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5 Things to Know Before Embracing Bitcoin

22 November 2022 13:09, UTC

Bitcoin is the most popular cryptocurrency, and that's why you are likely to have come across it in crypto news and forums. The growing popularity of Bitcoin is no secret. Moreover, the investment potential of Bitcoin is now becoming more apparent. For example, with the Biti Codes app, you can start trading Bitcoin today. But you also need to understand several things before embracing this virtual currency. 

With the looming uncertainties and grey areas surrounding Bitcoin, it is essential to grasp the fundamentals of this cryptocurrency. This article looks at five things that everyone should know before embracing Bitcoin.

1. What is Bitcoin?

Knowing Bitcoin will give you an idea of what kind of asset or resource it is and whether it is good for you. Start by understanding that Bitcoin is a digital currency supported by blockchain technology. Therefore, people can use it as a means of payment and a store of value.

As a means of payment, you can use Bitcoin to pay for goods or services in places where it is accepted. Here, you should also know that Bitcoin is not universally accepted. As a store of value, you should understand how Bitcoin derives value and how this value changes. Specifically, familiarize yourself with Bitcoin's price volatility. This knowledge should make you aware of Bitcoin and its uses.

2. What is the origin of Bitcoin?

Bitcoin is a virtual or digital currency. So, what is its origin? The central bank mints fiat currencies, but not Bitcoin. People produce Bitcoin through a process called mining. It involves solving complex mathematical puzzles on the Bitcoin blockchain. Miners create new Bitcoins every time they solve the puzzles successfully.

Miners do Bitcoin mining. Individuals or companies use robust computer systems and energy to mine Bitcoin. They are in different parts of the world. It is also essential to know that Bitcoin has a cap of 21 million coins. Miners have produced over 90 % of the coins, meaning mining will end soon when they generate the last Bitcoin.

3. Potential Benefits

It's crucial to know Bitcoin's potential benefits for you. As a digital currency, one of the main benefits is that it provides an alternative payment option. Paying with Bitcoin is safer, cheaper, and faster because there are no intermediaries. It is a peer-to-peer payment system.

Bitcoin also provides global accessibility. Bitcoin is not a domestic currency. So, people can use it in many countries. You can send and receive Bitcoin from virtually anywhere on the planet, provided there is internet connectivity. Other benefits of Bitcoin include anonymity and a more secure payment system thanks to blockchain technology.

4. Potential Risks

Understanding the potential risks of Bitcoin is also essential. The main dangers revolve around its decentralized structure and government intervention. The lack of government control and the decentralized nature means that users may have no one to turn to if something goes wrong with Bitcoin. They cannot go to the government.

Regarding government intervention, you need to understand that governments can take specific measures to affect the use of Bitcoin within their jurisdictions. For example, China banned all cryptocurrencies, making it illegal to use Bitcoin in the country.

5. Future of Bitcoin

Finally, determine what the future holds for Bitcoin. Is it likely to grow in terms of usage? Are governments going to introduce specific laws to regulate Bitcoin use? Such factors are worth considering. Already, trends show that Bitcoin is here to stay. More users, including institutional users, are embracing it, making it more widespread.