Bitcoin has become a sensation in recent times. Everyone seems to be talking about it, but not everyone knows what exactly Bitcoin is and how it works. In order to set the concept of cryptocurrency straight and increase your understandability of Bitcoin, we’ve tried to answer the ten most commonly asked questions about Bitcoin.
1- What Is Bitcoin?
Bitcoin is the most globally adopted type of cryptocurrency which was launched in 2009. It’s a digital currency that is not regulated by any government or any central authority. By using blockchain technology, Bitcoin provides a safe way to transact by using digital money in a peer to peer manner.
2- How Does One Buy Bitcoin?
Bitcoin is traded in the cryptocurrency exchanges and can be bought by conventional currencies like dollars. You can also buy Bitcoin in exchange of other cryptocurrencies like Litecoin or Ethereum. There are various online cryptocurrency exchanges where you can trade.
3- Are These Online Exchanges Safe?
The safety standards and the trustworthiness of these online exchanges can vary. And if truth be told, there have been some high profile security breaches and hacks of these Bitcoin exchanges in previous years. However, you can go for exchanges that are considered trustworthy, like Coinbase.
4- How Can You Invest in Bitcoin?
You buy this digital currency and you keep it as an asset like gold. Most of the people follow a buy and hold strategy for a long term. If you want to do this, then your holdings are transferred to a Bitcoin wallet for safe custody, until you decide to trade them or sell them.
5- How Does Bitcoin Work?
Bitcoin records every transaction on its network. Moreover, each Bitcoin holder has an encrypted key that is used to transfer Bitcoins. All the Bitcoin transactions are validated and are then added to the ledger of blockchain through mining process.
6- What Is Bitcoin Mining?
Mining is the process through which new Bitcoins are introduced. And it’s also the way to confirm and validate the transactions made.
7- How Do You Mine Bitcoin?
You need a special hardware to solve the cryptographic mining puzzle which is done by using microchips called ASICs. You can also mine Bitcoin by rigging a series of graphics processor units (GPUs) together. Then you’ll have to join a mining pool that brings together all the mining efforts from all over the world. If your pool solves the puzzle, each member will be given Bitcoins pro-rated on the basis of how much mining power each member contributed.
8- How Many Bitcoins Exist?
There can only be 21 million Bitcoins ever mined. So far 17 million have been mined, i.e. 80% of the total supply.
9- What Is the Worth of a Bitcoin?
The value of Bitcoin keeps on fluctuating. In December 2017 one Bitcoin was valued at $20,000, but it also went down to $11,000 in January 2018.
10- What Is Bitcoin Cash?
The blockchain ledger was split into two distinct ledgers and Bitcoin Cash is one of them. This process is called a hard fork. Bitcoin Cash is defined as peer to peer electronic cash, and it was introduced to increase the number of transactions in an effort to bring the transaction fees and the confirmation time down.
There’s a lot more than this to Bitcoin, but these answers to the most basic and commonly asked questions will surely help the beginners and all those who are determined to invest in Bitcoin for the first time.