Bitcoin Basics Every Crypto Investor Should Know
“I have invested in bitcoin because I believe in its potential, the capacity it has to transform global payments is very exciting”. Isn’t this quote by Richard Branson one reason why so many people got interest in cryptocurrency and have now become crypto investors?
The advent of bitcoin and the concept of cryptocurrency has taken the world by storm, and there is not a single person unaware of these terms. But the in-depth understanding of the concept is still lacking among a large chunk of the world population. Even many bankers, developers, scientists, and consultants only have limited knowledge and often seem to miss out on the basics of cryptocurrencies.
Cryptocurrency is a term that is used to refer to a securely encrypted decentralized digital currency. It is an open public ledger(but it is encrypted to ensure a safe and secure transaction between peers) that stores the records of transactions between peers. The ledger or the information about the transactions is based on blockchain technology.
Cryptocurrency mining
Another vital term that comes into the picture is cryptocurrency mining. It is a process wherein peer to peer transactions are verified and are adding to the digital ledger. Everytime a transaction takes place, cryptocurrency miners are supposing to ensure the authenticity of the transaction and update the blockchain with the details of the transactions. Cryptocurrency miners not only authenticate the transactions and update the blockchain. But they also compete against each other to solve mathematical algorithms. The first one to solve an algorithm is reward with a small amount of cryptocurrencies of his own.
Other than being used for secured transactions, cryptocurrencies have given rise to a large number of crypto investors, trading platforms and speculators. Benefits such as privacy, fraud detection, immediate settlement, and fast transactions have won the confidence and trust of crypto investors.
Ever since the invention of cryptocurrencies, many digital currencies have been introduced to the world. Like Bitcoin, Ethereum, Litecoin, and Ripple, there are around 1000 cryptocurrencies known till date. The growing popularity of cryptocurrency leads to an increase in the price and market cap. But only a handful of them is termed as relevant. Out of the many cryptocurrencies, Bitcoin is one of the most popular cryptocurrencies. It is the most popular cryptocurrency all across the world, has the highest market cap and is traded at the highest cost out of all the cryptocurrencies. So for all those new to the cryptocurrency space, here are a few things you and other crypto investors must know.
1. Bitcoin does not have the involvement of middlemen
Transactions made using bitcoins are not govern by any centralized authority like a bank. The underlying blockchain technology is a decentralized, open digital ledger in which peer to peer transactions take place only on the exchange of public and private keys. There is no involvement of any third person.
2. Longer the blockchain, safer the bitcoin transaction
With the growing popularity of cryptocurrency, more and more people are investing in bitcoins. As cryptocurrency is based on the blockchain technology. Every time a transaction, a block is generating that contains details of transactions. In this way, the blockchain grows longer, and the probability of someone hacking into the database becomes lesser.
3. Transactions once made cannot be reversed
Payments made via bitcoin are irrevocable. For instance, it is possible to reverse a payment made via a credit card in certain situations. But in the case of bitcoin, the payment once made, cannot be reversed.
4. No need for permissions
There is no need for permissions to use bitcoins. There is only a need for a software that can be download for free. After installing it, you can make transactions using bitcoins, and no one will prevent you from doing that.
5. Fast transactions and global reach
You can send money to or receive digital currency from your neighbour or someone who is at the other end of the world. You can make quick global transactions via cryptocurrencies like bitcoins. The global computer network makes it possible for to instantly send or receive digital currency in a matter of few minutes.
6. A limited supply of bitcoins
Unlike fiat-currencies, there is a limited supply of bitcoins. This makes bitcoin a bit like gold, and that’s why the people who unlock new bitcoins by solving mathematical algorithms are called miners!
Before investing your money in cryptocurrency, it is a good idea to be well versed in the basics of the popular currencies such as bitcoin and ethereum for a safe investing experience. All set to start investing in cryptocurrencies? Here are some cryptocurrency trading platforms for your reference.
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