Buy and Sell Bitcoin (BTC)
What is Bitcoin ?
Bitcoin (BTC) is a crypto asset and digital currency based on a peer-to-peer network created in 2009 to become a viable replacement for fiat currencies and conventional payment systems. Based on a decentralized mechanism, BTC aims to take control of money from governments and large organizations and give it to citizens. Bitcoin is not a physical entity, it is a code that exists on a ledger on every computer in its network.
Every transaction that occurs on the blockchain is transparent and visible to everyone. No bank, state or central authority has any power over Bitcoin and its price is strictly defined by the dynamics of supply and demand in the market. Since 2009, Bitcoin has become the most popular and valuable crypto-currency, accepted by many individuals and brands around the world.
Why was Bitcoin invented?
Launched in January 2009 by an anonymous individual or team calling themselves Satoshi Nakamoto, the Bitcoin blockchain and currency was created to take back control of money from large financial institutions and governments and give it to the people. It was designed to operate on a transparent and decentralized infrastructure. In addition, it also allowed for a higher level of anonymity and affordability than traditional options.
When Bitcoin was launched, nations around the world were struggling to cope with the recession caused by the crash of the US housing market. The economic recession gave rise to the feeling that these large financial institutions had unreasonable control over the country’s economy. Existing regulations have not been able to control them. In addition, using these institutions for financial matters meant that you had to share your personal information with them, deal with delays and pay high transaction fees.
Bitcoin was the first crypto-currency that tried to solve these problems by offering an alternative to people who don’t want to depend on banks to manage their finances and transactions. It reached an all-time high in December 2017 where its price stood at nearly $20,000.
How does Bitcoin work and what is the technology behind it?
BTC is based on a peer-to-peer network, a set of computers called nodes that are linked to each other and run the Bitcoin blockchain. It is called a blockchain because it contains blocks of code that are chained together in chronological order, with each block having a record of transactions. Because the blockchain is on every computer or node, no one can make changes on their own, as all changes must be accepted by the other nodes to be valid.
The people who own these nodes and process and verify transactions are called miners. For investing in the Bitcoin ecosystem and facilitating the verification of transactions, they are rewarded with newly created Bitcoins.
These miners ensure that no unauthorized transactions occur on the blockchain and make sure that no one has more control over the blockchain infrastructure to maintain decentralization. New BTX tokens are being given to miners at a rate that has steadily decreased since its launch, as the total supply of BTC is limited to 21 million units. This means that the maximum number of tokens in circulation can never exceed that number.
Unlike fiat currencies such as the euro or the dollar, which are printed in a near-limitless fashion based on the number of goods and services created by a country to ensure price stability, the BTC crypto-currency is created by an algorithm that takes into account different factors.
Bitcoin works by having two types of keys – public and private. These keys are long strings of letters and numbers created by the blockchain’s encryption algorithm. Public keys are visible to all for transparency and archival purposes, while private keys enforce ownership and transferability.
Is Bitcoin real money?
Yes and no.
Currently, Bitcoin is the most viable alternative to traditional money. However, it is still far from acquiring the ubiquity, convenience and speed of cash that is guaranteed by traditional financial institutions. That being said, HSB reported that about 36% of small and medium-sized U.S. businesses accept Bitcoin as a valid currency. Some of the most well-known names include Expedia, Microsoft, AT&T, Overstock, Burger King and Wikipedia.
It is important to note that compared to altcoins, Bitcoins have been more popular with consumer-focused brands like KFC, Playboy, Twitch, CheapAir and Subway. The majority of other digital currencies are generally accepted by brands and companies that have built their business with a crypto-currency-centric approach. Over the years, Bitcoin has gained more awareness among the general public than any other virtual currency. However, it still has a long way to go to be considered as viable and interesting as real money.
Fees and charges
At the time of writing, the average Bitcoin transaction fee is $3.074 per transaction, a 40% increase from last year, when the average transaction fee was about $2.196.
The average fee for a Bitcoin transaction is determined in USD when a miner processes and verifies a transaction on the Bitcoin blockchain. Keep in mind that fees can fluctuate based on network traffic or high demand for proof of work. In the last month of 2017, when BTC reached its peak price, the average transaction rate reached its highest point, almost touching the $60 mark.
In addition, the commissions and fees charged by various crypto-currency markets, including trading services, differ in terms of percentage and fee structure. In general, buying and selling via bank transfer will cost you between 0.5% and 3%, while using debit cards can cost you up to 10%. Similarly, bank transfers may have a flat fee. Pricing for BTC transactions can be quite complex and differs significantly depending on a number of factors, including the method of payment, the amount of BTC and the region you are in.
What are the benefits of Bitcoin?
Designed to be a viable payment alternative, Bitcoins offer a wide variety of benefits, including the following:
Fast transactions – With a peer-to-peer network that spans every populated continent, Bitcoin can process and verify transactions in minutes, regardless of the amount.
International Payments – With traditional money, international payments are always a hassle. Bitcoin reduces the number of difficulties associated with international transactions and ensures fast and cheap transfers.
Affordable – One of the main attractions of Bitcoin transactions is the low processing fees, which allow consumers to send and receive any amount of money anywhere in the world without paying exorbitant fees or service charges.
Extremely Secure – Blockchain is a system designed to enforce security unanimously. A single individual with malicious intent cannot compromise the system and security is also enhanced by encryption measures.
Widely accepted – Bitcoin is the only major crypto-currency that has broad appeal to consumer brands, including Microsoft, Burger King, KFC, Wikipedia and many others. Other altcoins have failed to achieve the same popularity.
Continuous improvement – At any given time, hundreds of developers are working on the Bitcoin Core project to further improve the payment system, including faster processing and verification and even lower transaction fees.
Can Bitcoin be used anonymously?
Not everything you do on the Internet can be anonymous. That said, compared to how traditional financial transactions work, Bitcoin can be considered relatively anonymous. The problem is that governments are trying to regulate crypto-currency trading, which means that they require exchange and trading platforms to comply with KYC (Know Your Customer) and AML (Anti Money Laundering) regulations.So when you buy or sell Bitcoins on a large, trusted exchange platform, you must provide personal identity information for verification.
There is also a downside to anonymity. The more anonymous you want your transactions to be, the further away you are from the exchange platforms. And even then, it’s highly likely and uses bitcoins that if a government agency or hacking expert wants to find out about you, they will.
How safe is Bitcoin?
Bitcoin is an inherently secure system because the blockchain mechanism is designed to be immutable – which, in plain English, means that nothing can be reversed once a transaction has taken place. Furthermore, the transaction can only take place if all nodes verify it and agree. Furthermore, Bitcoin is secured by security measures (encryption), which makes it impossible for a hacker or any other malicious cyber-attacker to break into the blockchain.
For safe and secure storage of Bitcoins, there are many software and hardware wallets that ensure that your digital assets will not be compromised. These wallets can be secured with two-factor authentication, as well as a seed phrase.
What teams are working development?
Bitcoin is a large and dynamic project, with multiple teams and hundreds of developers working on different aspects of the project around the world.
One of the best things about Bitcoin is that it is a free service, to which any developer can contribute. All code is stored in a GitHub repository, while conversations about future developments and management companies take place on the Bitcoin-dev mailing list and on GitHub.
Developers can participate in startup projects where they can write tests, fix existing bottlenecks, and work on solutions to known problems. Here are some of the teams that are directly involved in Bitcoin development:
- Bitcoin StackExchange
- Bitcoin Core Slack
- BitcoinTalk technical discussion and development forum
The main contributors to the development of the mother of all crypto currencies are listed on the website, sorted by number of engagements. The top contributors are Wladimir J. van der Laan with over 6,500 commits, MarcoFalke with over 2,500 commits and Pieter Wuille with over 1,500 commits. You can see the full list on the official Bitcoin website. In addition to the core and direct development of Bitcoin, there are many open source projects for developers to work on, including Bitcoin Wallet, BFGMiner and Armory.
Which financial institutions use Bitcoin?
Since Bitcoin is a direct competitor to financial markets and central banks, they are not looking to invest directly in the project. That said, they are looking to experiment with the Bitcoin blockchain and other decentralized crypto-currencies to develop a more viable, long-term, consumer-friendly payment infrastructure. These banks and financial institutions include Bank of America, JP Morgan, BNP Paribas, SocGen, Citi Bank, UBS, Barclays, Banco Santander, Standard Chartered and Goldman Sachs.
Mining is the process that allows the Bitcoin network to process transactions and secure the blockchain. It involves adding new blocks to the blockchain by carrying new transactions and keeping a chronological record. Once transactions are verified, blocks are split, keys are created and BTC are transferred.
Miners can also create new BTC by using the computing power of their computer hardware to find solutions to cryptographic problems. The reward given in terms of Bitcoin is based on the unanimous decision of the network and is currently around 6.25 BTC. To control inflation, the Bitcoin network has a fixed supply of 21 million BTC, which means that the maximum number of Bitcoin in circulation can never exceed this number.
If you want to keep your BTC secure, you will need a Bitcoin wallet. This can be a physical device or software that you can use on your browser or download as an app on your PC or cell phone. Here are some of the major BTC wallets:
- Ledger Nano S (Hardware wallet)
- Trezor (Hardware wallet)
- Electrum (Desktop wallet for PC)
- Blockchain (Online internet wallet)
- Robinhood (For safe trading)
- Exodus (Desktop wallet for beginners)
- Mycelium (Mobile wallet – iPhone/Android)
Is it worth investing in Bitcoin?
There is no easy answer to this question. The fact is that crypto-currencies, including Bitcoin, have only been famous for a few years and have yet to offer a stable infrastructure that has been proven for decades.
This means that the price is strictly dictated by demand and supply, which can be affected by several political and social factors. This has introduced a lot of volatility into the Bitcoin world. On the one hand, you can lose a lot of money in a few minutes, but you can also make billions of dollars in no time.
In an interview on the Clubhouse network, an excerpt of which was posted on Twitter, Elon Musk confirmed this support for Bitcoin. “I think at this point that Bitcoin is a good thing […] I’m late to the party, but I am a Bitcoin supporter. And I think Bitcoin is really on the verge of being widely accepted by conventional finance.”
In May 2020, a special event will occur on the Bitcoin blockchain: Halving Day. This is the third in Bitcoin’s history, the last one having taken place in July 2016. This phenomenon occurs every 210,000 blocks, and until now, it has always been followed by a rise in the market.
This is why you need to be extremely careful when dealing with crypto-currencies, including Bitcoin. Only invest an amount that, if lost, does not negatively affect your financial situation or your everyday life. It’s here to stay, but no one can predict how its price will change tomorrow. You need to do your due diligence when you invest and make sure you take all the necessary safety precautions.