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What is

What is Stock to flow model? Bitcoin goes to $ 1 million!

What is Stock to flow?

The stock-to-flow model is generally used for natural sources, such as precious stones. In short, this model shows the connection between the total supply of this resource, versus the annual quantity that enters the market. We can compare it with the relation of “scarcity”, or “supply and demand”. The greater the stock-to-flow, the less resource enters the market each year when compared to the maximum supply. Consequently, the more valuable the asset becomes as a store of value.

But calm down, I’ll explain it better! This model is super important for anyone who invests in Bitcoin in the long term. What’s more, for those who want to understand why we say that one day, Bitcoin will cost $ 1 MILLION!

Bitcoin is a store of value

The stock-to-flow model treats Bitcoin as commodities, that is: as gold or silver. As it is very difficult to increase the amount of precious stones available in nature and on the market, this type of asset retains value over time because they are scarce (rare). This means that their price only increases as they become increasingly rare! For this type of commoditie, we call it “Store of Value (SoV)”.

Bitcoin is the first scarce digital asset that exists! That’s because as you will read below, there is a limited amount of BTC currencies that can exist.

Stock-to-flow model in practice

Let’s abbreviate the word stock-to-flow for S2F, which is how you can find it on the Internet as well. The best way to explain it is to show, right away, what kind of model this is.

Below, we have the chart model that shows us the ratio of total supply x quantity entering the market. You can follow here on this site, which is the official site, inclusive! Let’s interpret it in parts:

Stock-to-flow model, from lookintobitcoin.com
Modelo stock-to-flow. Source: lookintobitcoin.com

S2F chart elements

Follow me here with what each piece of this graph represents. Read here and follow the graph there, ok?

Left sidebar, written: BTC PRICE (USD)

On this axis, we have the variation of Bitcoin in dollars, which ranges from $ 0.1 to $ 1,000,000. Today, as I write this text, it is 01/05/21 and we are there with two price markings: the colored line and the dark red line, which hit exactly the same price: US $ 31,800.

Right sidebar (colored), written: DAYS UNTIL NEXT HALVING

Here the things is going crazy, because you need to know what Bitcoin Halving is. I will migrate a text I had here on the website explaining what this event means on the Bitcoin Blockchain. But in short, just to give a level of understanding in this text, I will give an explanation:

Bitcoin halving, 174403 blocks left for the next halving
What is Bitcoin Halving?

Halving is an event scheduled to happen every 4 years or so. This event is automatic, happens automatically in the Bitcoin Blockchain and was designed to occur since the Genesis block. It turns out that for every block of the Blockchain that is mined, miners earn a reward in BTC. And every 4 years, when Halving happens, that reward is cut in half.

  • By 2009, the reward was 50 BTC per block mined;
  • In 2012, when the first Halvening took place, the reward dropped to 25 BTC / block;
  • In 2016, in the 2nd halving, we decreased by 12.5 BTC / block;
  • And in the 3rd halving, now in May 2020, the reward dropped to 6.25 BTC / mined block.
Halving and Stock-to-flow model

“Okay, but what does the reward for mining have to do with the price of Bitcoin? And with stock-to-flow?”

Hey … Those who put Bitcoin coins on the market are the miners. Just as gold is found in mines by miners before going to the store!

There are about 3 million Bitcoin coins to be mined. After that, mining will end!

If mining is getting less Bitcoins, then there are fewer coins entering the market. And that, one day, will be zero! After all, the maximum supply of BTC on the market is 21 million coins. For you to have an idea, we have already mined more than 18,500 BTC. We are almost done with mining this cryptocurrency!

THEREFORE … this colorful bar in the Stock-to-flow model is a legend for you to see when we are approaching the next event.

Dark red line in the middle of the chart

This line is the price predicted that the stock-to-flow model makes. This line is drawn according to:

  • The time for the next halvening;
  • The total amount of Bitcoins that may exist (21 million);
  • And the amount of Bitcoin coins that have already been mined and are in circulation.

With this data, it is possible to make this price prediction. Note that by the end of 2021, Bitcoin is predicted to hit $ 50,000 (today, we’re at $ 31,800).

Colored line in the middle of the Stock-to-flow chart

This line is the actual Bitcoin quote. So the red one is what was predicted and the colored one, in addition to showing how long for the next halvening, also shows the true values that Bitcoin reached in a given period.

So if you look over there in December 2017, you’ll see that the prediction (red line) was that Bitcoin would cost $ 5,500. But in fact, “Digital Gold” came to hit, the historic top at the time, the $ 19,000! The colored line fills the red line as we arrive at the dates.

Stock to flow model: price prediction x real price

Can the chart go wrong? Is obvious! I just gave an example in which the forecast was quite different from the real one. Therefore, we have the last element of divergence that I comment on in the next topic.

See marked in black on the side as the real value (colored) was different from the estimated (red line). And in purple, we have the divergence between the predicted and the real.

Red line on the bottom horizontal axis of the graph

It is the variation between what the Stock-to-flow model predicted and the true quote that Bitcoin reached. Although there are divergences, note that over time, the price of Bitcoin has indeed kept pace with forecasts. Now oscillating for less, now for more, but always following the forecast.

The more the real price deviates from the forecast, the greater the oscillations in that horizontal line of the graph, which I marked up there in purple.

Who created the Stock-to-flow model for Bitcoin?

Look, guys, the “Stock to flow model” has been around for a long time! However, the S2F chart adapted to Bitcoin, was created by a user called Plan B, who does not know much about him, as he surfs anonymously, presenting only this nickname “Plan B“.

However, the creator of the entire website (www.lookintobitcoin.com), which has several live charts to devise Bitcoin trading and hodling strategies, was the economist, trader, investor and researcher Philip Swift. In the image below, see that there is more than one type of chart to analyze the price of Bitcoin!

Types of charts available on the Lookintobitcoin.com website

Bitcoin price could reach $ 1 million

If you have doubts about this, know that you don’t have to! The price of Bitcoin can reach US $ 1 million! And that is why so many people buy Bitcoins for HODL, which is to keep for a long time. Look at the graph that by March 2021, we can already have Bitcoin for more than $ 55,500!

But now it’s up to you: homework to see if you have learned to read this chart correctly or not! I’m going to ask you two questions and answer them here in the comments or on social media, ok?

  1. According to the Stock to Flow (S2F) chart, what is the predicted price for Bitcoin in December of 2021?
  2. And in what month and year will Bitcoin cost $ 1 million?

Comment here in the text or leave it on the social networks that I want to see if you learned to read this graphic or not!

A super virtual kiss in each one of you who have read this far! ♥

JG

Categorias
Carteiras/ Wallets What is

Crypto wallet: what’s it, what is it for and how to use it?

A crypto wallet is a wallet where you store, receive and transfer your Bitcoins and altcoins. It is made up of a private key that only the owner can know. And one or more public keys, which can be shared. This wallet can be found as hardware, software or paper […]

If you read the post “What is Bitcoin?“, maybe you are now wondering how to use it. The answer is: through a cryptocurrency wallet!

Wix migration to WordPress

We are migrating the Wix site to WordPress for a better experience for our readers. So be patient with poorly formatted texts without images or with crooked images! We will leave everything tidy for you! 😉

What is a crypto wallet?

The cryptocurrency wallet is a wallet where you store, receive and transfer your Bitcoins and altcoins. It is made up of a private key that only the owner can know. And one or more public keys, which can be shared. This wallet can be found as hardware, software or paper. Each model has its usability, but in the end, the mechanism is the same.

I need to highlight here at the beginning of the text that:

  • If you are going to send Bitcoins, send only to a Bitcoin wallet;
  • If you are sending Ethereum, send only to Ethereum wallet;
  • Never send tokens or cryptocurrencies to a wallet that belongs to another Blockchain;
  • If you send Bitcoin to a Litecoin wallet, for example, you will lose all your coins!
Black leather wallet with Bitcoin coins sticking out of it to illustrate a cryptocurrency wallet

How does a Bitcoin wallet work?

The wallet is a way to interact with Blockchain. That is, it is the “bridges” between us and the Blockchain. It consists of a private key and a public key. The combination of these keys reveals the exact location on the Blockchain where the cryptocurrencies or token are.

Private key of a digital currency wallet

The private key of a crypto wallet is the primary key. As if it were the “password” to be able to access the wallet. So it must be a secret that only the owner knows. Anyone with access to the private key, will be able to locate the wallet and transfer the funds to other person.

🚨 Granny WARNING

Do not write down your private key on the computer. Not in an online notepad or in your email box. Much less smartphone apps. Anything that can connect to the Internet can be attacked and stolen! So let go the laziness and write down your private key on paper and keep it in secret very well!

The private key is unique for each wallet and is an alphanumeric code that looks like this:

Private key represented by a secret lock.

e9873D79c6D87DC0FB6a5778633389f4453213303dA61F20Bd67Fc233aA33262

Remember that in the text “What is Blockchain?” I said that before data is written on Blockchain, it needs to be validated? And that this validation occurs through mathematical calculations? It is from this sequence of numbers and letters that your wallet gets the ability to send your Bitcoins to other people. After those calculations, your transaction is validated.

You can also think of your private key as the secret coordinates for locating your Bitcoins. In other words, anyone who knows your private key has complete control over the cryptocurrencies contained there!

Simulation of a key opening the Blockchain, just like the private key of a wallet can find the location of Bitcoins and open the cryptocurrency wallet

What is the private key for?

“Jessica, when am I going to use the private key?”

Well, now that you understand what a private key is, I’ll tell you when you’re going to use it. You understand that you open your wallet with it, right? Anywhere in the world, on any device.

Let’s suppose you have a wallet on your smartphone, which, like me, uses Coinomi, for example. And then, on a beautiful sunny day, your cell phone falls on the toilet (it happens right? 🤷🏻‍♀️). Even more when you are taking that beer on Friday and forget your cell phone on the bar table.

Anyway, lost your smartphone? And your cryptocurrency fortune in the wallet? Lost all your fortune? Didn’t your parents warn you that this Bitcoin business was a bubble? They told you!

Lost your cell phone and now do you lose wallet cryptocurrencies too? How to recover?

Just as Bitcoin is not a bubble, you don’t lose your crypto just because you lost your device! That is, as long as you write down your private key!

In this case, just insert your private key into another wallet, from any device and wait a few minutes. There, your funds will be there again!

The private key is also used to generate your wallet address, which we will now see as the public key.

Crypto wallet address or public key

This address is something that you share with people who want to send you Bitcoins. It’s like your deposit account.

The wallet address is very similar to the private key. But it should not be confused! It is also an alphanumeric address and is usually smaller than the private key. It will look like this (below the QR code):

Binance, the largest exchange in the world. How to find the wallet address

This address is the address of my Binance account. And see that it’s okay to share this public key here on the site. The most that will happen is that you look at my transactions or send me Bitcoins 💁‍♀️

These wallet addresses are generated from the private key. However, there is no way to find your private key just by looking at a wallet address.

In fact, it is often difficult for us to find our own private key. Good! So we don’t run the risk of sending the private key instead of the address!

What is an crypto wallet for?

When I talk about Bitcoin wallets, cryptocurrency wallets, altcoins, virtual or digital currencies, I’m talking about the same thing. After all, the wallet mechanism will be the same for any cryptocurrency!

In short, the main function of the wallet is:

  • Create one or more public addresses;
  • Crypto storage;
  • Send and receive cryptocurrencies by combining and using a private key with a public key (wallet address).

In other words, the cryptocurrency wallet automates the complex cryptography of Bitcoin and other altcoins, for you! That is, it facilitates the use of Blockchain, transforming the computer language into something that humans can understand.

In this tutorial on Coinomi, I explain step by step how to create the wallet, receive crypto, store and send them. So you will see in practice everything I just said here. I even think it should be a text to read along with this one, lol

What is a Hierarchical Deterministic wallet?

Well, let’s agree that having to write down that huge alphanumeric address for your private key is a pain, right? A little letter, an “A” that you miss there… you’re lost! The code must be IDENTICAL!

Also, what if you don’t want to write down the private key but rather memorize it? Think about it, then no one can steal you!

GIF representing the memorization of the private key of a cryptocurrency wallet (brain wallet)

What is the cryptocurrency wallet seed?

As Bitcoin wallets evolved, HD (hierarchical deterministic) wallets were created. HD wallets turn the private key into a string of words. This sequence of words is known as “seed”. Which is just a mnemonic phrase.

“Mne… what?!”

Mnemonic! It is a phrase created with a set of memorization techniques. Exactly to make it easier for you to remember! This seed (wallet seed) is a series of common words that you can memorize instead of the confidential, long and confusing alphanumeric key.

If you’ve tried to create a wallet, you’ve certainly noticed that you’re always asked to save at least 12 random words.

Example of a wallet seed. What is the seed? HD Hierarchical deterministic wallet

Hierarchical Deterministic cryptocurrency wallet addresses

An HD wallet can create many public addresses in the same seed. So even if you have 10 public addresses, all Bitcoins will be within the same private key.

In particular, I love being able to do this division within the portfolio. For example, I create an address where I only store cryptocurrencies that I receive for payment from my customers. At another address, I place virtual currencies that I am doing HODL (I explain this term in this text). In another portfolio, I leave the crypts that will be destined for some project and so on.

Ultimately, all cryptocurrencies are within the same wallet. Just use my seed to open it.

What is an HD (Hierarchical Deterministic wallet) wallet. Private key generates several public keys.

Different types of wallets

Although the mechanism of Bitcoin wallets is similar, there are several types of wallets. I’m creating a unique post for each type of wallet – and a tutorial on security tips as well. Soon, you can click on the links to see new content.

9 types of cryptocurrency wallets

  • SPV – simple payment verification;
  • Hot wallets;
  • Cold wallets;
  • Desktop wallets;
  • Mobile wallets;
  • Paper wallets;
  • Brain wallet;
  • Hardware wallets;
  • Multi-signature wallets.

Soon we will have a post here explaining how to choose the right type of wallet for each profile and situation.

If you have any questions about your cryptocurrency wallet, contact us on social media or right here, in the comments.

This post was written with great love in 2017 and updated with fresh content for you! <3

JG

Categorias
Blockchain What is

What is Blockchain? Explaining this technology!

Hello, dear reader! In today’s text, I will answer the question: what is Blockchain?

Blockchain is a worldwide ledger, distributed, trustworthy and immutable. It serves to record data and transactions, track assets and execute smart contracts. The records are […]

Wix migration to WordPress

We are migrating from Wix to WordPress for a better experience for our readers. So be patient with poorly formatted texts, without images or links.

What is Blockchain?

Blockchain is a worldwide ledger, distributed, transparent and immutable. It serves to record data and transactions, track assets and execute smart contracts. Records are made in chronological order, forming a chain of blocks. And that’s where the name Blockchain comes from: block chain!

Blockchain is the mother of Bitcoin and all Altcoins. It exists without Bitcoin, however, Bitcoin does not exist without Blockchain. Got it? If you don’t know what Bitcoin is, you can understand here: “What is Bitcoin? Complete guide 2020“.

Blockchain is a worldwide ledger, distributed, transparent and immutable. It serves to record data and transactions, track assets and execute smart contracts. Records are made in chronological order, forming blocks. And that's where the name Blockchain comes from: block chain

Explaining Blockchain

Have you seen a ledger? It is a notebook, where the most diverse types of records are made. Then you can have a ledger for several things, such as:

  • Employee timesheet;
  • Entry and exit of people in one place;
  • Cash inflows and outflows;
  • Product withdrawals in a store;
  • Registration of orders; etc.

It should be noted that these records are made in order of time. That is, in the first line, there is the first record. In line 2, the second record. So on.

Blockchain is a worldwide ledger, distributed, transparent and immutable. It serves to record data and transactions, track assets and execute smart contracts. Records are made in chronological order, forming blocks. And that's where the name Blockchain comes from: block chain

Blockchain is a global ledger

I am comparing it with a handwritten ledger, because after registering, there is no way to delete or change the registration. Unless you corrupt it.

Blockchain works just like the ledger, only virtual. However, it is impossible to change a record. It is immutable, incorruptible! There is no way to counterfeit or hacker the Blockchain.

Before being written on the Blockchain, the data has to be validated. This validation takes place through various calculations. So, you need a computer that stays with that mission. It does a lot of calculations to prove that the transaction is true. Only after validation, that registration is made.

That’s why we say that Blockchain is trustworthy, so much so that its nickname is “trust protocol”. Everything that is registered there, is true! Anyone in the world can read and check the Blockchain, as it is distributed to everyone!

Characteristics of the Trust Protocol

  • Decentralized, that is, no one controls or is its “owner”;
  • Distributed, then each user has a copy of the ledger;
  • Protected by advanced encryption. What prevents data and records from being deleted, revised or modified;
  • Trustworthy;
  • Transparency;
  • Maintains the privacy of users.
Blockchain is a worldwide ledger, distributed, transparent and immutable. It serves to record data and transactions, track assets and execute smart contracts. Records are made in chronological order, forming blocks. And that's where the name Blockchain comes from: block chain

Remember that each cryptocurrency has its own Blockchain. That is, the Ethereum currency has its own Blockchain, which is different from Bitcoin. I’m not talking about tokens here, just cryptocurrencies.

That is, there are many Blockchains, but each one has a specific cryptocurrency.

How does Blockchain works?

Each block is like a ledger sheet. When you are finished making records on a sheet, you need to start a new sheet. In Blockchain, each block is as if it were a part of that ledger. Only at the end of each block, a signature is required.

This signature places the date, time and the block number. Ensuring that it will be attached to the previous block. At the same time, it ensures that the next block will be attached to it. This keeps each block in its respective place.

Block chain example

To explain the chain of blocks, let’s use the example of the train below.

Genesis block

Every Blockchain has its genesis block. This is where the rules of the system are written. On our train, this block is responsible for loading all other blocks. In addition to defining the direction they are going. In this block there is information such as:

  • Maximum amount of cryptocurrencies that will be issued in this system;
  • What is the reward for mining each block;
  • The code;
  • Functionalities;
  • How will it work;
  • And other more complex parameters.
Block chain. Genesis Block, hash and transactions.

Blocks

After the source block, comes the first block, block 1. The first transactions will be written to it. And when all the space is filled, this block will be closed and signed.

Hash

The hash is an encrypted key, but for us, it is enough to know that it is the signature that encloses a block. It is the last information for each block, as it is only signed when it is complete. This signature links this new block to the previous and the next block. Some of the information it contains in a hash:

  • Date and time;
  • How many transactions are validated in the block;
  • Current and next block number.

Block being written

There is a wagonn that has not yet been attached to the train. This wagon represents the block that is currently being used. It is the incomplete block, where transactions are still being recorded.

When all the space in this block is filled, it will then be signed with the hash and then yes, it will be attached to the Blockchain. In our example, it represents the future block 3.

Decentralized ledger

When we talk about digital currency technology, we always mention the terms:

  • Decentralized;
  • Distributed.

Now let’s explain what they mean. See the image below, where we have 3 different types of systems.

Difference between centralized, decentralized and distributed ledger, network, system or social media.

Centralized

In a network that is centralized, we have an “owner” of the network. That is, all information and data are passed through the owner. And only after this mediation, they are distributed to other users.

A bank’s system, for example, is centralized. After all, you have your account inside, but the transactions go through the owner. That may or may not refuse or reverse its operations.

What is decentralized Blockchain?

In short, it is the opposite of the first. It has several aggregation centers, but which distribute the flow of information and data. It does not have an owner. Data goes through these centers and everyone’s ledger is updated simultaneously.

Distributed

In a distributed network, in addition to being decentralized, each user on the network is a node. And each node has a copy of the ledger. Each user (or node) is like a center in that system. In this way, everyone owns it. And each user is their own Blockchain infrastructure.

If a node enters the network, the information is automatically copied and delivered to it. And if another node leaves, all other users already have a copy of all the shared data. This is all excellent so that there is no point of failure in the network.

Advantages of Blockchain

Now that you’ve understood what Blockchain is

Let’s talk about the advantages of using it and what can it bring us to improve?

Advantages of Blockchain
  • There is no intermediary in negotiations between two parties;
  • Users have complete control over their data and transactions;
  • All transactions are executed as the protocol determines, eliminating the need for supervision;
  • The cost of a transaction is less, as fees are not necessary for an intermediary or a regulatory entity;
  • Resistance to attacks: the network is distributed, so the data is protected and copied on each node;
  • Transactions must be validated, therefore, all information is complete, true, accurate and is always available to network users;
  • Clean and organized environment: within a blockchain, there is only one database, where everything is organized in chronological order with no chance of frauds;
  • There will still be the use of Blockchain in an incredible way and environments, as there are a multitude of applications of this technology in real life, since any document or asset can be translated into code and inserted in the ledger.

Challenges of using Blockchain

Not everything is a bed of roses, dear reader. Blockchain is the future and you need to accept that. There is no escape. But we still have a series of challenges and obstacles to achieving this reality.

Challenges of using Blockchain

Main Challenges of Blockchain Deployment

  • As it is a new technology, there are challenges to reduce the time of transactions and data validation. In addition, the limit of data inserted in a blockchain is fundamental for its use to be widely accepted;
  • Although it helps to save time and money between transactions, there is a high initial cost for its implementation;
  • As there is no regulatory entity, nor third parties supervising the network, there may be great resistance from banks and other financial entities to accept the global use of Blockchain;
  • Although it is one of the most secure systems, with advanced encryption and inability to track information, there are still cybersecurity issues that must be resolved and enforced before the world population trusts their data on the network;
  • Mining, or validating network data, requires great computational power and electricity consumption. Which shows us a new environmental threat and separation from those who have technical and computational resources (miners) from ordinary users.
  • The technology behind Blockchain is very different from the reality in the world today. For it to become fully implemented, it would be necessary to adapt all the systems in the world. That is, for Blockchain to be adopted, there would be a need for a global transition period.
  • In addition to a system transition period, a revolution in culture would also be necessary. Breaking paradigms. It is a completely decentralized service, where the participation of each node would be essential.

A revolução já começou!

On these last 2 points of challenges, I say: it is already happening. So, read the article: “Do you know what the future of Bitcoin is?“. And you will understand that that vision that we had of digital currencies for the future, is already happening!


Did you already know Blockchain? If so, do you believe in its use globally, as common as we use the Internet today?

If you still didn’t know what Blockchain is, did you have any questions? What did you think of this explanatory article?

Leave your opinion here in the comments or on our social media! And don’t forget: share with your colleague who still thinks Bitcoin is a bubble! 🤦🏻‍♀️🙄

This article was written with a lot of love and devotion! ❤️

JG

Categorias
Cryptocurrencies What is

What is Bitcoin? Complete guide 2020

In this text, we will answer some questions, such as: what is Bitcoin? What is Bitcoin for? Is Bitcoin a bubble? Where did Bitcoin come from?

Hello guys! We are migrating our website from Wix to WordPress, so there are still some links missing, but be patient that everything will be tidy for you! ;)

WHAT IS BITCOIN?

Also called “Digital Gold”, Bitcoin is a decentralized virtual currency. First of all, Bitcoin is for peer to peer transactions. Therefore, you do not need a mediator, such as a government or bank to function. As Bitcoin technology works by cryptography, this type of digital currency has become known as cryptocurrency. Bitcoin’s acronym is BTC or XTB!

Bitcoin was created in 2008 by a person or group of people, called Satoshi Nakamoto. To this day, nobody knows who they are, it is a mystery!

What is virtual currency and altcoins?

Did you know that there is not just BTC? However, BTC is the first in this universe. Furthermore, it is the digital currency with the largest market presence so far! In this way, we give more prominence to Bitcoin.

What is Bitcoin? What is Bitcoin for? Guide updated. Bitcoin origin. What is the difference between Bitcoin, cryptocurrencies and altcoin? What is Blockchain? Bitcoin as a form of payment. Bitcoin investment. Holding Bitcoin HODL investment in Bitcoin in the long run. Bitcoin trading Digital money era, will Bitcoin replace money? Decentralization, peer-to-peer. The Internet is decentralized. Bitcoin's ledger. What does Bitcoin mean to the world?

That is, when we talk about crypto, we talk about Bitcoin and all other cryptocurrencies. You can tell that Bitcoin is a crypto, but not all crypto is Bitcoin.

You may also see the term “altcoin”. Altcoins are the alternative currencies. So all currencies other than BTC are called altcoins.

What is Bitcoin? What is Bitcoin for? Guide updated. Bitcoin origin. What is the difference between Bitcoin, cryptocurrencies and altcoin? What is Blockchain? Bitcoin as a form of payment. Bitcoin investment. Holding Bitcoin HODL investment in Bitcoin in the long run. Bitcoin trading Digital money era, will Bitcoin replace money? Decentralization, peer-to-peer. The Internet is decentralized. Bitcoin's ledger. What does Bitcoin mean to the world?

WHAT IS THE ORIGIN OF BITCOIN?

“OK, I understand what this Bitcoin is. But where did it come from?”

BTC grew out of Blockchain technology. We have a complete post on this topic and I recommend reading: “What is Blockchain?“.

What is Blockchain?

In short, Blockchain is a global ledger. Everything that happens on the BTC network is written on the Blockchain. These records are made from the oldest to the newest.

One transaction after another, composing blocks in the network. And that is where the name “Blockchain” comes from: it is a chain of blocks containing data and transactions.

And who compiles all this data? The miners! They are the ones who use super computers that execute and validate each transaction, having the network currency as a prize. For example:

  • The Bitcoin Blockchain gives prizes in BTC (Bitcoin currency);
  • Ethereum’s Blockchain gives awards in ETH (Ethereum currency);
  • And so on.
What is Blockchain? Global point-to-point technology ledger

WHAT IS BTC FOR?

Bitcoin serves 2 basic functions:

  • Payments; and
  • To invest or trading.

Bitcoin as payment

You can accept BTC as payment for anything you want, such as:

  • To receive for a debt;
  • Receive for a service;
  • Payment for products sold in physical or virtual store;
  • Or even to get donations.

Nowadays, if you are going to receive money, you are likely to have to declare income tax. If you go to the bank, you may have to pay the transfer fee, which is not very cheap!

And if you receive by card, in addition to the time, you will still pay for the card machine! Not counting the commission. In other words, you cannot escape the fees and mediation in this current system.

INVEST IN BITCOIN

Now comes the part that everyone wants to know: how to invest in Bitcoin?

Before thinking about how to make money with BTC, you should ask yourself first: is it safe to invest in cryptocurrencies?

The answer is: no!

Holding Bitcoin (HODL)

However … you can get very rich in this market, yes! Through HODL and trading with virtual currencies!

I’ll explain: see the graph below, which shows the price of Bitcoin in Dollars (USD) from 2013 to 2020:

Price, Bitcoin quote today, from 2013 to 2020 according to CoinMarketCap
  • In April 2013, 1 BTC cost ~ $ 134;
  • Bitcoin’s quote today, as I write the article, is ~ $ 13,675.

Bitcoin in trading means:

Whoever bought $ 100 in Bitcoin in 2013 and hedl it until today, has around to $ 10,000! That is, this person made a profit of $ 9,900 in 7 years without doing ANYTHING!

Now, calculate how much a person who invested $ 5,000 at the same time, profited:

  • With $ 5,000 you could buy 37 BTC at the time;
  • Today, 37 BTC = US$ 510,000;
  • Therefore, the profit is $ 505,000 in 7 years,

Is there still time to invest in Bitcoin?

“Ah! But if I didn’t buy Bitcoin in 2013, then did I miss the chance to get rich with crypto assets?”

Of course not! I am giving a historical example, with data. But there is still soooo much to come in the crypto universe! Continue here in the text with me, about investing in Bitcoin and cryptocurrencies.

“But you just said investing in altcoins is not safe! And you still want me to invest anyway?”

So, dear reader, the investment is not really safe, it is high risk. There is no way to guarantee returns! But yes, I, Jessica, would like to help you on this mission. But I’ll talk about the risks later.

The origin of the term “HODL”

Hodlers buy active crypto and “forget” in a wallet, so that many years later, they can realize their profits. Below, I leave the origin of the term. The message is hilarious because he was drunk! If you want to check, just click here to access the forum with the origin of the term HODL.

The origin of the term HODL

Hold on for dear life!

The term became so famous that it even made sense of the lyrics! Hold On for Dear Life. Which refers to the message of keeping or clinging to something as if your life depends on it. In the case of virtual currencies, it is saving, because in the future it will be worth more money than today!

Investing in Bitcoin and cryptocurrencies by trading

Now comes the big fever of the moment: trading.

Trading has been around for a long time, before Bitcoin! It consists of the technique of buying an asset when the price is low and selling when it is high. Just that.

Trading already exists, for example, on the stock exchange with an Apple stock. In the same way that this stock goes through analysis and is traded, it happens with cryptocurrencies!

The cryptocurrency market is volatile!

The big chance we see in digital currencies is that the crypto market is super volatile. That is, it varies too much in a short period of time compared to the “common” market (stock exchange).

And this is where the danger lives!

Remember that I said that investing in Bitcoin is not safe? That’s why: just as he can blow the price up, he can fall. So you need a lot of knowledge in technical and fundamental analysis, before risking your money on this adventure!

TradingView chart with indicators enabled

This post was written with a lot of love and research! So, give us your opinion on our social networks and if you have questions, just call! ;D

If you want to read a fundamentalist analysis about the future of Bitcoin, please, check it here: “Do you know what is the future of Bitcoin?“.

JG