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?
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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.
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 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 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:
- 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.
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!
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