Everyone who is into cryptocurrency will eventually find themselves in a situation where they face the following question:
“What exactly is Bitcoin?”
Straightforward enough for those already buying, selling and using cryptocurrency – quite the opposite for those with no idea how the whole thing works.
Rather than immediately diving into a lecture on the technicalities of crypto trading and mining, it can be more useful (and less stressful) for everyone involved to offer a simplified summary. Not to mention, ready yourself in advance for the questions you are most likely to be asked.
A few of the most common examples of which are as follows:
1. What Are Bitcoins?
Bitcoin is a 100% decentralized form of virtual currency, which works a little like cash in that it passes directly from one person to another. There is no middleman involved and nor is the currency controlled by any central bank or authority.
In a little more detail, Bitcoins exist as fragments of computer code, of which there is a strictly limited number available – around 21 million in total. Essentially, Bitcoin is a form of virtual ‘cash’ for online transactions that can be used safely, discreetly and (usually) without processing and handling fees.
2. Is it True that Bitcoin Transactions Are 100% Untraceable?
In many ways, Bitcoin is exponentially safer and more discreet than most conventional online payment methods. As it the case with a cash transaction, you do not have to provide any personally identifying information to conduct transactions using Bitcoin. You simply transfer the funds to the recipient to complete the transaction.
However, this does not mean that a full and detailed log of every Bitcoin transaction ever completed does not exist. It does – the blockchain keeps a full record of all Bitcoin transactions to ensure that the same Bitcoins are not spent multiple times. This therefore means that Bitcoin transactions can technically be traced, though are still way more private and discreet than conventional transactions.
3. How Are Bitcoins Purchased?
Purchasing Bitcoins is the most popular approach for obtaining them. They can also be mined, but most newcomers to cryptocurrency simply buy Bitcoins from online exchanges. One of the simplest and most reputable of which is Bitvavo, which provides quick and easy access to Bitcoin purchase and trading opportunities by way of a flexible online portal.
Bitcoins can be purchased using any conventional form of currency, in a similar way to purchasing foreign currency for an overseas trip. The biggest difference is that you first need to install a Bitcoin wallet on your computer or your Smartphone, which is subsequently where your currency will be stored. You can then use the Bitcoins you buy to make transactions in the same way you would with a credit or debit card, though without the fees and commissions associated with such transactions.
4. Do Many Businesses Currently Accept Bitcoin?
The United States is currently leading the charge with regard to the number of major brands and businesses that accept Bitcoin payments. Kmart, Sears, Home Depot and CVS are some of the biggest names that now support Bitcoin payments, which can also be used to make purchases on Amazon and hundreds of other major online retailers.
It is also possible to use Bitcoins to play at online casinos, bet on sporting events and so on. Bitcoin gambling has become particularly popular over the past couple of years, due to its potential to enable those who get it right to increase the value of their Bitcoin haul exponentially. Though of course, the risks of gambling with a volatile form of currency are self-explanatory.
5. Can I Make Money with Bitcoin?
Last but not least, most of those who have made vast sums of money with Bitcoin have done so simply by buying at the right time and holding onto their coins long-term. As recently as 2014, the value of a single Bitcoin was approximately $650. At the beginning of 2021, the same Bitcoin was worth more than $30,000. More impressively, many analysts have predicted that the value of the Bitcoin will exceed $100,000 or even $200,000 within the next couple of years.
The short answer is therefore yes – you can make money with Bitcoin, if you make the right moves at the right time. However, the value of the Bitcoin has also plummeted just as dramatically and quickly as it has increased, highlighting the importance of buying and selling at the right time.