In this modern era, there are many innovations that are developing in every field in the world. One of them is in terms of investment, there is the latest innovation called bitcoin. Bitcoin itself is an enthusiasm for investment and trading players. Apart from the benefits offered, the increase in users from time to time is also extraordinary. Bitcoin is a new currency or electronic money commonly used in internet transactions or the cryptocurrency market. For more details about Bitcoin itself, you can understand it through the article below.
Many people only trade bitcoin as one of the profitable investment activities. This is influenced by the price of bitcoin itself which reached hundreds of millions of rupiah in 2017. Unlike money stored in a bank account, bitcoin is basically stored on a personal computer in a wallet file format, or stored in a wallet provided by a third party. For the understanding of bitcoin itself, you can understand according to the understanding below.
Definition according to Wikipedia
Bitcoin is an electronic currency used in transactions on the internet without using intermediaries or bank services. Bitcoin was created in 2009 by someone who uses the pseudonym Satoshi Nakamoto. The system used by Bitcoin itself is a peer-to-peer (P2P) system. This system of bitcoin works without a single depository or administrator the United States Treasury Department calls bitcoin a decentralized currency.
Unlike other currencies, bitcoin does not rely on one main issuer. Bitcoin uses a distributed database spread across the nodes of a P2P network to journal transactions. Then Bitcoin also uses cryptography to provide basic security functions, such as ensuring that bitcoins can only be used by the person who owns them, and never more than once. Also you can read What is Blockchain? A Beginner’s Guide to Understanding Blockchain Technology.
Bitcoin History
On August 18, 2008, the Bitcoin.org domain was registered. This domain was protected by WhoisGuard, which meant that the identity of its users was not public information. Then on October 31, 2008, Satoshi Nakamoto made an announcement on the Cryptography Mailing List at metzdowd.com. Then on January 03, 2009, the first block of the bitcoin blockchain was launched which could be interpreted as a statement, a hint, or just a marker.
Cryptocurrency users believe that this was a special statement from Satoshi after it appeared in the newspaper ‘The Times: Chancellor on Brink of Second Bailout for Banks’ on the same date. The first version of the Bitcoin software was announced on a cryptography mailing list on January 8, 2009. The next day, block 1 was mined, and bitcoin mining was already underway. You can learn more about the history of Bitcoin in books and other sources. For those of you who want to find out more about your own expertise in trading, you can do a Preliminary Test to measure how far your ability to trade is.
How Bitcoin Works
There are ways of working that you can apply when using this cryptocurrency. It can also be divided into three, namely, blockchain, mining, and wallet. The bitcoin blockchain is a list of every transaction one of the cryptocurrencies has ever made. Until a transaction enters this chain, it is not considered complete. As the name implies, a blockchain consists of a set of blocks that contain new transactions and are linked to previous blocks that contain older transactions.
This blockchain is useful for protecting transaction data and digital money owned by miners and owners. The security level is also high, so this Bitcoin blockchain is difficult for hackers to penetrate. Next, there is mining. In this mining, there are people who are in charge of maintaining old transactions and ensuring new transactions are recorded, as well as creating new blocks.
For this service, they will receive Bitcoin. To get Bitcoin, you don’t have to be a trader, but you can also be a miner. Until now, the miner who gets the highest chip can only get 12.5 units that come out every 10 minutes. However, there is a math puzzle that miners must solve so that one of these cryptocurrencies can come out. Finally, there is the wallet.
The Bitcoin wallet is the part of Bitcoin that users often see. This wallet is not a place to store pieces of one of these cryptocurrencies, but rather a wallet is a private key or key for the owner to add transactions to the blockchain at an address called a public key or arguably a bitcoin market. As explained earlier, one of these cryptocurrencies is only stored in a record of transactions called the blockchain.
Benefits of Bitcoin
The benefits and advantages that you can get when investing using bitcoin are that there is a decentralized nature to bitcoin which means that it can make the process of transferring or exchanging bitcoins unnecessary to pass through intermediaries, such as banks. When a bitcoin transfer occurs, just update on the blockchain network and it is very safe.
Each Bitcoin owner will get a private key and a public key. It’s like if at an ATM, the private key is an atm pin, while the public key is a bank account number. These two keys are used to show ownership of Bitcoin and if a transfer is made using this key combination as an address and pin. Every crypto asset shipment can also be checked by looking at the block confirmation on the blockchain and the support chain.
Bitcoin Weaknesses
In every transaction, there are certain weaknesses that arise from the transaction itself. Likewise with bitcoin. In this bitcoin there are several weaknesses of its own, namely:
- Mining damages the environment. Bitcoin mining refers to the energy-intensive process required to generate new coins and ensure the payment network is secure and verified. Electricity is used when transactions are validated on the Bitcoin blockchain, which is not good for the environment. Crypto miners use custom-built computers to solve complex mathematical equations that effectively allow coin transactions to take place. The miners are rewarded for their efforts by being paid in crypto money. However, the entire process used to create a bitcoin requires a lot of energy and can consume more power than entire countries like Finland and Switzerland.
- The second is that Bitcoin is not very anonymous. The main idea of Bitcoin is to provide a pseudonym. But it turns out that if you use Bitcoin frequently, and especially if you use Bitcoin to obtain goods and services, then it eventually becomes possible to link a physical address or identity to your digital identity. Interestingly, there are other cryptocurrencies that try to fix this and offer more anonymity.
- The next drawback is that Bitcoin does not function well as a currency. In theory, bitcoin should provide an anonymous and efficient medium of exchange, but this doesn’t work. Instead, bitcoin is considered slow and impractical as a means of paying for goods and services, especially since the market is highly volatile. Bitcoin is prone to large swings in volatility, as seen by the 30% drop in one day.
- Prone to fraud. There have been many scam tragedies that have befallen its users. Due to its digital form, it is not uncommon for hackers to attack users’ Bitcoin wallets.
- No refunds. Lack of refund policy like all credit card companies and other payment methods have. This certainly results in users who get scammed when making transactions with Bitcoin, being unable to apply for a refund.
Advantages of Bitcoin
When compared to other cryptocurrencies, bitcoin has its own advantages, including:
- Greater liquidity. As a cryptocurrency with a significant margin, bitcoin has greater liquidity compared to other cryptocurrencies. This allows users to retain substantial value when converting Bitcoin into fiat currency. Flat currency is money whose value is derived from government regulations or laws. This is different from other cryptocurrencies. Most of these currencies cannot be exchanged directly for flat currencies and some even lose substantial value when exchanged.
- Many are accepted as a payment method. There are hundreds of online stores that have accepted Bitcoin as their payment method. This is certainly very beneficial for bitcoin users in making transactions.
- Lower transaction fees. Transaction fees from Bitcoin are fairly low when compared to other digital payment methods such as credit cards or PayPal. Usually, the transaction fee from Bitcoin is no more than one percent of its value. This is in contrast to other digital payments that cost 2-3 percent.
- International transactions have never been easier. Bitcoin is one of the most popular cryptocurrencies in the world. That way, its users can make international transactions easily. In fact, using Bitcoin does not require special bureaucracy.
What is Bitcoin Mining?
Bitcoin mining is one of the ways to get Bitcoin itself. We can look at Bitcoin as a large global cash system that keeps a history of the movement of money from one person to another. In the case of Bitcoin, this process is not done by individuals or companies, but by thousands of computers around the world connected to the internet.
These computers are known as miners, which are simply computers that process transactions. With bitcoin mining, the costs for this global system are shared across thousands of computers, and they recoup the costs with newly mined bitcoins. So it can be concluded that this is an act of democratizing infrastructure in the financial sphere. Before moving on to some questions about Bitcoin, you can also consult the GIC by filling out the Trader Assessment so that you can ask other questions about the trade.
F&Q
For new users, or someone who is just putting themselves in the field of investment and trading or other online transactions, there are certainly various questions that arise about Bitcoin itself. This time we will learn a few of the questions that are often asked by the general public about bitcoin itself.
Is Bitcoin a Scam?
Actually, bitcoin is not an act of fraud. However, it does not rule out the possibility that Bitcoin can also be used as a place to deceive its users. So what you need to do is know how to characterize bitcoin fraud in the crypto transaction itself.
- What you should know is that crypto operates on a blockchain network. In the absence of a blockchain, the bitcoin does not exist. You must know whether the blockchain exists or not. Usually, scammers or fraudsters will claim their blockchain is under development or even about to be released. A legitimate blockchain will have an official website that allows you to verify its existence.
- Beware of crypto tips from anyone. Multi-level marketing, or MLM, scammers usually use crypto language to persuade people to bring friends, by promising them to get bonus payments by recruiting more members. However, crypto projects do not use a member system but rather have investors. You can go to price tracker websites like CoinMarketCap or others to find real-time and historical data on coin prices and trading volumes. If the token is not listed in the tracking, then it is a scam.
- Investing in crypto using Bitcoin has no guaranteed returns on an ongoing basis. Nothing is certain in crypto. Scammers will later claim to have developed a high-tech solution, which can guarantee profits. However, experienced investors claim that bots will do no such thing. There are no supercomputers, AI tools, or anything else that can guarantee continuous profits on this crypto.
Is Bitcoin a Money Game?
Every money game promises attractive benefits for participants who are willing to deposit a certain amount of money within a certain period of time. Generally, this kind of money game will be under the guise of investment, but in reality it is just a ponzi scheme. Where the interest paid is not sourced from the money deposited by new participants. Meanwhile, cryptocurrencies are pure currencies like dollars and rupiah.
Is Bitcoin Digital Gold?
Bitcoin can be considered as digital gold because it has the same characteristics as gold itself. Because the amount of gold is scarce, so is bitcoin, gold is also stable and does not degrade, is easily recognized, and is difficult to replicate. Likewise, bitcoin has similar characteristics. However, unlike gold, you can move bitcoin anywhere in the world within minutes. This is why people refer to bitcoin as digital gold, but better digital gold. Before continuing to the next question, you can fill out an internal survey so that we can find out how much user satisfaction on the platform we developed.
Is Bitcoin a Crypto?
As explained earlier, bitcoin is a means of payment in the cryptocurrency market. So it’s no wonder that everyone thinks that bitcoin is crypto. What is the connection, and how does it work. In fact, bitcoin uses cryptography to provide basic security functions such as ensuring that bitcoins can only be spent by the person who owns them.
Is Bitcoin a Ponzi?
A ponzi scheme is an illegal investment scheme that profits investors from their own money or money paid by subsequent investors. These ponzi schemes usually entice new investors by offering higher returns than other investments in the short term with extremely high rates of return. However, bitcoin is not one of these ponzi schemes because it is not offered as an investment tool but as a medium of exchange that has innovative technology in it. Bitcoin is also something that has a clear product and a wide ecosystem.
Conclusion
Bitcoin is a digital currency based on blockchain technology that is decentralized, limited supply, traceable and irreversible. It works with wallets, blockchain, mining and consensus mechanism. In addition to being a digital currency, Bitcoin has a wide range of applications, as well as some risks and challenges. For individuals, understanding the characteristics and applications of Bitcoin can help us get a better grasp of this emerging digital currency.
