What is Bitcoin? Are Bitcoins real? Are Bitcoins a good investment? So many questions on your mind, but getting answers to none?
This article could just be the answer to all your questions. So hold your horses and dive into the world of cryptocurrencies and bitcoins.
Over the years, cryptocurrencies have really made their way into the financial world. Since its launch in 2009, it has taken the financial markets by storm.
Bitcoins have progressively become popular among today’s investors. Though there are many speculations about bitcoins. Many of its supporters say that bitcoins could be the future investment, while its opponents think that it is an unsafe investment and could threaten the returns in markets.
Since its introduction in 2009 by an anonymous developer, it has always been in talks among the investors and has increased the popularity of many other cryptocurrencies.
The momentum in Bitcoin is definitely rising. Recent developments have provided a rapid increase in its valuation.
Let us look into the basics of bitcoins: What are Bitcoins, How does bitcoin work, Where to buy it? And some of the pros and cons of Bitcoins.
What is Bitcoin?
Bitcoin is a digitally decentralised cryptocurrency. It is not controlled by any governed body or issuing authority, they are validated by network nodes through cryptography and are recorded in a public distributed ledger, known as Blockchain.
It was invented in 2008, under the anonymous pseudonym Satoshi Nakamoto. People started using it in 2009 and ever since it has become a common subject in the financial world.
7.1% of India’s population owns cryptocurrencies, which is around 97.5 million people.
What is Blockchain?
Bitcoin uses a publicly distributed ledger “Blockchain”, that records the transaction and keeps track of the assets in the business network. It is very secure as the record cannot be altered analytically without the alteration of all the subsequent transactions and the accord of the network.
How does blockchain work?
Following are the steps on how blockchain works:
Step 1: Record the transaction
Step 2: Gain agreement
Step 3: Link the blocks
Step 4: Share the ledger
How to buy Bitcoins in India?
A common question for new investors in the market. Here is the answer to this question:
- Go to a bitcoin exchange.
- Submit all the relevant documents, including Aadhaar card and PAN card and complete the KYC process.
- Place an order for the purchase on a cryptocurrency exchange.
- Payment through: RTGS, NEFT, debit or credit cards, and other digital payment methods used for day-to-day transactions.
- Store your purchased bitcoins in the cryptocurrency wallet.
And that’s it. It could look difficult at first, but once you start investing in bitcoins you will get a hang of it.
Pros and Cons of Bitcoins
Pros of Bitcoins:
Anonymity and transparency
Bitcoins are registered with their wallet IDs instead of the names of sellers or owners. This makes sure that there is no public tracking of the user, and no transactions can be tracked.
With its blockchain technology all the transactions are kept safe from fraud. You can create multiple crypto wallet addresses to keep your information safe.
Accessibility and Liquidity
A prime benefit of bitcoin is that it is easily accessible. You can quickly transfer your bitcoin to another user, it hardly takes a few minutes. It can also be used to purchase goods and services.
With this you can easily make a purchase in foreign countries for a foreign exchange. Bitcoins can also be easily sold.
Bitcoins are distributed across many computers in the form of nodes. Decentralisation is a major plus point of bitcoins as no government body can take it down.
No taxes could be implied on bitcoins. It gives the user the autonomy and full complete control over their money as the price isn’t linked to government bodies.
Bitcoins are highly volatile and can rapidly change on a daily basis. This could be a major benefit for the investors as it could result in high returns.
With the increased investment in bitcoin at the global level, has increased the potential of high returns.
Bitcoin is provided with incredible security. All its transactions go through cryptography making sure it’s authentic. The transactions are stored in blockchain, with no chances of fraud as no transactions can be altered.
Cons of Bitcoins:
There are certain crypto risks involved while trading.
As compared to the other assets, bitcoin is highly volatile. This volatility can give you high returns but there are also chances of high losses, especially for the long-term investors.
No Government Entity
Decentralisation is one the advantages of Bitcoin, but is also a disadvantage in a way. With no government body involved the transaction may not be regulated and won’t have legal protection.
There could be a chance of susceptible scams. Also with decentralisation there is no guarantee of minimum valuation.
While bitcoin is the highly dominant cryptocurrency in the market. There are still many competitors, like Ethereum (ETC). Apart from these, there are more and more cryptocurrencies coming into existence.
With no government body involved, the transactions are anonymous and unregulated. If you are dealing in Bitcoin, you have to be absolutely careful, as it is irreversible. If you send the wrong amount or pay to the wrong recipient, there’s nothing you can do.
There’s a limit to where you can use bitcoins as it is still not widely accepted. Many companies still don’t accept bitcoin and it is banned in several countries.
Above article covers all the aspects of investing in Bitcoin and the pros and cons of Bitcoin. We hope we have answered all your questions and you find this article helpful to make more informed decisions regarding cryptocurrencies.
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