Probably you have heard about the term Bitcoin but your information about this digital currency is not enough and this is what has to lead you to this piece of writing.
Many believe that Bitcoin is the first digital currency that stimulated the development of innumerable cryptocurrencies rightly available. We have noted down here the answers to the basic questions regarding Bitcoin which can help you understand the fundamental concepts of the digital currency.
Not a long ago, the crypto currency made headlines due to the sudden and astonishing rise in its value. The value of Bitcoin accelerated from $1000 to $19000 within a year.
During the first half of the year, 2018 Bitcoin faced a drop in value up to 50 percent. Except for the unexpected rise and fall in the value of the cryptocurrency, there are more interesting things to know about Bitcoin. Read it to know what is bitcoin, how can you get it, and whether it is legal or illegal to use.
What exactly Bitcoin is?
Bitcoin is a form of electronic cash and it is quite different than the paper and plastic money we commonly use. The digital currency was developed and launched by an anonymous group in 2009 but is associated with the name of Satoshi Nakamoto.
There is no central bank or administration to regularize and control the use of this digital cryptocurrency. It is the first decentralized digital currency that gets a transfer from one user to another through peer to peer network. The transaction takes place without any intermediary and is verified by network nodes through cryptography. The transactions of Bitcoins are recorded in the blockchain which is a public distributed ledger.
What determines the value of Bitcoin?
There is no bank or central authority to determine the value of Bitcoin. The value of this cryptocurrency is determined by what people will pay for it. Its value is open to interpretation but the process of Bitcoin pricing involves assumptions and can be manipulated.
According to the rules set by the developers of Bitcoin only 21 million bitcoins can be mined which means there is a limited supply of this cryptocurrency just as silver, gold, and other precious reserves. Almost 12 million bitcoins have been mined so far and 9 million are remaining to be mined. There are several theories that explain the significance of the limited supply of bitcoins and the number of 21 million.
How to buy Bitcoin?
The digital currency gets transferred from one user to another. The owner of the cryptocurrency remains anonymous despite disclosing their names, tax IDs, and social security numbers.
The seller and buyer of this electronic cash make a deal through encryption keys. This is not issued by someone but is mined through powerful internet-connected computers.
The currency can be bought with debit and credit cards. However, the purchase of this cryptocurrency with debit and credit cards can be daunting. There are companies like Coinbase and CoinMama that have simplified the process to buy Bitcoin.
Coinbase lets you make a deposit into a Bitcoin wallet through your bank or PayPal account. It takes a few days to get your account funded after which you can exchange the commonly used currency with Bitcoin.
What are the uses of Bitcoin?
This electronic cash can be used to get products and services. There are more than 100,000 merchants who accept Bitcoins and offer products and services against this cryptocurrency.
The owner of Bitcoin can also exchange this currency with other currencies or stuff. There is no inherent transaction fee for Bitcoin but the Coinbase charges a nominal service fee on the purchase and sale of this electronic cash.
Is Bitcoin Legal?
Similar to other currencies Bitcoin is also a legal currency. However, using this cryptocurrency for an illegitimate purpose is forbidden. A few years back the digital currency was used in the Dark Web marketplace for drugs and other illicit products and services. In 2013, the FBI blocked the website.
The use of cryptocurrency for the purchase of illicit goods and services also contributed to its popularity. The rising use of Bitcoin for illegitimate purposes prompted the ban on the advertisement of Bitcoin on Facebook, Google, LinkedIn, and other popular online platforms.