Bitcoin 101 – Everything You Need To Know About Bitcoin And Cryptocurrency
BITCOIN 101 – INTRODUCTION
The world has witnessed a tremendous growth in virtually every sphere of life. It owes its advancements to the great intellectuals whose succour lies in solving practical human problems. A noteworthy invention is the recent introduction of global digital currencies that uses a public ledger system for payments, investment and other forms of transactions.
These transactions are at present being carried out with ease and devoid of any restrictions whatsoever. It is a revolutionary transition from the engraved metallic coin to the printed papers and now, to the reign of digital currencies. Such digital currencies include the likes of Bitcoin, Ethereum, Litecoin, etc., and they are categorically called crypto currencies.
Bit coin is blazing up the trail in the world of the digital currencies. This is perhaps because it has become widely accepted by people from every facet of life. World leaders with stronger economies are beginning to see the enormous potential residing in the power of Bitcoins. Although they have their fears that decentralized cryptocurrencies may result in subverted activities with untraceable transactions, they, nonetheless, have also seen the minimum risk involved in using it.
Bitcoin can be issued in fractional denominations, which are Bits and the Satoshi. A bit it represents the common unit used to designate a subunit of a Bitcoin. An estimated 1000000 bit is equal to one bitcoin. This unit is used as small denominations in the Bitcoin world. It is estimated that 1bits is equal to 0.00000100 Bitcoin and the smallest unit is the Satoshi, with one Satoshi equalling 0.00000001 bitcoin.
If you are new to the cryptocurrency world, there are ways to set up your Bitcoin account and make your first purchase. You could also earn it by services rendered; goods sold, and individual cloud mining, plus large-scale mining pools requiring sophisticated hardware.
Setting up your Bitcoin account is simple. Some of the sites offering this service are blockchain.info, coinbase, and Xapo. All you must do is, visit the sites, fill in the required information and create an address peculiar to that wallet.
This address will be required to have all transactions done online. There are also offline wallets often called a cold-wallet. A cold-wallet is relatively safer to store your Bitcoin. However, it is required that the computer is highly secured from virus and intruders who could hack away your Bitcoin.
Having purchased or earned your Bitcoin, you can invest or simply store them in your wallet. Watch out for market trends and sell your Bitcoin in exchange for fiat currency of your choice to make a profit.
If this still sounds a bit confusing, don’t worry. Just keep reading, and we’ll walk you through each step of the process.
WHAT IS BITCOIN?
Bitcoin is a type of digital currency that is produced and held electronically. They are not issued as printed papers like the dollars, yen, euros, and pounds. They are increasingly being produced by people, businesses, and enterprises running computers all over the world using software that solves mathematical problems.
Bitcoin transactions are sent from persons to persons without a third party like the conventional centralized banking system. In other words, it operates on a decentralized system with no government, regulating body, company or individual having sole control over it. Hence, all transactions are peer to peer.
All transactions carried out are transparently. Copies of the electronic ledger are reserved across a distributed network of computers hosted on the web with no single point of failure. The technology behind this is Blockchain which is fast becoming well accepted worldwide.
The mining of Bitcoin is difficult, and as it stands, the demand for it is very high hence it’s rapidly increasing exchange rate. It is a currency which is only less than a decade, yet it has gained more relevance than the printed fiat currencies. This is because of the value it has created in such a short time of its existence.
Bitcoin uses the acronym BTC as its unit. Bitcoin and other digital currencies like Ethereum and The-Billion-Coin also fall in the monetary category known as cryptocurrencies. They are also based on mathematical proof.
What is Cryptocurrency?
Cryptocurrency is a general term used to describe digital currencies created to enable the medium of exchange using cryptography. This ensures the security of all transactions carried out as well as controls the transfers and creation of additional units. Bitcoin is the first ever decentralized cryptocurrency created.
This decentralized cryptocurrency is based on a software developer called Satoshi Nakamoto’s proposition. He proposed that an electronic payment system currency, independent of any central authority, transferable electronically with low transaction fee and ease be produced. His idea yielded results when Bitcoin was created in 2009. Today, the smallest units of Bitcoin are called the Satoshis.
Why is Bitcoin Trending – why is it so popular?
After a turbulent start of 2017, there was an increasing rise in the global cryptocurrency market and the market hit its stride in the early month of February. This increase rise gave reasons for strong optimism in the future of Bitcoin. These rises out-performed key market leaders such as S&P, DOW, etc. giving Bitcoin unusual popularity.
Bitcoin has also found an increase in its usage and value. Experts believe that it is because of the following reasons:
• It is believed to be safe and appreciative which has helped to grow its value.
• Payment methods involving high-risk fraud have drastically reduced to its barest minimum with its usage unlike those done through credit and debit cards.
• Some parts of the world where the no-VAT ruling is practiced, e.g., Europe, has also helped to increase its popularity.
• Another profound reason is its increasing acceptability all over the world for payment for goods and services via the web.
• The future of cryptocurrency is fast taking over from other online payment methods such as PayPal, credit and debit cards which has restrictions on usage. Some countries are not even allowed to use such means of online transactions.
With the popularity of Bitcoins across the globe, it is certain that the future looks bright for the digital currencies. More and more people, companies and agencies are starting to take a keen interest in this form of currency.
WHY USE/INVEST IN BITCOIN?
It is no longer news that those who invested early in Bitcoin are reaping from the value it has amassed. It is estimated that between the years 2011 to 2012, Bitcoin value increased by 300% and between August 2013 till November 2014, it increased above 400%. However, just recently, it has been down to around 34%. Investors and venture capital firms continue to see the need to bet on the cryptocurrency.
The simplest way to invest in Bitcoin is to buy some. Buying Bitcoin all around the world is simple. In the U.S. for instance, the most popular avenues to buy and sell Bitcoin are coinBase, bitstamp and Local Bitcoins.
Some of these avenues have links that connect a local bank account which enable easy transactions to be made.
There is also a local website which links buyers and sellers to provide a good deal offline. With these, you can be assured that the profit you have after one-year investment in Bitcoin will be great.
Why Bitcoin Over Another Cryptocurrency?
According to reports from FORBES, there is huge hype surrounding Bitcoin, cryptocurrency and the Blockchain technologies rivalling the dotcom bubble. A lot of printed money is being converted into the digital currency, and this trend doesn’t seem to be slowing down anytime soon.
The price of Bitcoin in the crypto market is far more valuable than other cryptocurrencies.
The popularity of Bitcoin over all other digital currencies has created more value and market for its usage. The most famous sites that use Bitcoin as a medium of exchange are:
• Pirate Bay
• Virgin Galactic
The crypto market today has attracted more money from other capital markets because of the popularity of the Bitcoin. A forex and stock market trader will find it easier to make money on the crypto market than all other volatile markets with very low return on Investment.
Bitcoin being the leading digital currency is a certain crypto market to venture into.
Benefits of Bitcoin
Bitcoin has a lot of benefits when compared to the printed money like the dollar and Euros. Below are the best benefits it has:
Interruptions by third-party do not exits
One of the most widely known benefits of the Bitcoin is that interruptions by banks, governments, and other financial intermediaries have no effect on Bitcoin transactions. The system exists as a peer to peer network, this creates a great degree of freedom to transact daily.
Users of Bitcoin can pay for their transactions made online with ease. Anywhere there is internet access in the world, users can carry out transactions. Purchasers never have to go to the bank or store to buy items. Also, the users’ accounts information is not a necessity to carry out a transaction.
Very low transaction fees
As stated earlier, due to non-intermediary between the buyer and sellers of products, transaction fees have been kept at the barest minimum. This will prove very useful to travellers and other major foreign exchangers.
Unlike the standard transfer system which involves a great of deal of fees and exchange cost, Bitcoin transactions only cost very low amounts.
Taxes levied by governments and other financial institutions are clearly averted since no intermediary is involved. This is because all the viable ways to implement taxation of Bitcoin which would have had a great impact on the transactions made are all eliminated.
Speed of Transaction
Transfer of Bitcoin over the internet is very fast; this quickly eliminates the inconvenience caused by authorization of the transaction made. The wait periods for every transaction is eliminated.
Bitcoin cannot be stolen
Owners of Bitcoin have a unique Blockchain address peculiar to them. These addresses can only be changed by their owners alone. No one can steal Bitcoin unless they have access to the user’s computer, and then send the Bitcoin to their own Blockchain address.
There is no way transactions made can be traced by other unauthorized persons unless the user publicizes their addresses. Therefore, there is a great privacy allotted to every unique address.
Concerns about Bitcoin
Bitcoin is the first decentralized digital currency. This lack of control by central authorities is the primary reason governments, and other financial authorities are worried about the crypto world. To understand this fear, it is important to know about governments and the conventionally printed currencies.
The term used to describe the conventionally printed currencies issued by the government is FIAT. Fiat currencies have unique value issued by the government. The fiat currencies are not backed up by tangible assets. This simply means that you cannot exchange fiat currency with tangible assets such as gold or silver from the governments that issue them. You can only do so with other entities that possess those assets.
Control of fiat currencies matters to the government because they use the central banks to issue or destroy money through what is known as ‘Monetary policy’ to create economic influence.
Governments also control the transfer of fiat currency enabling them to track currency movement. This defines who make profits from such currency movements and the levied taxes. It also helps trace criminal activities involving money laundering.
The government also uses fiscal policy to control money in circulation to stimulate investment and spending, generate jobs and to a greater extent avoid inflation and recession.
If Bitcoin and other digital currencies become well adopted, governments fear that the banking systems all over the world would become irrelevant and possibly extinct. Many workers would be laid off from their jobs and taxes, and the revenue the governments often gain from the banking industry would be no more.
Untraceable illicit transactions involving crime such as terrorism, money laundering, drug trafficking, prostitution, tax evasion and other subversive activity would increase.
Since digital currency cannot be held, it’s vital for users to have good storage ability. A computer is the means of storing Bitcoin, and if the users don’t have a good antivirus and backup system, they could lose their money.
WAYS TO MAKE MONEY WITH BITCOIN
With the stride Bitcoin has gained, the world of digital currency has been a key interest in the media. Being the first decentralized currency, it has achieved a good reputation all around the world.
There are several ways to venture into the crypto-world and make a good living with it. Below are few of the best ways to leverage Bitcoin.
Bitcoin mining is the process it takes to create more Bitcoin. It is a very complex task and hence usually not recommended for beginners who want to venture into the digital currency world. The process requires the use of highly sophisticated machines. These machines are very expensive and consume high rate of electricity to solve the mathematical algorithm involved.
Miners enable transactions to be carried out by sharing their Bitcoin network, allowing it to run smoothly. In exchange for this network’s availability, they are rewarded with new Bitcoin. This is where the small fee for transactions goes.
In the short years of Bitcoin’s existence in the digital world, it is no longer a lucrative business to mine Bitcoin from homes. This is because there is a paradigm shift from the small scale to a better large-scale mining.
This shift created an opportunity for miners all over the world to put their resources together to form a mining pool. Investments in the mining pool can create a fortune for the investors. As the resources are used together to share hashing power, each investor is rewarded according to his share contribution.
Some of the highly reputable mining pools are Slushpool, BTC China, BW Pool, Antpool, DiscusFish/P2Pool, BitFury, Eligus, and KnCMiner.
There are speculations that this Pool accounts for 56% of global Bitcoin miners. They also claim to be the largest cloud miners in the world. It was launched in 2013, and the co-founder Jihan Wu is the current CEO.
F2Pool is also known as discusFish because of its logo. It is owned by the Chinese and is operated by Wan Chun Mao Shihang. It accounts for 16.49% of the total Bitcoin generated.
Cloud mining is an alternative to the use of highly sophisticated mining machines. It involves the use of a remote data centre alongside shared processing power. This is a great opportunity for individual mining from home without having to handle mining machine or hardware.
Undoubtedly, the most reputable company running cloud mining of Bitcoin is Genesis Mining. Bitcoin mining is not an easy task. It could take a whole year to get a tangible fortune from it. However, it is often better to buy the cryptocurrency itself or engage in peer-to-peer lending than go into the mining investments.
Buy, Hold and Sell Bitcoins
This is one of the best ways to make money with Bitcoin. The steps to get started on this journey are first to obtain a Bitcoin wallet offered by Blockchain, coinbase, luno, xapo, localbitcoins, Bitquick, coincorner, and others. These serve as the means of sending and receiving Bitcoin, as well storing Bitcoin online. However, you could also store your Bitcoin offline using the cold wallet on a well-protected computer.
Once you have secured a wallet, the next step is to obtain the wallet address which will enable you to complete transactions. This address is peculiar to the wallet and should not be published. If it does get accidentally publicized, you could obtain another wallet address without having to waste time.
Next is to buy Bitcoin in bulk from local sellers or online via websites that allow such transactions. These sites link both buyers and sellers and create a market for them. Some wallets such as coinbase and luno give users the opportunity to link their bank details with these wallets. Here, users can directly buy and store their Bitcoin and then sell when the market price for Bitcoin gains a stronger stride against the dollar and other foreign currencies.
Microtask for Bitcoin
Since companies realized the ease of Bitcoin payment, they have adopted it as their best mode of payment. You can earn Bitcoins by completing online micro tasks which involve simply sending bulk emails, writing, filling out surveys, testing software, etc.
Some of the websites that reward micro tasks with Bitcoin are listed below:
Bitcoin reward: this enables microtasks workers to earn Bitcoin for downloading and testing apps, watching videos, filling out market research surveys and other minor tasks.
Crowdsourcing is a website, such as crowdflower. It has various group task to be done in exchange for Bitcoin and some other currencies. Workers carry out mini tasks involving bulk emails, application testing, surveys and other micro-tasks. The Crowdsourcing site can also be linked with clixense for more tasks
and with a better reward. Crowdsourcing enables workers to improve their skills based on the task to be done, and this gives badges to the workers as they progress.
Bitcoin get: this is another company that rewards their microtask worker with Bitcoin having carried out a satisfactory work for them. Others include Bituro, coinbucks, cointasker, Bitcoin Reddit, etc.
Day-Trading with Bitcoin
Lovers of financial markets such as FOREX and IQ option who trade on a daily basis have no idea what fortune awaits them in day-trading with Bitcoin. If they knew, they would get involved with the trend of daytrading in cryptocurrency.
Bitcoin trading is not a difficult task. It simply requires basic principles and strategies to understand the market trend. It involves buying into Bitcoin when the market trend is low and selling at a higher price to generate profit. It requires that the trader is familiar with the market price dynamics. And this can only be achieved when one is highly equipped with important information that drives the market.
It is very important to track Bitcoin news as often as it breaks when trading the digital currency. This will help you to understand the market runway. It guides you on how to protect yourself against transactions that you might come to regret. A trader should understand that investment decisions do not start with deposit and purchases, they start with education.
Market Trading in Bitcoin
There are several websites that allow you to trade your Bitcoin for fiat currencies (the conventional currency in print). One of such websites is localbitcoin.com. This website allows an individual trading option where a trader buys and sells their Bitcoin. To start with, sign up on the website and become a registered member.
Ensure you have Bitcoin you want to market and then place adverts regarding your market. Once a buyer or seller sees these adverts, they make a request either to buy or sell. A deal is done between the buyer and seller.
The Bitcoin transfer is made to the seller’s escrow. When payment is done and confirmed, the Bitcoin is released from the seller to the buyer. And a review which will spur the seller’s reputation can then be written.
Sell Goods and Services Using Bitcoin
This is another way to earn Bitcoin by selling goods such as clothes, gadgets, cars, homes, etc. Currently, there are a lot of websites that accept Bitcoins for goods sold. These are simple transactions done with fiat monetary system but are now also being complete with ease using Bitcoins.
There are also services one can venture into and be paid with Bitcoin. Microworks for instance and many other freelancer sites pay using Bitcoin. Some of such freelancer sites are coinality, coindesk, etc. Another website to join this trend is Fiverr.
Gambling Using Bitcoin
There are several sites where you can play some games, and the rewards are unusually gratifying. Some of the popular games are casino poker, dice, blackjack, slots, live dealers as offered by Fortunejack.com, space.casino is another hybrid site offering over 700 games, Dasiscasino.online, betchain, cryptogames, bitstarz, 1xbit, bitplutos, etc.
Sports betting sites that allow the use of Bitcoin has also emerged in this era. They include sportbet.io, bet365bitcoin, cloudbet, 1xbit, etc.
Ads placements remain one of the few ways to earn from the internet world today. Bloggers and other site owners use this to attract a large audience. Bitcoin faucet sites also place ads on their sites and reward their viewers who visit and spends time perusing their contents.
However, it is a very slow way to earn Bitcoin, but it is certainly rewarding to anyone that is new to the Bitcoin world and the entire world of crypto-currency because you can get started for free. Some sites with good reputations in this genre and that have consistently made payouts to their audience over a long period include BTCclicks, Moon Bitcoin, and Bitcoin Aliens.
Blogging is one of the popular ways people share information online. Micro-blogging is not a get rich quick scheme, however. As a matter of fact, it is a slow process. From the very onset of creating your blog site to setting up Adsense and growing your audience, as well as getting your audience to click on your ads is a gradual process.
But in a nutshell, it can be very rewarding and also very flexible. Putting in just a few hours per week is good enough to get you extra cash. Bitcoin blogging is no longer a difficult task. It is as easy as earning any other kind of money.
Some of the monetization strategy necessary to own a successful blog is to start a blog on a revenue sharing website. Bitlanders is one of those sites that will reward you in Bitcoin for your beneficial contributions on their sites. This is usually done by sharing information as a written blog posts, videos, and other content that helps to grow the sites. Some of the other sites that pay well include coinURL, BitMedia, and BitClix.
There are strategies to earning as a bitcoin blogger, just like the strategies used for blogging for fiat money. For example, if you place an ad that is worth $10 per click using fiat currency, placing another ad of $1 would reduce your earnings. Another example is that just as with strategic ads made for any other type of blog, an ad placed with 1000 Satoshi would be much less likely to offer a good return on investment (ROI) as 100,000 Satoshi. Having high-quality content on your ads is also vital to their success.
HOW TO GET STARTED WITH BITCOIN
Bitcoin Vocabulary You’ll Need to Know
• Address: The Bitcoin address is similar to the usual email address you are probably familiar with. It is generated on registration with a wallet you are creating. It combines alphabets with numbers. It is the single information needed to carry out a transaction, and it is peculiar to an individual.
• Bit: This is the common unit used to designate a subunit of a Bitcoin. Estimated 1000000 bit is equal to 1 Bitcoin. This unit is used as a small denomination in the Bitcoin world.
• Bitcoin: Note that this concept has two meanings. When it is capitalized, it is used to describe the concept of Bitcoin digital currency and the entire network of operations. Without capitalization, it is used to describe the unit of an account, e.g., 0.01 btc.
• Block: This is a record in the Blockchain that contains and confirms many waiting transactions. Approximately every 10 minutes, on an average, a new block for a transaction is added to the Blockchain through mining activities.
• Blockchain: Blockchain is a public ledger or record of Bitcoin transactions in sequential order. It is shared between all Bitcoin users. It is used to verify the stability of Bitcoin transactions and to prevent double spending.
• BTC: This is a common unit used to represent one Bitcoin.
• Confirmation: This represents a single transaction that has been processed by the network and is not likely be reversed. Transactions are confirmed when they have been included in a block and subsequent blocks. It is worth noting that a single confirmation is secured for low-value transactions. However, when a larger amount is being conducted, it makes more sense to wait for more than 8 confirmations. This will reduce the possibility of reversal.
• Cryptography: This is the branch of mathematics which aids the creation of mathematical proofs that provide high levels of security. State of the art banking and commerce have begun using cryptography. In the world of digital currency, it helps to make sure that unauthorized users are prevented from spending from another user’s wallet.
• Double Spend: This refers to instances where some dubious users try to spend their Bitcoins on two different recipients simultaneously. Blockchain, which is highly secured with cryptography, will create a consensus on the network regarding which of the two transactions will be confirmed and considered valid while invalidating the other.
• Hash Rate: This is the unit for measuring the processing power of the Bitcoin network. To secure itself, the Bitcoin network creates thorough mathematical operations. So, when the network reaches a hash rate of 10 Th/s, it culminates 10 trillion calculations per second. This means that when the hash rate is high, the network creates a more secure connection.
• Mining: This is a process that involves making computer hardware perform mathematical calculations for the Bitcoin network to confirm transactions and secure it. Miners earn their reward from the small transaction fees incurred per transaction confirmed and the new Bitcoins created. Mining is a competitive market and rewards are divided according to how many calculations are correctly completed.
• P2P: The acronym means Peer-to-Peer. It refers to systems that work like an organized collective by allowing individuals to interact directly with others without an intermediary. Here, one user broadcasts the transactions of other users without a third party involved.
• Private Key: This is a secret piece of data that affirms your qualification to spend Bitcoins from a specified wallet through a cryptographic signature. This key is stored on the computer for cold wallet users and on remote servers for online wallets users. This key should be kept safe from unauthorized users.
• Signature: This is a mathematical mechanism that gives someone proof of ownership to a wallet. In Bitcoin, private key and signature are linked together by an extremely complicated mechanism to ensure security.
• Wallet: Bitcoin wallet is loosely equivalent to the physical wallet or bank account on the Bitcoin network. This wallet is secured by private key and signature ensuring ownership to a peculiar user. The private key allows users to spend the Bitcoins allocated to it in the Blockchain. Each Bitcoin wallet can show you the total balance of all your Bitcoins. It controls and lets users pay a specified amount to another user.
Steps to Set up a Bitcoin Account and Get a Wallet
A Bitcoin wallet is basically equivalent to the physical wallet or bank account. There are two main types of wallet: (a) Software wallet is the one you install on your computer or phone of a different operating system. You are in complete control of the safety and maintenance of this wallet. (b) A web wallet or hosted wallet is one that is hosted by a third party. They are often much easier to use, but you must have trust in the provider for the maintenance and security of your Bitcoins.
For beginners, five main wallets are recommended. These are:
The above-listed web wallets have all the full features that make it excellent for beginners. They also have the software you can install on your devices on whatever platform, such as Android, Blackberry, IOS, and even Windows and Linux.
Log on to
Hit the sign-up button
Enter your email, a combination of numbers, alphabets and special characters to make it strong
Enter your preferred password
Confirm your password
Take time to read the terms and conditions of service and ensure you fully understand it
Click on the box to confirm you have truly understood the terms of service
Click continue. This will to take you to your dashboard. Explore the contents of your dashboard using the buttons you see there.
Click on Get started. This will take you to your wallet information:
a. Wallet I.D: a combination of numbers, special characters, and alphabets.
b. Ensure you save it. On your next long in, use your user I.D with your password to log into your dashboard again. Note: you cannot login with your email.
Log into your email and verify your mail. In case you forget your Wallet I.D, don’t worry because they are backed up in your mail.
Once your verification reads ‘Success,’ you are good to go with the next step of purchasing of your first Bitcoin to fund your wallet.
Best Practices/Pros and Cons of Bitcoins
The Potential of Bitcoins
In the short time since Bitcoin was introduced, its value has increased greatly, and it may be helpful to compare Bitcoins to other electronic payment methods.
There were increased transactions volumes in the fiscal year ending October 2013. In the U.S. for instance, over 8 billion dollars in transactions were made with Bitcoins. Contrastingly, The Bank of America, Western Union, PayPal, Automated Clearing House (ACH) Network, and Fedwire uniformly processed 132 million transactions for a cumulative sum of 599 trillion dollars in 2012 as reported by the United States Department of Treasury in November 2013.
Bitcoins have a long way to go before being overtaken by alternative digital currencies as a means of transactions. However, below are the major advantages it provides to the users:
Protection from Payment Fraud: Bitcoins are a digital currency, and as such, cannot be faked or reversed arbitrarily by the sender, as often seen with a credit card.
Reduced Possibility of Identity Theft: When you hand in your credit or debit card to a business, you give him full access to your credit line. The operations of credit cards are ‘pull’ basis, where the store initiates the payment and pulls the designated amount from your account. However, Bitcoin operates on ‘push’ mechanism that allows the Bitcoins holder to send the exact amount to the merchant with no further information made available to them.
Lower Transaction Fees: There are usually no transaction fees for Bitcoins exchanges because the miners who provide a network for the smooth running of all transactions are compensated by the network with newly issued Bitcoins. Even though there are no transaction fees, many still notice that most users will engage a third-party service, like the Blockchain and Coinbase which are rewarded minimally for the security and maintenance they provide.
Access to Inaccessible Markets: There are great populations of the world who are restricted from some of the services provided by some credit card issuers like PayPal. These individuals mostly hail from Africa and Asian countries, although they have access to the internet either through the mobile phones or computers.
With the advent of Bitcoins, access to unexplored markets is beginning to go into full swing. The most recent is Kenya’s M-PESA system, a mobile phone-based money transfer and microfinancing service announcing a Bitcoin device, with one in every three residents of Kenya owning a Bitcoin wallet.
Limitations and Risks of Bitcoins
Bitcoin isn’t loved by all. In fact, cryptocurrency has its share of critics. As with any new venture of this magnitude, there are restrictions and hazards involved that will need to be ironed out as the trend continues to evolve. Some of the potential limitations are given below.
High Risk of Loss
Some of the reason to be cautious about Bitcoins as rightly identified by Timothy B. Lee, a scholar at the Cato Institute and a regular contributor to Forbes.com, include:
• Lack of security: Human error could occur at any time, your password forgotten, technical failure of the hard drive and fraud and if these happen you could stand the chance of losing your Bitcoins.
• Regulations could increase without much warning, and its value depreciate. This is because Bitcoins, with no traceable transactions, could be used to siphon fiat currency, resulting in a massive money laundering scheme.
• Limited Scaling: The design of the system limits the number and speed of transaction processed, making it unlikely that Bitcoins will replace conventional credit card transactions.
Illegal Financial Activities
Blockomics reports that, in mid-May, a countless number of people across the world were attacked by a malware program that locked their computers and demanded money to unlock them. The attackers received thousands of dollars in the form of Bitcoins.
The very fact that Bitcoin is anonymous and easy makes it a favorite scheme for criminals to siphon money and go untraced. Some believe cryptocurrency will alone make it easier for criminals to create new ways of scamming innocent people.
Bitcoin users can be subjected to theft, scams, and fraud because the structure lacks stringent regulations. The very nature of Bitcoin makes it very difficult to prevent fraud and even retrieve stolen Bitcoins because the system does not revert transactions after confirmations have been completed. Also, drug traffickers and money launders have found solace in the dark web using Bitcoin to carry out their subverted activities.
However, although there is no name attached to the Bitcoin wallets, the wallets and transactions made between wallets are viewable to the public. This gives law enforcement agency the ability to be able to track transactions and be able to make it easier to trace Bitcoins back to its owners.
The excessive volatility of Bitcoin is a major problem in the cryptocurrency world, due to its lack of liquidity, which has many investors concerned. This has called for concern by many investors. Some experts believe that the volatile nature of Bitcoins may result in problems that will make it retain a store of wealth, unlike gold.
CNBC reports that the digital currency is currently trading at $3883.76 per Bitcoin. From the beginning of 2017, its value has risen by 298% according to coinDesk, but it also fell from a record high of $4991 at the start of September to as low as $2989 by the middle of the month, 40% loss.
Bitcoin liquidity problems are the major reason investors and potential investors are being continually deterred from venturing into the market. Some market experts suggest that more funds would be invested in Bitcoin if there was an exchange-traded fund (ETF) which held the digital currency.
Even with the concern surrounding them, digital currencies are no doubt here to stay. Bitcoin remains the trailblazer in the world of cryptocurrencies, and it has a huge fortune potential if you know the right market strategies. Understanding these marketing strategies is paramount to success, and therefore, you must gain a comprehensive education if you hope to make great wealth from it.
Watch for market trends and make quick, decisive moves when it is favourable to buy or sell your Bitcoins. Below are outlined some of the core points you need to remember that will guide you on your Bitcoin journey. They are grouped into the following three areas.
Ways in which you can earn Bitcoins with zero loss per day without starting your investment by purchasing and selling Bitcoins. They include:
Cloud mining of Bitcoins
Benefits of Bitcoins that can be accrued to users. These are:
Ease of transactions
Protection from identity theft
No intermediary obstruction
Devoid of taxation and much more
Tips to help guard you against losing your fortune to fraudsters and criminals. These are:
Never disclose your wallet I.D and password to anyone
Ensure that you have sufficient storage capacity and security for your computer
Ensure that you have a solid antivirus security to prevent hackers from looting your Bitcoins.