Bitcoin, the oldest and largest crypto by market cap, has people curious about how it works and many other things they don’t understand. As a novice investor, the urge to actively seek answers and clarifications can help you learn more about Bitcoin, enabling you to make informed investment decisions. In this article, we’ll answer five common questions about Bitcoin.
1) What is Bitcoin?
Bitcoin, publicly launched in 2009, is a decentralized virtual currency and is currently top among the most popular cryptos. It’s built on a blockchain, a distributed digital record. Bitcoin can be traded for services or goods with vendors who’ve already embraced the crypto as a payment method. As a Bitcoin holder, you can buy and sell the coin and even exchange it for services and goods without a bank or central authority as an intermediary.
2) Where can one buy Bitcoin?
If you’re new to crypto investing and don’t know where to buy Bitcoin, below are several options to consider:
- Cryptocurrency exchanges: They’re digital platforms where you can buy and sell digital currencies. Most of these platforms offer many crypto options, while others only provide popular ones. Be cautious when choosing a crypto exchange to ensure a secure, seamless trading experience
- Bitcoin ATMs: They are internet-connected kiosks where you can buy Bitcoin using deposited cash. Unlike a conventional ATM that allows you to physically deposit, withdraw, or transfer money to your bank account, a Bitcoin ATM generates blockchain-based transactions that send Bitcoin to your digital wallet, usually through a QR code
- Peer-to-peer money transfer applications: Cash transfer apps like PayPal allow their clients to buy, sell, store, and send Bitcoin directly via the apps
3) What makes Bitcoin stand out as an investment?
While you may be skeptical about investing in Bitcoin due to its regulatory uncertainties and volatility, it’s an option worth considering, provided it resonates with your investment strategy. Some of the reasons why Bitcoin stands out as a viable investment vehicle include:
- Limited supply: Bitcoin’s supply is limited to 21 million tokens, which makes it inflation-resistant. With over 19 million coins having been mined so far and already in circulation, scarcity further increases Bitcoin’s value
- Profit potential: Since its inception, Bitcoin has shown remarkable price appreciation. With the possibility of reaching all-time highs in the future, Bitcoin provides chances for investors to create wealth
4) Is Bitcoin valuable?
Bitcoin is valuable because it can be used in place of and exchanged for fiat currency. It has unique attributes that suggest it has value, including:
- Acceptability: As more and more become more familiar with Bitcoin, countries are adopting it, and businesses are accepting it as a mode of payment
- Divisibility: A single Bitcoin can be divided into eight satoshis
- Portability: Consumers can use Bitcoin across borders, allowing them to take part in the global economy provided they have an internet connection
Additionally, Bitcoin is acknowledged as a unit of account and acts as a store of value, contributing to the crypto’s value.
5) What is Bitcoin mining?
Bitcoin mining is the process of creating and releasing new Bitcoins into circulation and validating ongoing transactions. Bitcoin miners (those involved in the mining process) usually invest electrical energy to create new Bitcoins. As a reward for successfully creating new coins, these miners receive Bitcoin.
Endnote
New Bitcoin investors and other people interested in Bitcoin usually have many questions about the crypto. Familiarize yourself with the common questions about Bitcoin and their answers to better understand the coin.
