What Is Bitcoin?

As of the time of this article’s writing, Bitcoin has reached an all-time high of $40,000, with bulls thinking it could go even higher before a correction. These eye-catching prices mean that anyone with even a passing interest in cryptocurrency might be taking notice and following Bitcoin news. With that being said, if you’re thinking of investing in Bitcoin, it’s always a good idea to do research on an investment prospect and understand the technology first. So what is Bitcoin, anyway?

Defining Bitcoin

In its simplest form, Bitcoin is a digital currency, or cryptocurrency, and a method of electronic payment. But that’s oversimplifying things.

Bitcoin refers both to the cryptocurrency itself and the protocol upon which it’s built. The Bitcoin token is what a user is able to own or trade. Tokens can be exchanged through the use of a Bitcoin wallet, which is software that allows you to store cryptocurrency, and accessed with your own private keys. Bitcoin the protocol is built on a technology called the blockchain. The blockchain is a ledger that records all of the transactions for tokens. The reason this works so well is that the ledger is maintained through the use of thousands of private nodes, meaning networks have to agree and verify a transaction before it’s recorded. This makes all records transparent and immutable. Transactions are forever stored on the ledger and can’t be reversed.

The main strength of Bitcoin is that it is decentralized. This means no central institution, like a bank, controls the network. This is achieved through the vast network of volunteer nodes that verify transactions on the network. Since these nodes are all private, it’s essentially impossible for Bitcoin to be hacked or tampered with.

As far as Bitcoin price goes, there is a set amount of Bitcoin to be mined. Once this amount is reached, then no more Bitcoin will be produced. Miners are rewarded for mining Bitcoin, and every four years, the mining reward is halved. You don’t need to have a full Bitcoin token to use the currency, either. You can trade percentages of a token. Unlike fiat currency, which can just be printed as needed, leading to inflation and other associated problems, Bitcoin’s price will eventually stabilize. And more won’t be able to be created, which means it will create a stable currency along with all the other benefits we’ve outlined.

Should I Invest in Bitcoin?

The choice of investment is up to you. Make sure to stay on top of Bitcoin news and do your own research. Remember when it comes to investing, especially with something as volatile as cryptocurrency, it’s a good idea not to put in more than you’re willing to lose. Having notifications set for big Bitcoin news announcements will also help you decide on what to do with your investments.

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