lost a lot by making some little mistakes .

We will create more post to teach you how to buy any cryptocurrency and also how to keep your funds secured depending on how many shares and comments this post gets. 

 

 

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