What is bitcoin?
These days the world of currency is changing. In years gone by it was all about what was literally on paper, but as we know, the world is now in the midst of a true digital revolution. Not missing out on this, the currency realm, whether it likes it or not, has been pulled into a brand new direction. This direction has taken the form of cryptocurrencies. Being honest, to a lot of people this word will mean very little, but there is every chance you have heard of bitcoin, with it being the lead cryptocurrency in the world today. Understanding bitcoin isn’t actually as challenging as you may think. What bitcoin is in officially terms is a peer-to-peer electronic cash operating system, which doesn’t depend upon a central monetary authority; it is this that separates it from traditional currency formats.
What really works to make bitcoin so viable in today’s financial environment is the fact that it is pretty much untraceable. Where bitcoin came from exactly proves to be somewhat illusive, but what is know is that the idea was first floated around by members of the cypherpunk mailing list, before being developed into a fully working peer-to-peer network and financial system. Following this a programmer named Satoshi Nakamoto outlined the cryptography transaction format in a paper that was released in 2008, before bitcoin was officially launched in 2009.
How to buy bitcoins
Bitcoin as a currency is a totally digital operation and one that means physical money is a non-factor in any and all transactions made. Instead, acquiring bitcoins takes on a somewhat different path, as anyone who has an interest in acquiring such (whether it is for bitcoin sports betting, bitcoin poker, bitcoin gambling or otherwise). How you can buy bitcoins is through an exchange, of which there are many that either solely commit to or at least dabble in bitcoin as a currency. Looking at size alone, Kraken (since the fall of Mt.Gox) takes the top spot for the most popular bitcoin currency exchange in operation. Working through this setup you can buy bitcoin in a similar way in to which you would buy traditional currency. What makes Kraken so unique as a bitcoin exchange is that it really does a great job of blending together forex trading features, including stop-loss and other risk aversion elements, with base level currency purchasing. Thinking big picture, Kraken has become the perfect way to buy bitcoin, as it really does tie into the fast paced nature of the cryptocurrency
Delving into the bitcoin experience a little further, what you will find is that the bitcoin exchanges of the world really are the beating heart of the cryptocurrency. Operating as a currency medium, those with bitcoin or wish to buy bitcoins set limits for buying and selling the currency at a certain price. The exchanges will then match up buyers and sellers based upon such, along with other conditions and requirements. With this in mind two different orders can be placed through a bitcoin exchange, that being a limit order and a market order. Limit orders allow someone to buy bitcoin at a price lower than the currently listed rate. However, such orders can only be executed when another user accepts the offer being touted. Market orders work on just finding the best matching limit order. Putting it simply, anyone who has any designs on buying bitcoin is going to need to take the time to explore the bitcoin exchanges currently in operation, grasping a true understanding of how exactly they work in the process
Price of bitcoin
It is far and away one of the toughest factors to discuss relating to bitcoin, as it is what determines whether on not the cryptocurrency is worth investing in. Trying to read between the high-level of complexity, there are a number of determining factors that control just how the cryptocurrency is valued. For starters, the basis of supply and demand is in full effect when it comes to bitcoin. Bitcoin, officially speaking, is finite in current form, with blocks related to the currency becoming harder to come by as more are ‘mined’ year on year. This means that as the pool of bitcoin ownership shrinks, the likelihood of a price rise becomes much more evident.
Another matter that really plays into the price of bitcoin are real world events, back in the day the currency may have been ambivalent to such matters, but times really have changed. In a similar sense to gold, bitcoin really does tend to spike when a real world crises is in effect. For example, the financial issues in Greece saw bitcoin escalate on the price front. Much like gold, investors will specifically cling to bitcoin when other currencies are rocked.
Lastly, faith and confidence in its purest form also plays a very key role in determining how bitcoin is valued by the powers that be. Investors in a sense hold the key, because if the cryptocurrency is being backed on a mass scale the price of bitcoin will more often than not stabilise. On the grand scheme of things bitcoin is a new currency and one that the world isn’t completely familiar with just yet, so when investors have confidence in it, the price responds accordingly. What the growth of bitcoin proves is that, at least from a price perspective, it can now stand shoulder to shoulder with the paper currencies of the world.
The emergence of bitcoin as a commodity comes about through mining, which really does prove to be somewhat of a complicated process. In an attempt to break down and simplify matters, a bitcoin must be “unearthed” in a sense before it can be bought and sold. The mining process works by adding transactions to a block chain, which occurs through a specific algorithm, before bitcoins are subsequently released. The actual mining process revolves around compiling recent cryptocurrency transactions into “blocks” before then having to decode an extremely difficult puzzle or equation related to such. The first individual or group of individuals to decipher the code earn a bitcoin or a portion of the bitcoin amount mined.
Bitcoin as a cryptocurrency is committed to protecting customers; as such they are adamant that it remains secure for mainstream use. The extent of the security measures surrounding bitcoin stem from the fact that the cyrptocurrency proves to be completely trackable. This means that should bitcoins be stolen they remain pretty much unusable. For example, during one instance in which 25,000 bitcoins were stolen, not a single one of those bitcoins was every used through official channels.
The importance of bitcoin
For years all the world ever knew was paper currency, with such being an ever present throughout history. But innovation is taking hold and the world of currency is changing for the better as a result. What bitcoin represents now is something that much more than just an alternative, it represents a viable mainstream currency option that has modern day usages and credentials. If you are looking to move your money matters into an entirely digital setting, the true importance of bitcoin really shouldn’t be understated.