What is a bitcoin? Is it a worth it?
Bitcoin was a fairly hot topic around 2018. Stories talking about its record prices, which exceeded $19,000 for one bitcoin, could often be heard in the news, even in the mainstream media. At the current dollar exchange rate of 3.8, this price is equal to about PLN 70,000. During that time, opinions stating that bitcoin is a big scam from which you should stay as far away as possible could often be heard. At that same time, you could hear about people who became millionaires thanks to it. Since then, a lot has changed, machines allowing you to pay with bitcoin have already appeared all over the world. Society has already gotten used to the new currency, and its applications in everyday life are becoming more and more proliferated. As bitcoin is developing and becoming more common, it is beneficial for everybody to learn more about it. The basic questions are: what is bitcoin and how does it work? Is it worth investing in? Are cryptocurrencies safe? I invite you to read the rest of this article, wherein this topic will be explained.
What is a bitcoin? How can you get into it?
What is a bitcoin? Let’s start at the beginning, bitcoin is a cryptocurrency. It can be described simply as virtual money. Cryptocurrencies are a digital representation of our physical coins and banknotes. Due to the fact that they are simply currency, we can use cryptocurrencies to pay for goods and services. Bitcoin is the most popular cryptocurrency, but there are many others. And as with physical money, different cryptocurrencies have different values. To make it easier to understand, let’s compare their value to the Polish zloty. One zloty is currently worth around twenty-seven yen, but only around twenty Russian roubles. Differences in cryptocurrencies’ prices result from the same factors as those of physical currencies’ prices, namely supply and demand. The greater the interest in a given cryptocurrency, the higher its value. What bitcoins and other cryptocurrencies have been loved for by today’s world is decentralization. Decentralization means that cryptocurrencies and transactions concluded between their users are not dependent on any top-down authority. This means, more or less, that no central bank has access to data on transactions taking place using cryptocurrencies. Cryptocurrencies are used to disconnect transactions from banking institutions, which has been very difficult before their invention. But how is this possible? Cryptocurrencies allow independence from the authorities through the use of the so-called blockchain system. This system can best be explained as a closely interconnected chain of blocks. With the help of these chains, transaction information is transferred between users. As a result, there is no need to base transactions on other bodies that would constitute a central database. The chain itself is an efficient and, most importantly, very safe tool for conducting transactions. “Decentralized” means that transactions can be concluded independently of any central authority. Blockchain allows only the people involved in a transaction to record information about the said transaction. Blocks store data, and since the data is dispersed, there is no single database where it can be verified.
The security of this system is based on the use of cryptography. Cryptography is a way of securing data using complex mathematical operations. In order to even consider breaking such cryptographic security, a person would need a computer with computing power that is currently impossible to achieve. As a result, blockchain transactions are completely safe as of now. What’s more, the security that users of bitcoin and other cryptocurrencies enjoy is also in part due to blockchain’s resistance to various types of fraud attempts. If a person was to make a cryptocurrency transaction, this information is then saved in the chain and cannot be altered. All data about the transaction is saved for good. This solution completely excludes any changing of the transaction’s information for the purpose of extortion, fraud, or forgery. It can safely be said that thanks to the blockchain technology ensuring the anonymity of the transaction and resistance to any subsequent modification attempts, it is the safest possible way to buy and sell.
Before answering the question of whether it is worth investing money in bitcoin, let’s consider what the use of bitcoin looks like. You already know what bitcoin is and whether it is safe, but how can you store and pay in bitcoin if it does not have a physical form? Cryptocurrencies can be obtained in two ways, the first of which is mining. Mining bitcoin means lending your computer’s computing power, for which you are awarded a payment. Bitcoin miners are nothing more than devices with the greatest possible computing power allotted to this purpose. The second and much more common method is to simply buy bitcoin. In order to buy or mine bitcoin, you need to have somewhere to store it, and that’s exactly what a special virtual wallet is for. Such a wallet, called a cryptographic wallet, has two individual keys: a private key and a public key. The principle of operation is quite simple, you can treat the private key a bit like a password used to access your wallet, while the public key can be shared with others in order to carry out a transaction. The transactions are very simple, you need to enter the public key of the person and the amount you want to transfer to them, and literally after a few moments, the bitcoins will be transferred to the person’s wallet. Fast, simple, and safe. The keys are used to verify the sides of the transaction, after which everything is permanently saved.
It’s time to clearly answer whether investing in bitcoin is worth it. In my opinion, the answer is a resounding… YES. Let me explain why. First of all, let’s recall everything that has been written in this text so far. Cryptocurrency transactions are likely to become very popular over the next few years. Security and anonymity, which are guaranteed by the use of blockchain technology, are gaining more and more supporters. Of course, it’s impossible to say with 100% certainty when to buy bitcoin, when drops in its price will occur, and when investors will look at it generously. There is no such thing as a secure investment and this has to be stated in the case of cryptocurrencies. Investing in bitcoin seems wise, however, as we know the supply of bitcoin is limited. Like any product with a limited supply, it has great potential to gain value over time. It is treated like gold by many investors. It is a fairly reliable way to store investments over long periods of time. Of course, it is not as stable as gold, because anyone interested in cryptocurrencies has had the opportunity to see the fluctuations it is subject to more than once. However, bitcoin compensates for these fluctuations with its other features, such as fast and safe transactions and easy investment. After all, in order to invest in bitcoin, all you need is a device with Internet access and a few free minutes.
In conclusion, investing some of your savings in bitcoin is definitely worth considering. The cryptocurrencies you purchase will be safely waiting in your wallet, while their value is likely to continue growing. The increasing emphasis on transaction security will push companies towards cryptocurrencies, with anonymity as an additional incentive. In addition, the increasing use of bitcoin and the growing popularity of machines that support cryptocurrencies, all make the choice of investing in bitcoin seem rather obvious.