How Bitcoin Works And Other Commonly Asked Questions

Bitcoin is gaining more and more popularity over its recent rise to fame in 2017. People have been starting to wonder, is it the future of money? Is bitcoin stepping up to take over and overthrow other traditional currencies?

Try not to overthink it too much. Right now, bitcoin is just another digital advancement carrying the purpose of making electronic transactions easier and cheaper. And if we delve a bit deeper, it prides itself on its being a promising investment. Basically, bitcoin is a digital currency with no authority controlling it - an open network. It may sound ridiculous, and it can be intimidating at first, but in reality it's actually easy to understand bitcoin and make full use of its wonderful features later on.

1. How does bitcoin work?

Many people who want to learn about bitcoin often start at gaining knowledge about how it really works. Unlike traditional banks, bitcoin isn't run by the government or other private institutions; it is only maintained by volunteer developers all over the world, making it completely decentralized. Bitcoin users are connected through a digital network, by encryption keys. Users are also anonymous; there is no requirement of tax IDs and other identity proofs when undergoing transactions using bitcoin.

2. What is the value of bitcoin?

Like other traditional currencies, the value of bitcoin changes over time. Its value is based according to how much people are willing to pay for it - just as how stocks in the market are priced. The algorithm set by its proprietors is the sole factor that determines the value of bitcoin.

3. What can I do with it?

Bitcoin is primarily used to buy or sell goods and services online without having to go through the process of depositing and withdrawing payments in a bank. You can also keep and earn it in an online wallet as an investment which you can sell for a good price to other bitcoin users in the future.

4. How is it a good investment?

There isn’t a continuity to the production of bitcoins - there’s only 21 million of them, posing an imminent end to its availability. Which is why now that it’s becoming more mainstream, people are more eager to learn about bitcoin and get their hands on them to take advantage of their high demand. As the demand increases and supply runs out, prices are expected to go way higher, making it an investment that’s expected to yield higher returns.

Now more than ever, it’s highly rewarding to understand bitcoin just by being aware of its essence, how and why it was created, and what it can become.