- What is Bitcoin and blockchain network
- Cryptocurrency wallet
- Can I pay with Bitcoin?
- Advantages and disadvantages of Bitcoin
- Mining pools&farms
- Can an average person start mining?
- How much is Bitcoin now and where to buy it?
- So where to get this dream currency?
- What influences the Bitcoin price
- Bitcoin prospects for 2019
Today the crypto world develops at light speed, new cryptocurrencies are created every day – for now there are more than two thousand (be exact – 2,530) different cryptocoins, their total market capitalization is more than $121 billion. All of them generated from Bitcoin. And despite the fact that there are already more convenient coins than Bitcoin, in this article we will deal with BTC in detail and answer the most common questions about how to coexist with this cryptocurrency.
Bitcoin is a new experimental currency that still develops actively, despite the rapid growth of its usage. Therefore, its future can not be foreseen with accuracy.
Even now, 11 years after its creation, Bitcoin is still a new money form, which is quite hard to find without having special powerful equipment. Many people want to get their Bitcoin on the wave of its growing popularity, imagining that after that their profits will increase exponentially.
The Bitcoin history began in 2009, when Satoshi Nakamoto (it was one person or a group of people – unknown) launched a network of Bitcoin and blockchain, and melt into the air.
Bitcoin coin was named in honor to the creator – 1 Bitcoin is 100 million Satoshi.
Bitcoin is based on specific blockchain software that can prevent cases when users spend the same money twice.
Blockchain is like an anonymous online journal that records all transactions with bitcoins and stores all information about existing or previously wallets.
How does the blockchain work? All information is encrypted in chains of blocks that is decoded in millions of miners’ computers. You can’t change anything in the block, since all next blocks are connected to each other to the very end. Any changes will be revealed immediately. Therefore, this system is hard to fake.
Nakamoto programmed this system so that transactions are grouped into blocks every 10 minutes. Thus it’s kind of motivation for miners who find transactions block, add it to the blockchain and get bitcoins as a reward. But, the more blocks have already been mined, the smaller is a reward.
Need to know!
No one controls your Bitcoin operations. There is no special structure that will monitor transactions with this currency. All operations take place in this cryptocurrency network, which is serviced by software.
Roughly speaking, everything happens in the World Wide Web, so the quicker you got your bitcoins, the quicker and easier you can lose them irreparably.
What it is. It’s a place for cryptocurrency storage, access to which is protected by the private key.
Where it’s located. You can download it on the official website of any cryptocurrency. It takes up quite a lot of memory, so it’s better to prepare a hard disk in advance for downloading. You need a separate wallet for each currency.
Bitcoin will help to protect your wallet and perform easily different financial transactions. If used correctly, Bitcoin can guarantee a high level of protection.
There are several types of wallets:
1) Desktop wallet. If you have extra 150GB of memory on your computer and you want to download the whole blockchain, then it’s right for you. It has a high level of protection, because the keys aren’t stored on the network;
2) Online wallet. It’s faster and easier, but the protection level is lower. Just register and you can perform transactions with Bitcoin. There is a risk that such a wallet can be hacked any time and all accumulated funds will be lost;
3) Hardware or HD-wallets. This device is like a flash drive where you store all the necessary information. Such a carrier is reliable enough and is protected from hacking, so the price is $30-150.
Bitcoin has become almost a universal online currency that seems to provide almost unlimited possibilities. But it won’t become a successful world cryptocurrency until we start using it like ordinary fiat money. It is necessary to learn how not only to store Bitcoin in your wallet, but also how to buy goods with it.
Bitcoin received legal status in the following countries:
- USA, where most startups are created with reference to the blockchain at once. Here is the largest number of Bitcoin ATMs in the world;
- Denmark is in the Top 10 countries that want to abandon paper money in favor of 100% digital currency;
- South Korea is a country that officially legalized Bitcoin as a method of monetary transactions;
- Netherlands – has its own Bitcoin city – Arnhem, where you can pay almost everything with a crypto coin;
- Canada is the home of many Bitcoin startups and ATMs, and the cryptocurrency is governed by anti-money laundering laws.
Bitcoin was also legalized for financial operations in Japan, South Korea, Singapore, Germany, Sweden, Australia. Although these countries are careful with mining, the authorities think about imposing a tax on electricity consumption.
Bitcoin was created in 2008, 11 years ago, but despite this, you can pay with it not every time and everywhere. Some companies and stores have already entered payments using Bitcoins, but still the majority doesn’t support this payment type, because they are afraid to work with cryptocurrency because of its decentralization.
Now it’s profitable and convenient for enterprises and companies to work with real currencies, by the reason that the speed of operations through Visa and PayPal payment systems is much higher than on cryptocurrency platforms.
But still, there are advanced companies that accepted Bitcoin as a mean of payment. For example, Overstock, one of the largest online trading companies, introduced Bitcoin for payment in 2014, so now you can pay with it worldwide. An American company DishNetwork also introduced cryptocurrency as a payment mechanism. You can buy services with Bitcoin on hosting sites (TCPHost.net, UNIhost.com), and online computer games (Zynga).
Bitcoin is an illegal payment mean in Russia. The Central Bank calls it “money surrogate”. However, despite it, the number of places that accept cryptocurrency is rapidly increasing. For example, Headquarters coffee house, Klyuch IT-bar, Valenok restaurant started accepting Bitcoin this summer. A special place – cryptobar called Vechernaya Shkola, which is dedicated to crypto was opened recently in Moscow. You can pay here not only with Bitcoin, but also with Lightcoin and Ethereum. Various workshops and seminars about cryptoindustry are held here additionally.
– anonymity – nobody knows what amount of Bitcoins belongs to whom and what was the amount of transaction. Although, it’s rather a myth now, because some service providers have begun to adhere to KYC/AML rules (know your client/ anti-money laundering);
– decentralization – neither government nor financial institutions don’t control Bitcoin operations. Everything is under the control of those who own it;
– no intermediaries and banks, transaction is several times cheaper;
– transparency of operations: the blockchain stores all information on a large number of computers, it is available everywhere and always;
– doesn’t depend on inflation: the amount is limited (21 million), there is no economic and political influence on this coin;
– Bitcoin is impossible to fake.
– it takes a lot of time to process data due to its decentralization: on average, it will take you 10 minutes or more to perform the simplest operation with Bitcoin;
– you can easily lose your Bitcoins if you forget or loose your wallet password; another reason can be a computer virus attack; lost Bitcoins don’t return to the turnover;
– exchange rate volatility;
– complexity of the mining process.
Mining, or Bitcoin extraction, is a kind of money issuing. This process requires computers with powerful graphics cards. All this is a farm. It must work all day in order to mine Bitcoins, performing complex calculations, for which e-money is issued.
This process was easy from the very beginning, one miner could easily cope with it. However, due to the fact that the blockchain system functions in such a way that the complexity of the tasks is gradually increasing, miners began to unite and start to mine bitcoins together.
Theoretically, yes. But the time of home mining with processors and video cards has already passed, and it will be difficult to cover the costs for the necessary equipment. Newbies won’t earn much in this business. To profit from the equipment cost and electricity prices, you need to work for 6-10 months, after which you would break even at least.
Practically, no. You need to be a real specialist with great experience and finances. Their farms can include hundreds and even thousands of video cards that will cost you a lot.
For example. The lowest expanses for Bitcoin mining are in Venezuela – the cost price of 1 Bitcoin is $531, the highest prices are in South Korea – $26 000.
We can say for sure that you have heard about a rather unstable Bitcoin rate, which can change several times a week. To visualize the situation let us give you an example of the dynamics of Bitcoin cost from 2009 till now:
- At the very beginning Bitcoin cost ridiculous money;
- $1 mark BTC broke only at the beginning of 2011. For several days, the cost continued to grow, after it fixed at $31.91;
- a situation happened after that many experts call a bubble: a sharp drop in price: from $31.91 to $10;
- the user’s electronic wallet was hacked for the 1st time in 2011 and 25 thousand coins were stolen;
- In 2012, 1 BTC price ranges from $8- $12 for 1 Bitcoin;
- February 22, 2013 is the day when Bitcoin price was growing actively. After the price rose to $100, Bitcoin grew to $266 within 9 days;
- From November 2013, the cost of Bitcoin began to grow again – to a new record of $503;
- $310 was registered after the next rate fall;
- 2016 showed the rate of $950 for 1 coin;
- 2017 began with a mark of $1000, and stopped at $20 thousand in December;
- By Catholic Christmas, the coin rate fell from $20 000 to $12 000;
- January 1, 2018: the course was about $14 thousand;
- At the end of 2018 Bitcoin fell in price to $4 300.
Now, on January 21, 2019, the price of Bitcoin is $3 536.
According to financial experts, such jumps of the Bitcoin rate are normal. But looking at that, we can conclude that Bitcoin is close to devaluation.
If you want to buy Bitcoin, you need to get a wallet, where the coins will be stored. Without doing it all further actions are simply impossible. Once your wallet is activated, you can collect bitcoins.
The main ways of BTC obtaining are:
- Stock Exchange. The course will differ in different stocks. It depends on supply and demand: the more sellers, the lower is the rate.
- Exchangers. Here you can exchange the usual fiat currency for a cryptocoin. Completely safe and tested.
- Bitcoin faucets. These services distribute free cryptocurrency. More precisely, you can get bitcoins for performing certain tasks, for example, for visiting the site page or viewing advertising, for your clicks, etc. That is, you have the opportunity to get Bitcoin for performing elementary tasks.
How much can you earn this way. Let’s assume that a BTC rate is $10 000, your daily earnings will be only $1.
- The terminal. Bitcoin ATMs are common in other countries, which look like ordinary ones.
Mainly, the speculators in the market influence the rate of Bitcoin. All depends on demand – as long as market players hold the interest on Bitcoin, its value rises, but as soon as speculators stop buying cryptocoins, it becomes cheaper.
The cost of Bitcoin can unexpectedly rise and fall during a short time. Therefore, you shouldn’t keep all your savings in this coin. This is a high-risk asset. If you make payments in this cryptocurrency, then use services that will help you convert it into the currency you need.
The limit on Bitcoin mining is 21 million coins, most of which have already been mined, 17.49 million are already in usage. Therefore, its value will only increase over time.
Why does the BTC rate change?
Firstly, there is no possibility to pay with cryptocurrency according to all agreed terms and clearly defined value of the coin.
Secondly, each stock exchange sets its own rules.
Thirdly, high volatility, which is also influenced by external factors.
The cost of Bitcoin depends on the interest. As a rule, the more noise around, the more valuable the currency.
Another important reason is the speculators who can easily play with the course of Bitcoin in their own interests. They accumulate a certain amount of coins and thus influence the sharp jumps of the course. Currency speculators increase the demand for cryptocurrency artificially.
There are different views according the future of Bitcoin – some experts predict another boom, others confirm that this currency has no good future. Indeed, now Bitcoin has tough times – last time it showed such a minimum 2 years ago, in 2017.
Today all cryptocurrencies and in particular Bitcoin are part of business. Someone earns due to high rate, having left behind the beginners with a small capital, or having sold for higher price than bought; someone, on the contrary, has lost significant amount of their investments.
In order to hold out on the cryptocurrency market for a long time, you need to be a real specialist who will calculate everything to the last drop, who is very patient and has a stable nervous system.
But there is no answer to the main question – it’s impossible to foresee the dynamics of the rise or fall of Bitcoin. Too many factors affect its rate. Analysts claim that it’s not worth investing in BTC in 2019. Wall Street and Bloomberg experts are confident that Bitcoin will go down and up thousand times; it is expected that the Bitcoin will go down to $1 000.