This article is intended to provide information on what the average person should understand about Bitcoin. Now, since lots of other coins have somewhat different purposes I will focus only on Bitcoin. I will go over its use case, investment opportunity, and the basics of how it works.
What is Bitcoin?
Bitcoin in its simplest form is a peer to peer digital cash system. Think of western union. With western union you can send cash to anyone almost anywhere. Bitcoin does this but in a much faster fashion with much lower fees. Bitcoin can transfer within seconds or the hour depending on overall traffic. Typical transfers take less than 10 minutes as opposed to other peer to peer solutions and costs are typically fairly low.
Another advantage to this peer to peer system over other digital systems like cashapp or paypal is it is available anywhere there is the internet. Because it is decentralized no government can actually control it thus allowing you to send it anywhere in the world at the same cost and speed it would take to send it to a friend across town.
This is huge for people who send money to family overseas or in another country. Fast and reliable. The network never goes down and funds never get lost. The system is also easy to verify as it has an open ledger making it easy to trace funds to a wallet.
Bitcoin can also be stored in two different ways. Centralized or decentralized. You can handle storing it yourself in offline or software/hardware wallets or you can let an exchange like CoinBase hold on to your crypto. Both have advantages and it is best practice to not keep your money on exchanges as exchanges can be hacked but the option is there and it is usually the first place people store their funds while learning about wallets. We could go on all day about wallets so a separate post at a later date on those.
Should I Invest in Bitcoin?
Apart from using it as a method of sending cash to people or entities the market does fluctuate similar to a stock making it something people use to grow their money. The best thing about Bitcoin is you can invest as much or as little as you want since a coin can be broken down into extreme fractions. You can buy as little as $2 worth on most apps.
While some people do use it as an investment opportunity prices are highly volatile at this stage. This means big gains or big losses depending on how long you are willing to wait. This is why it’s important to never invest more than you can afford to lose. While I personally believe Bitcoin will continue to grow it is not the right investment for everyone but everyone should understand what it does, thus this article.
Merchants are starting to accept Bitcoin both online and in brick and mortar stores. Volatility is the biggest disadvantage to merchants however there are solutions for this. With payment processors, you can convert to USD or other local currency at the moment of sale removing the risks of market volatility. This, of course, helps Bitcoin grow and innovations to bridge the gap between payment processing and bitcoin users is happening fast.
To sum up, Bitcoin is a Peer to Peer digital cash system. It has high market volatility at the moment and is being adopted worldwide by individuals, companies, and even some local governments across the world. Bitcoin is changing the way we look at banking and storing money.