Bitcoin – What You Need to Know

Cryptocurrency? Blockchain? These words remind many people more on the Matrix Movies than on real money. But last year Bitcoin increased its value more than 1500% and many people all around the world begin to wonder what’s it all about. There are endless reports and explanations going around how the Bitcoin system functions in details, but unfortunately the whole topic is such a complex one, that many people are back to square one after reading them. Is it money? Is it an investment? Actually it has become both So let’s get back to 2009. A group of people named Satoshi Nakamoto invented the Bitcoin System, what was, heavily summarized, the attempt to set up a globally working, anonymous currency for everybody without involving the existing bank system. The idea was simple: In your daily life you deposit your money on your bank of choice. When you want to send money to another person, you actually don’t send it to him or her -you send it to his or her bank account by using the bank transfer system. And in 2009, many people realized that our global banking system is not that stable as it should be – so these people tried to create a way to transfer money which is independent of the existing system. Bitcoin works differently You don’t deposit your money on an account of an online bank which could collapse in bad times, your money lies on an independent online wallet. Heavily simplified, you are your own bank. The only thing you have to do: you have to look for a service which provides these kinds of Bitcoin wallets; using these services you get also access to it. And these services offer you also the option to change your money to bitcoin and back into your currency of choice, whether it’s Dollar, Euro or whatever. If you still don’t understand, what Bitcoin actually is, I want to ask you a question: what do the bills in your pocket actually represent? Right, they display an amount of money that you own. These paper bills confirm that you own that amount of money. And if you take your bills to your bank and put them on your account, you will also see the amount on your account – the bank also confirms that you own that money. It’s just an accounting system, nothing else. And here you can also find the answer what bitcoin actually is: it’s also an accounting system. And in this case not a government, not a bank, the whole world confirms that you own that amount of money. That’s in fact all you need to know. But who takes actually care of my money if there is no bank? It’s as simple as that: everybody who is a part of this system. The system checks itself at every transaction, and it provides a directory (Blockchain) where every transaction is registered. This directory cannot be edited or manipulated, it just records all the transactions within the system – and so your money is safe. So transfers within the Bitcoin system are anonymous, and they go peer to peer – which only means that there is no intermediate step, from your wallet to the other wallet, no banks involved. And that’s it. But what can you actually do with Bitcoins? Don’t worry, they are not just to watch. The main problem Bitcoin had until this year was that many people didn’t see it for a long time as something which could be suitable for the real life – it was just something virtual and weird thing, reserved only for nerds. So until this year, there have been only a few online shops which offered a payment option via Bitcoin – but this seems to be history after the way Bitcoin took last year. The number of online shops which accept Bitcoin increases every day, and probably it will not take long until Bitcoin will be a common way to pay at the shop at your corner. A huge step for Bitcoin in this year has been made by Amazon – the first global Big Player which accepts Bitcoin. Another way you can use Bitcoin for, which is way more interesting these days – Investing in Bitcoins As you might have heard Bitcoin increased its worth in the last year more than 900% – what’s the rate of your bank again? If you would have invested 1000$ at the beginning of the year in Bitcoins, you could now spend 9000$. Sounds interesting, but what’s the catch? It’s quite simple: Bitcoin is a system of trust, just like every other currency. The note in your hand, whether its Dollar, Euro or anything else, is only worth the number on it as long as you and everybody else believe that has this worth – otherwise it’s just paper. The reason why Bitcoin increases its worth so rapidly is due to the fact that the trust in this currency and its whole system increased that much in the last time. But on the other side of the coin, you can also see the risk – wherever something grows so rapidly, whether it’s a currency, a product or a company, it can also lose its worth also very quickly if people start to lose trust in it. And that’s also possible if you invest in Bitcoins, no question. But that’s the kind of risk you have always if you decide to invest in something. So was it just a hype? Yes and no. Bitcoin hasn’t been invented to become a new toy of speculation and investment, its main purpose is to revolutionize our idea of money. Nevertheless, Bitcoin increases its worth so rapidly that it obviously became for many people a good chance to make quick money. And that was the problem: Many people who only wanted to make quick money jumped off the train and left him when they thought it would be the time to cash up. Bitcoin didn’t lose its worth, just its price So in first weeks of 2018, we could regard a rapid downward trend in the Bitcoin Chart – the beginning of the end of Bitcoin? To be honest,there are no real indicators for it. Compared to other cryptocurrencies, the Development Team of Bitcoin still seems to have a huge lead when it comes to technical infrastructure and experience. And as Micheal Sherman, Author at Cryptotalk, recently said: “Bitcoin didn’t lose its worth. Just its price.” And as we could see, the recovery of Bitcoin has already begun in the last days. But it’s to be hoped that its growth would return to a more stable and healthier way in the next months; slow, but sustainable. Don’t invest in something because it’s cool and everybody does it In the end it’s your money and you should take care of it. Only if you are convinced that it’s a pretty good deal – then you should make an investment. So if you decide to invest in Bitcoins, a good advice would be to start slow and look if you feel good about your investment. Take your time to check the development of the course, and if you have a good feeling you can start to go big – never invest all your money in just one investment. If you want to take a look at the Traders which provide Bitcoin, you can find a list of Approved Traders on TheTestDummies.com