There were no cryptocurrencies to compete with Bitcoin when Satoshi Nakamoto launched it in 2009. However, other digital currencies had already emerged by 2011 to compete with Bitcoin. These cryptocurrencies used the same blockchain technology on which Satoshi built Bitcoin. And this prompted developers to create more digital currencies.
Currently, the world has thousands of cryptocurrencies. Although each cryptocurrency aims to provide new functions or features, most of them have the same underlying principles.
- No central authority like a central bank regulates, issues, or backs cryptocurrencies
- Cryptocurrencies use specialized computer code or cryptography to encrypt or secure them.
- Peer-to-peer review and a distributed ledger or blockchain gives cryptocurrencies their value
- People store cryptocurrencies as assets in digital wallets that allow them to trade or manage their tokens
Today, people trade Bitcoin on platforms like CEX-IO Review. And such platforms increase by the day, with some allowing people to trade several cryptocurrencies. But Bitcoin remains the dominant virtual currency due to its key concepts that are as follows.
Transferring Bitcoin to people in different places in the world is a seamless process. Ideally, this virtual currency uses the blockchain to ease value transfer. Anybody with a smartphone and a computer or smartphone can receive, trade, or send Bitcoins.
Blockchain is the underlying technology for Bitcoin. And this technology secures this cryptocurrency by checking and verifying transactions via the miners’ activity. Blockchain creates a distributed ledger that’s almost impossible to hack.
Bitcoin payments don’t require users to share personal information. Essentially, this cryptocurrency protects your financial information from third parties. And these could include payment service providers, credit-rating agencies, advertisers, and banks. Since Bitcoin doesn’t require you to send sensitive information over the internet, it limits your financial information risk. Thus, using Bitcoin protects you from identity theft.
Bitcoin’s blockchain publishes every transaction publicly. That means nobody can manipulate Bitcoin transactions. Essentially, Bitcoin’s underlying technology prevents rules or money supply adjustments.
Nobody has ever hacked Bitcoin’s network. Bitcoin’s fundamental ideas make this virtual currency safe. This cryptocurrency uses a system that doesn’t require a person to seek permission to join. Also, open-source software is at the core of this cryptocurrency. Thus, countless cryptographers and scientists have examined different network aspects to ascertain its security.
Bitcoin payments differ from credit card transactions because they are irreversible. And this reduces fraud charges for merchants. Bitcoin transactions reduce costs for a customer by eliminating high payment processing fees.
Bitcoin as an Investment
Bitcoin might present a viable investment opportunity. Today, people invest in Bitcoin in several ways. For instance, some individuals purchase and hold onto their Bitcoins, waiting for the value to increase. Some people use coins in decentralized finance platforms to earn interest via lending or staking.
You can also take a conventional route like an exchange-traded fund with a cryptocurrency tie. In some cases, individuals invest in crypto-supporting industries or projects instead of buying Bitcoin itself.
Overall, Bitcoin investment is evolving rapidly. Nevertheless, don’t invest a large amount of your hard-earned money in this digital asset. That’s because Bitcoin’s volatility could lead to significant losses. Therefore, ensure that Bitcoin takes only a tiny part of your investment portfolio.
Many experts see Bitcoin and other virtual currencies as an alternative to fiat money. That’s because these virtual assets provide solutions to the current financial system’s shortcomings. However, anybody venturing into the crypto world should not invest more than they can afford to lose in Bitcoin or other virtual currencies. Essentially, Bitcoin is volatile, and you could lose a lot of money within a short period.