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Bitcoin, the word seems to be everywhere these days, and for a good reason. It’s a digital creation that might go down in history as the most important in the modern era. It’s helped change the lives of many people over the years, but despite that, a lot of people are still hesitant to get on board.
The reasons that people are turned away from Bitcoin are numerous. Some people find that they don’t have the time to trade it, while others are intimidated by that.
Despite its immense popularity in the digital space, there isn’t much marketing for the currency in a traditional sense. You’re not going to see Bitcoin ads on the TV or anything like that.
That unfortunate fact means that a lot of people are out of the loop when it comes to Bitcoin. If you’re one of these people, then fear not. We’re going to break Bitcoin down into its simplest parts to help you understand the concept better.
Let’s start at the most rudimentary level. Bitcoin is a currency, not unlike dollars and euros. It can be used in certain retailers and at certain places online to buy goods and services.
However, unlike traditional currency, Bitcoin doesn’t have any physical representation of value. Every fiat (physical) currency utilized by different companies around the globe all have physical denominations. Typically, in the form of coins and notes.
Bitcoin is 100% percent digital, meaning there is no physical cash variant for you to put in your pocket and bring to the supermarket with you.
Bitcoin is a digital currency. It exists solely in the digital space. A lot of people mistake this as a lack of security and value, but that isn’t the case. Despite only existing on a screen, what makes Bitcoin hold value is its creation process.
Each Bitcoin unit is made up of a series of complex algorithms and code, and each one is unique. It can’t be replicated or forged. This is where the value of the coin comes from.
That’s the biggest difference between Bitcoin and some of the other currencies you have the option of investing in, but the differences go much deeper than that.
Bitcoin isn’t accepted in as many physical stores are traditional currency. This should come as no surprise, especially given that there is no physical item to trade. That being said, a lot of places accept cryptocurrency purchases online, and the number of storing accepting it as a valid form of payment increases by the day.
Bitcoin is also decentralized. When a country needs more money, dollars, for example, the bank prints more dollars in collaboration with government officials, these institutes decide how much to print and when to print it.
It’s this process that has resulted in a lot of the world’s currency depreciating in value. How much a dollar is worth now is not equivalent to how much it was worth 20 years ago. The economy has scaled with the depreciation, but only to a certain extent.
The effects of this are particularly visible when you look at the housing market. The price of a house is significantly higher than it was in the past. There are a number of contributing factors to that, but the increase in the supply of money is one major one.
Bitcoin doesn’t have a central institute with the power to make decisions like that. It operates independently of any major conglomerate, meaning it’s less likely to depreciate in value and also resistant to hyperinflation.
Therefore, without a council of businessmen to say when and how much to print, how is Bitcoin actually made. The Bitcoin creation process is unique and a stroke of genius.
To understand that, you need to understand how Bitcoin changes hands. When you trade Bitcoin with someone, it’s facilitated by a network of extremely complex security protocols. This prevents anyone from getting scammed or duplicating coins. While this does mean there’s no way to refund a purchase, it does make that purchase more secure.
This system needs hardware to facilitate these transactions. This hardware is volunteered by people known as Bitcoin miners. These miners, big or small, build computers made of industry-leading parts to assist in the Bitcoin network. In exchange for facilitating this, the network creates and rewards them with freshly minted Bitcoins.
This keeps the minting process regulated while also making sure that the network remains self-sufficient. The behind the scenes of this process is, of course, a lot more complicated. However, that’s the barebones information that you need to know in order to trade with Bitcoin Prime.
Bitcoin miners can operate on various different scales. Some only have a room or two full of computers dedicated to mining, while some have entire warehouses.
If you exist in the gaming sphere, you might remember a time a few years ago when the price of graphics cards jumped dramatically. This was because all of the supply was being bought up by Bitcoin miners.
Become a miner has an expensive startup cost associated with it, so we recommend you trade with Bitcoin Prime before setting foot in that realm of possibility. You don’t want to invest tens of thousands of dollars on hardware to discover that Bitcoin isn’t for you.
The history of Bitcoin is full of ups and downs. We’re sure you’ve at least heard of the great boom of 2017. This was the year that Bitcoin really began to grow in value. Thus, many people were hopping on the trend that it became a bubble.
This period of time made a lot of people very skeptical. However, it also bankrupt a lot of people once that bubble popped. Cryptos are not perfect.
To put it into perspective, at the highest point of value, a single Bitcoin was worth nearly $20,000 dollars. By that time next year, it had crashed to $3500 per unit. This was still a lot higher than what Bitcoin was trading for before it jumped in value, but you can see what a lot of people are afraid to get burned.
However, the fact that this happened is a good thing for us. It means that a new industry has gotten it out of its system, making it a safer investment for you.
As of October 2020, Bitcoin is valued at around $9,000. Not only is this up dramatically since the crash, but it is also on par with what it was worth at the start of the year.
What’s the point of that, you ask? Well, every single market in the world took a massive hit during March when the pandemic went global. Many of these markets are still reeling from the effects, and many of the world’s economies have gone into recession.
Bitcoin, on the other hand, bounced back quicker than anyone could have expected. It took an initial hit, sure, but it made a staggering recovery.
This is the first global emergency that Bitcoin has ever had to endure, and the fact that it held so well is great news for you.
Despite being a currency, Bitcoin doesn’t have too much in common with trading currency on the Forex. For starters, Bitcoin jumps in value a lot more than a typical currency. One unit of Bitcoin is also worth a lot more than one unit of any other fiat currency.
Due to these qualities, Bitcoin is sometimes called digital gold. This description isn’t entirely inaccurate, either. Trading Bitcoin is a similar process to trading commodities. It’s considered a relatively safe investment that is expected to only grow in value. That’s the way you should be thinking of it. Don’t look at it like buying euros with dollars, instead view it as investing in a commodity, either for long term growth or short-term trading.
This mindset is actually a major factor in why Bitcoin recovered from the pandemic so quickly. Traditional investors saw that the future of many companies was up in the air, so they moved their money into Bitcoin because there was no risk of it going bankrupt. While you don’t need to be thinking on this level to trade Bitcoin with Bitcoin Prime effectively, it is something that you should keep in mind.
Don’t treat your Bitcoin trading like you would treat your Forex investments, and instead treat it like you’re buying gold.
The team here at Bitcoin Prime is comprised of industry veterans that have all been around the block in one way or another. In their time, they’ve all heard countless questions be asked pertaining to Bitcoin. Some of these questions were incredibly niche, but some have a tendency to come up time and time again.
We’ve decided to list a few of these down below for you to have a look at. Take a look at these before you sign up, and before you go asking questions that you otherwise don’t need to.
This tends to trip a lot of people up. Thinking of it like a currency makes people think that there’s an account they can set up to store their Bitcoin in, similar to a bank account.
This isn’t too far off the mark, although the reality is a little different. Rather than accounts, Bitcoin is stored in “wallets.”
These wallets aren’t the type you carry with you in your pocket; it’s just the name given to any device or program that can store Bitcoin.
Wallets range drastically in type. A simple USB stick or a hard drive can act as a wallet, as can your phone with the right programs installed.
You need to remember that Bitcoin is code. It’s secure and complex code, but it’s still code. There, logic dictates that anything that can store code can store Bitcoin.
Thus, you store Bitcoin in any device that can house code, and we call those devices wallets. There is something else you need to be aware of, though.
Yes, Bitcoin wallets are divided into two different categories: hot and cold.
Hot wallets are what you’re going to become accustomed to using with Bitcoin Prime and are the wallet type utilized by the majority of the Bitcoin world.
What categorizes a wallet as hot is its connection to the internet. Hot wallets require you to always have an internet connection to use and access. The most common examples of this are the Bitcoin wallets that you can get for your phone.
Hot wallets are simple and convenient. If you want to receive Bitcoin, you send out your wallet ID. If you want to send Bitcoin, you enter the receiver’s wallet ID.
You can transfer money in and out of hot wallets quickly and easily, making it a great choice for day to day trading.
However, hot wallets do come with a handful of downsides. These downsides are typically in the form of security concerns. While it’s relatively unheard of, the constant internet connection requires by hot wallets leaves them open to cyber-attacks.
Most security breaches in the crypto world go through a different avenue (which we’re going to talk about in a second), but it is still a concern for some people.
This concern is what leads people towards cold wallets. Cold wallets are offline, meaning you can access the coins on the device without an internet connection.
This makes transferring coins to and from the device a pain, but day to day transactions aren’t what cold wallets are designed for.
This wallet type is popular with long term investors. These are the type of people to drop five or even six digits on Bitcoin and keep it for years. They load up a cold wallet with their coins, put it in a safety deposit box, and leave it.
This isn’t the type of trading that you’re going to be doing at Bitcoin Prime, but it can be helpful to be aware of its existence.
The security concern that we mentioned earlier actually comes in the form of online Bitcoin traders. Similar to the Forex, there are online marketplaces that facilitate the buying and selling of Bitcoin between its users.
This alone is perfectly safe; however, a lot of users ended up leaving their coins on the site for the sake of convenience. The security on these sites, while good, is nothing compared to the security on wallets.
What ends up happening is that those sites have a data breach, hackers get into the network, and everyone loses their Bitcoin.
This has only happened a handful of times in the past, but there is a precedent for it.
Thus, for your own sake, if you’re ever on a cryptocurrency marketplace, make sure you don’t leave your money stored on it.
Given how tight the security on Bitcoin wallets is, it makes sense that accessing it isn’t as simple as just logging in.
To access your coins, you need what is called a “key.” Every wallet has its own unique key, and it is generated from a long random string of letters and numbers.
Losing these keys is the number one reason that people lose Bitcoin, so make sure you write yours down when you get it.
If you only want to keep cold copies of the key (copies not on a digital device), then make sure you keep more than one copy. This key isn’t something you’re going to be able to commit to memory, given that it’s made up of a lot of numbers and letters of both cases.
Like we mentioned before, Bitcoin is decentralized. There is no single governing body that represents that. While that has its benefits, it means that there’s no customer support you can call if you lose access to your wallet.
Contacting the provider of your wallet isn’t going to be any good, either, given that they typically don’t have access themselves.