A Review of Bitcoin
Ever since the evolution of mankind began, humans have developed various mediums for making transactions in order to conduct business and satisfy consumer needs. From barter system to coins and modern currency and now digital currencies like Bitcoin, the changing nature of transaction medium demonstrates the ever improving and improvising nature of mankind. These currencies are also referred to as crypto currencies. This article facilitates its readers with a Bitcoin review.
What is Bitcoin?
Bitcoin is a modernized version of currency which is a digital currency first introduced in 2009. It operates on the principles laid out by Satoshi Nakamoto, whose true identity has not been verified even yet. It was developed to facilitate online payments and transactions and offered lower transaction fees than the traditional paper money. BTC can be a little controversial to people because of its intangible nature. As BTC do not exist physically but only on the computer itself, getting a grasp of the concepts involving Bitcoin can be confusing to some people. To clarify these confusions, a Bitcoin review is presented. They may not consider it to be a currency even but nevertheless, it has huge popularity among most of the individuals reminding us of the modern age that we are living in. As per the official Bitcoin Foundation, when referring to “Bitcoin” as a concept or entity, the word is capitalized while it is written in lower case letters when talking about the quantity of BTC (e.g. “I bought 10 Bitcoins”).
First decentralized currency
Bitcoin is the first currency of its nature which is not centralized meaning that it is not backed by any Government or Authority of the world. Instead, the Bitcoin miners may be thought of an authority that backs and implement the credibility of coin. This cryptocurrency uses peer-to-peer technology in order to aid instant online payments with minimum fee. A peer-to-peer or P2P is sharing of information or asset without the involvement of a regulatory authority just like Bitcoin.
Facts and Figures
BTC was created in 2009 and it has risen in value since then. In fact, from 2015 to 2017, it raised in value by an astonishing 1289% as more and more individuals are taking interest in Bitcoin and its demand has sky rocketed. By September of 2017, almost 16.5 million Bitcoins are circulation where the maximum number of it which can be issued is 21 million. Also, the market capitalization or market value of all theBTC in August 2017 was 75.8 billion out of which 64% of them are never used and might never be used. Refunding of Bitcoin transactions is not possible due to the nature of currency. In 2016, a Bitcoin sent $137000 instead of $5 accidentally with no way of getting it back. Also, the 21 million limit is expected to expire in 2140. From 1st April 2017, Bitcoin is a legal mean of payment in Japan. There are some countries where Bitcoin is illegal. These countries include Saudi Arabia, Bolivia, Kyrgyzstan, Ecuador, and Bangladesh.
Sites to buy the Bitcoin
According to reviews taken from exchanges and BTC brokers the following are the best sites to buy your coins, click on name of exchange to see review:
Bitcoin mining is a process through which new Bitcoins are created and released into the pool of coins. Basically, this process is performed on computers which use processors to solve mathematical puzzles and discover a block. This block is then added to block chain to create new Bitcoins. This process is performed by people using their computers and specialized hardware to solve these problems and they receive rewards in the form of Bitcoin for mining. BTC mining is a way of income used by many individuals and they receive them through mining. The reward for a single block was 50 new Bitcoins in 2009 which decreases every four years. Also, the difficulty of the calculations and mining process increases significantly as more and more BTC are created. The difficulty of mining Bitcoins was at 1.0 at the start of 2009 which rose to 1.18 at the end of the year. In April of 2017, the difficulty level was over 4.24 billion. These results in more and more powerful computers required with less and less rewards for mining the BTC. A Bitcoin review is laid out to inform individuals about the characteristics of BTC. By the end of August 2017, there was 1402 Bitcoin ATMs in more than 55 countries worldwide with only North America having the 75% of the World’s Bitcoin ATMs. The first university to accept BTC as tuition fee was the University of Nicosia in Cyprus.
How Bitcoin works?
Bitcoin is one of a kind currency system which uses peer-to-peer network technology for quick payments and less fees. Without a regulatory authority, these transactions and their authenticity have to be proved in order to make it secure and less fraudulent. For this purpose, BTC uses a different method. The miners, who are continuously earning money by mining the Bitcoin and receiving transaction fee, use a ledger recording system to ensure the security and validity of these transactions. Whenever a transaction is made, these miners record the transaction and every single transaction is recorded by every single miner. Of course, it is a computerized process but this is a great system developed by community to ensure the safety of transactions and keep track of the Bitcoins.
One BTC is divisible to three decimal places and it is called a milliBitcoin. Also, one Bitcoin is divisible by eight decimal places which is a 100th million of them. This unit of Bitcoin is called Satoshi. It seems due to decrease in the total coins and increasing demand for the currency, one Bitcoin could be divided to more decimal places eventually.
Transaction in Bitcoin
If you want to buy Bitcoins and carry out transactions, it requires a simple process. First of all, you have to create an E-wallet where you Bitcoins will be stored for future use. Reviewing Bitcoin should also be a basic requirement for anyone interested in BTC transactions. There are many websites which offer E-wallets such as Blockchain Wallet. Once you have opened your E-wallet, you can transfer money from your bank account to cryptocurrency exchange so that you can buy Bitcoins with it. To buy the Bitcoins, you have to visit a cryptocurrency exchange where you will be able to buy them from any seller who is willing to sell it. As there are limited number of Bitcoins, there must a buyer and a seller to complete the transaction. Once received your Bitcoins, you can make online payments or even hold them for investing purposes. One thing to keep in mind is that you should never forget you E-wallet username and password. As the currency exists only in your E-wallet, you may lose all of your money if you forget your password and there is no way of getting it back.
Investing in Bitcoin
With the increasing demand and trend of Bitcoins usage, many individuals who have an interest in financial markets and investing, have identified this potential opportunity of trading and investing in coins. A comprehensive review for Bitcoin is crucial before making up the mind to invest in BTC. The value has rose significantly in the past year or so attracting a lot of attention from all around the world. Potential investors buy BTC when they anticipate that the value of it will rise in future or sell them when they think that Bitcoin value will diminish in the near future.
A cryptocurrency exchange is a place where buyers and sellers of cryptocurrency interact and make their transactions. There are not physical exchanges instead these are online trading platforms where registered users trade in cryptocurrency and keep track of the transactions. These cryptocurrency exchanges are divided into subcategories depending on different factors such as facilitation of new traders, the type of service which they offer and the exchange rates which these exchanges offer.
There are two most popular types of cryptocurrency exchanges:
Regular or Standard exchange
These are the traditional and the key forex market which follows the procedure of the elemental market to operate. This procedure is similar to any other forex market in which traders sell their assets for the normal money or for cryptocurrency.
Benefit of regular or standard exchange
- Regular exchange shows their Forex rate which represents quotes of the current market. The exchange may rise or fall according to market demand and offers.
- The quote currency, base currency or cryptocurrency used is either the dollar or the euro.
- the standard exchange can use either of the major world currencies for the transactions
- Their numberis growing and they can easily be found in some major world cities, on the internet search and also financial markets.
As the name suggests, peer-to-peer exchanges are free platforms where buyers and sellers interact with each other directly without any medium between them. They can carry out their transactions directly with each other and the major characteristics of this type of exchange include:
- Traders post their intended price for a specific asset publicly
- Direct negotiation between buyers and sellers is allowed which transfers the transaction to the exchange rate to quicken the deal.
- Sellers have the advantage to set their own price and can ask for any price and can transact in any world currency.
- The direct trading does not have a market price that is fixed
Cryptocurrency brokers work as the traditional brokers i.e. they facilitate transactions between cryptocurrency buyers and sellers and charge some fee for the service they are providing. Finding a good and reputable broker is an essential element when it comes to trading and transacting in crypto currencies. The benefits of cryptocurrency brokers include:
- Anybody can use the top brokers for trade.
- The top broker forex trading volume is quite minimal.
- The broker sets the rate which forces buyers to buy at the broker’s price.
Cryptocurrency funds are pools of currencies which are managed by professionals to ensure profitability and growth. These funds can be purchased by individuals who want to trade in crypto currencies but lack experience and do not want to take risk of losing money in crypto currencies. There are two widely used cryptocurrency funds and they are:
- Crypto currencies Public Traded Funds
A trader can participate in the fund or buy a share and can decide to sell it for some revenue or withhold it for some timer
- Crypto currencies Private and Hold Funds
These are normally available through invitations or being offered privately by a cryptocurrency broker who is at top level. The amount to be invested here is usually above 100,000 Usd and the participation is quite limited.
The exchanges which facilitate their participants to buy or sell Btc are Bitcoins exchanges and due to the ever increasing demand of crypto and the huge growth it experienced in the past couple of years, finding a good Bitcoin exchange to transact in btc may be a little tricky. With cutthroat competition among the number of exchanges, finding an exchange which ensures fastest Bitcoin transfer to E-wallets alongside lowest exchange rates can be a tiring and time consuming process which is why a proper btc review should be carried before buying and selling of crypto. But you have to put necessary time and effort to find the perfect exchange if you are serious about buying and selling Bitcoin.
Here is some safe and secure exchanges where you can buy Bitcoin with credit/debit card and bank wire:
Risks related to Bitcoin
Although Bitcoin was designed to make online payments, and not trading or investment purposes, the appreciation in the value attracted a huge amount of potential investors who saw this as an investment opportunity. But the digital nature of Btc and the absence of regulatory authority carry different risks to it. To minimize the risks associated with transactions, one should consider paying attention to Bitcoin review.
The btc and cryptocurrency industry is still in its infant stages and there is not much historical data to foresee and predict future moves regarding the value of Bitcoin. With less data available to analyze, this investment is a highest-risk, highest-return for the potential investors
As there is no authority or Government to back the Bitcoin, there is always a regulatory risk associated with it. BTC can be used to make illegal transactions, money laundering, and black market operations. This has caused the relevant authorities to conduct a Bitcoin review. Although the miners are considered to be the regulatory authority, there is no physical backing for the BTC in case something goes wrong.
As evident, Bitcoin is a purely digital currency with no physical existence and proof. This means that your money is stored in a computer making it vulnerable. There could be a risk of malware and computer viruses which could potentially result in the loss of money, not to mention the circumstances if you ever forget your E-wallet password.
We have witnessed huge fluctuations in the value of Bitcoin in the past year or so. Due to high volume of buying and selling and a large number of transactions, the direction of market of the value of Bitcoin is difficult to predict and btc investing is not for a person who does not want to take risk in their investments.
The Bitcoin is not eligible for any tax advantages, so there are not good options to shield your investments from taxation.
The industry shift
Bitcoin was a unique concept when introduced at first which changed the way everyone looked at currency. It was the effect of the ease and facilitations it provided to individuals that there are now a number of crypto currencies working in the world. The most common of them after btc are Litecoin and Ethereum. With these crypto currencies in play, the online and quick payment systems have revolutionized causing a shift not only in the industry but also the financial markets worldwide.
The potential investors are looking at it as a financial asset due to the high profitability and growth opportunities it may have to offer in the future.
Just like any other thing, Bitcoin has certain advantages as well as disadvantages attached to it. Not to mention the fraudulent activities and stealing happening over the internet with no place to look for once you are robbed of your money. Who know where this will go in the future and opportunities or threats it brings.
Benefits of Bitcoins
• It operates with discretion
Purchasing Bitcoins happens in a very discrete manner and the identity of the person doing these transactions is not revealed. This compares to cash transactions. For every purchase on makes, there is an address that is generated which is not in any way similar to the last transaction one had made.
• No regulations.
As mentioned in the facts, Bitcoins works under a free market that is not under the regulation of any government, bank or any other financial institution. In fact, banks have a tendency of freezing accounts but with Bitcoins, there is an assurance that this will never happen to its users for now.
• Taxation is not a vocabulary with Bitcoins.
This is because there is no one regulating how the system works. This presents a very big opportunity to those who trade in Bitcoins as there are no taxes imposed even sales taxes usually made on purchases.
• The transaction fees are at an all-time low compared to other means of transacting
There is always a lot that is incurred in the traditional way of transacting. With Bitcoins, you are assured of low charges on your transactions and a quick way of transactions as there are no bottlenecks such as waiting periods for the transaction to mature.
• Payments on the Go
Transactions are done online as long as one is connected to the internet. In this case, it eliminates the inconvenience of having to visit a physical location to conduct a transaction such as is the case with banks
• There is no paperwork involved
It has always been standard procedure for banks to require a lot of proof of identity before you can even open an account with them. Bitcoins do not need these types of processes. For one to start transacting they download a program offering a Bitcoin wallet and this generates one an address and they are good to go.
• There are no reversals on transactions.
This reduces the risk of reversal of transactions made for products and services. It has happened before through the use of normal cards such as credit cards. With btc, no one can defraud you. People should, therefore, be extremely cautious when sending Bitcoins and ensure this is received by the right person.
How to store Bitcoins
With the rise of digital currency, so is the risk of hacking as well. This is to mean that your Bitcoins are not completely safe. BTC wallets are here to provide you with the security of your coins. Find ways that you can ensure your Bitcoins are safe using different wallets.
Online wallets gives. you possibility to store coins in net, wallet server etc. The best online wallets are:
Coinomi – Check Review, it supports over 100 coins
Blochchain Wallet – Check Review
This helps to ensure that you are more protected as opposed to using the normal online wallet that is more vulnerable and can easily be accessed by a potential hack. Using the desktop wallet means that this can only be accessed using a personal computer which you can use different security keys on. This method is also not 100% safe especially if it comes into contact with malware made with the intention of siphoning your Bitcoins.
This includes devices such as USB’s that are portable. You will need to create a bootable drive that has permanent encryption and get it two sets of the password. This provides better security as compared to the desktop wallet. No info of the holder is stored here and funds can be retrieved using a back up the encrypted device if you happen to lose the device you are currently using. The best hardware wallets are:
Trezor – Check Review
Laedger Nano S – Check Review
It can be a good way of storing your Bitcoins especially if you are not planning on using them for a while. This can be produced online using secure websites or offline whichever is convenient. It is recommended to generate this in an offline manner.
How to access funds if your Bitcoins wallet is stolen or gets lost
It is important that you always remember your 12-word phrase for use in case you lost your wallet. Store this information in a very secure place that you can reference from. This will get you your funds back in no time. You can decide to actually back up the key in different places so that you are always sure of security.
Safety and security for Bitcoin Wallet.
Bitcoin works very differently from banks. It is advisable for one to have the knowledge and understand how it works before engaging yourself in any business with it. Literally, wallets are always secured. This type of crypto currency allows you to conduct the transaction in a very fast way all over the world and with this kind of features, security matters a lot. It provides security on high levels if only it is used well. But it is always your duty to embrace certain habits which are good and perfect for securing funds.
• Tread carefully with online services
There have been security issues in the past when using online services. You should consider being cautious about what you do especially with your Bitcoins wallets. It is recommended that you use the two-factor authentication method.
• Do not load excess funds to your wallet.
This gives you an assurance that in case something went wrong you would still have access to your other funds tucked away in a better place.
Backing up your wallet
This can help you to secure your funds in case there are issues with your laptop or any errors are experienced. You should ensure that you encrypt this information so as to be on the safe side.
• Backup your whole wallet
Other wallets allow you to have private keys as possible that are internal. Having a backup of these for your Bitcoins physical address only may end up making you lose on recovering a lot of your funds.
• Online Backups should be encrypted.
Online backups can be stolen. It is great if you can learn the art of encrypting all your online backups. This way, you will have added yourself a layer of security.
• Use multiple secure locations
Your backup should not rely on a single point. Having multiple locations guarantees that you will recover your wallet in the event that issues arise. As discussed above you can look into using USB, papers or even a CD.
• Create regular backups
This should be done routinely to ensure that new addresses and any changes are captured in the backup.
Encrypt your wallet
It will give you the opportunity to set passwords for withdrawal of funds. With these, you will be safe from thieves but not from key logging hardware
• Never forget your password
Your password is your everything in this case. Never forget this or you will lose permanent access to your funds. This is because Bitcoins does not give you many options in this scenario.
• Use a strong password
This is an essential part of the security process. Proceed to use a password that has letters, punctuation marks and numbers. 16 characters are highly recommended. Keep this in memory at all times.
Offline wallet for savings
It is also referred to as a cold storage and ultimately this remains to be the most secure due to the nature of not being connected to any particular network. When done properly, it can offer a very good protection against computer vulnerabilities. Consider using this method with backups and encryption for maximum security.
Some of the best Bitcoin wallets:
Below are ways in which you can use:
Update your software
Keep your Bitcoin software up to date. This allows you to get important security fixes. New features can help with added security. Update your devices without leaving any of them out.
Multiple signatures for protection from theft.
This is a feature that comes with Bitcoins that requires one to use multiple signatures. This is a great diverse feature which ensures third parties do not compromise what is in your account.
What is your will concerning your Bitcoins
There is a chance that your fortune can be lost forever. You should let someone know your back up in case you are gone forever.
Even though Bitcoins have advantages what are the limitations that come with it?
- Exchange rate:
Unlike other currencies which can be converted to the commercial mechanism, Bitcoins has no any physical trace and only operates online.
Most people like having something that will last forever and not something that one day you have it and the other day you don’t have. BTC keeps on fluctuating with a wide range thus making people not to have trust at all.
- Inadequate security on fraud:
Did you know that that the person who created Bitcoins made it a nonreversible once a transaction is made? This brings about security issues where people don’t trust the system.
- Bitcoins are not accepted widely
Bitcoins though so popular currently, they are not used by the wider population.
- Wallets Can Be Lost together with your Bitcoins
If your drives crash or they get corrupted, and there is no way to recover this, you can count yourself at a loss of your fortune. Your coins will forever remain in the system with no means of access.
- There is no protection for the buyer
If you buy goods and they are not delivered, a reversal of the transaction cannot be done. In short, you lose your goods with no guarantee of getting them back.
- Technical issues are bound to happen
There is potential for flaws in the system which can be exploited to the disadvantage of Bitcoins holders.
- Built-in Deflation
The system favors people who started trading early as Bitcoins are maxed at 21 million. The demand goes high thus it can cause deflation. It is therefore important to ask yourself when would be the right time to spend it if the value keeps going up.
- Limitations due to their Form
They cannot be used for some transaction especially in some stores. You have to convert this in order to use which can be inconveniencing especially if you are experiencing an emergency.
- No Valuation Guarantee
With no given authority to regulate the market, it can be both a blessing and a bad thing. If a good number of Bitcoins owners decided to leave the market all at once, the value of the Bitcoins would go down and those who have invested big would lose hugely.
Frequently asked questions on Bitcoins
Did you know that most of the people mistake Bitcoins as being a technology stock? It is not. Stocks are graded in a different way. They are under companies and have earnings while the Bitcoins is not under any company and neither have earnings.
Is Bitcoins a metal gold? Even though many people think that Bitcoins is like the metal gold, this is a big No. Even though at some point they are similar. Bitcoin being an invisible or rather an intangible commodity and gold is visible and tangible in terms of both the money and the metal itself.
Bitcoins have become popular in the recent past making a lot of money for people who have invested in the trade. It has disrupted the market in more ways than can be imagined.
With the rise of the BTC, questions such as how secure this trade is have come up; it remains to be something that people can take a risk on.
With the market being unpredictable, it is safe to say that only risk takers can navigate this.
But the best thing about is how you can easily access your funds without a lot of bottlenecks and its portability.