It’s already worth way more than an ounce of gold, completely digital and its disruptive technology is decentralized, global, and permissionless. Oh, yeah, let’s not forget, amazingly profitable. We’re talking about Bitcoin.
Bitcoin is a consensus network that enables a revolutionary all-digital payment system. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is perhaps best described as ‘cash for the Internet’, but Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.
Bitcoin‘s inventor, Satoshi Nakamoto, described Bitcoin as “A Peer-to-Peer Electronic Cash System” in the original 2009 Bitcoin whitepaper. To date, this is still the most simple and accurate description.
It is also known as digital cash, cryptocurrency, an international payment network, the internet of money – but whatever you call it, Bitcoin is a revolution that is changing the way everyone uses and invests in money. In recent years, Bitcoin has even become the new favored trading asset amongst beginner retail investors and industry insiders alike.
The Bitcoin protocol is also hard-limited to 21 million bitcoins, meaning that no more than that can ever be created. No central bank, individual or government can come along and simply ‘print’ more bitcoins when it suits them. In this sense, Bitcoin, like other cryptocurrencies, is a deflationary currency, and as such is likely to continue growing in value. Just ask any investor or trader who were smart enough to join the crypto sphere a year, 6 months or even one month ago. Today, top financial analysts unanimously acknowledge the fact that the cryptocurrency market is still in its early stage, with some forecasting returns of 50 percent in short term to over 500 percent in the long term.
Bitcoin Basics and How It All Works:
No Central Command
Bitcoin isn’t owned by anyone. Think of it like email. Anyone can use it, but there isn’t a single company that’s in charge of it. Bitcoin transactions are irreversible. This means that no one, including banks, or governments can block you from sending, receiving or trading bitcoins, anywhere in the world. With this freedom comes the great responsibility of not having any central authority to complain to if something goes wrong. Just like physical cash, don’t let strangers or uncertified brokers hold your bitcoins for you, and don’t send them to untrustworthy people on the internet.
Secure Your Wallet
There are several different types of Bitcoin wallets, but the most important distinction is in relation to who’s in control of the private keys required to spend the bitcoins. Some Bitcoin “wallets” actually act more like banks because they are holding the user’s private keys on behalf. If you choose to use one of these services, be aware that you are completely at their mercy regarding the security of your bitcoins. Most wallets, however, allow the user to be in charge of their own private keys. This means that no one in the entire world can access your account without your permission. It also means that no one can help you if you forget your password or otherwise lose access to your private keys. If you decide not to simply trade bitcoin, but rather own a lot of Bitcoin it would be a good idea to divide them among several different wallets.
Like everything, Bitcoin’s price is determined by the laws of supply and demand. For example, in early 2011 one Bitcoin was worth less than one USD, but fast forward to 2017 and one Bitcoin is currently worth over four thousand USD. Since the finite supply will be limited to 21 million bitcoins, as more people buy, sell or trade Bitcoin online, the increased demand, combined with a fixed supply will force the price to go further up, enabling huge profits for smart investors. And because the number of people using Bitcoin in the world is still relatively small, the price of Bitcoin in terms of traditional currency can fluctuate significantly on a daily basis. Yes, even drop. But in the mid to long term it should undoubtedly continue to increase as more people, merchants and even countries are adopting blockchain currencies.
There are several ways to buy or trade Bitcoin, but trusted exchanges or online brokers are a great way to begin. Because there are inefficiencies in the traditional banking system, exchanges will sometimes have slightly different prices. If the difference is too great, traders will buy low on one an exchange and sell high on another and close the gap. If an exchange constantly has substantially different prices than others, it is a sign of trouble and that exchange should be avoided. As with everything else, do your research and find an exchange or better yet, online trading broker you can trust. It’s also a good idea not to use an exchange as a wallet. Move your Bitcoin to your personal wallet so that you have control over your funds at all times.
Bitcoin transactions are seen by the entire network within a few seconds and are usually recorded into Bitcoin’s worldwide ledger called the blockchain, in the next block. While it’s possible that a transaction won’t be confirmed in the next block, in the vast majority of circumstances it is fine to accept a transaction as soon as it has been seen by the network. Unlike traditional payment systems, Bitcoin transactions are lightning fast and can be sent globally. Bitcoin is still relatively new, but with each passing day the technology becomes more reliable. It is more and more unlikely that a major bug will emerge in the system as time goes by, and people can trust the technology more with the passing of time. Each month people transact hundreds of millions of dollars’ worth of Bitcoin.
As more businesses and governments accept Bitcoin, the future of Bitcoin and cryptocurrencies looks promising than ever.
Where do you think Bitcoin will be in a year’s time? Two years? Five years? Despite some short term ups and downs in price, if we’ve learned anything from the past, it’s that financial assets of legitimate use and value like Bitcoin can be amazingly profitable in the mid to long term. That’s food for thought.
With all the headlines surrounding Bitcoin, Ethereum, and other popular cryptocurrencies, you might be thinking it’s time to invest a few hundred dollars just to get in the game. But where would you start? Crypto exchange? Alpha-numeric codes? Mining software? Wallets? Fortunately, there are much simpler ways. Online platforms like Zurich Prime, an official cryptocurrency hub, allow a simple and secure way to become a Bitcoin investor by trading, not buying, Bitcoin at the fraction of the market cost while still offering investors the same short-term to even higher long-term profits.