What is Bitcoin and How Does Crypto Currencies Actually Work?

New ideas and technologies can be scary. When the internet first came out, many people were reluctant to trust it with their personal information or explore its possibilities. In the same way, when the first Bitcoin appeared in 2009, many people thought of it as a joke or a fad that would soon disappear. However, even though cryptocurrencies continue to be misunderstood and misrepresented by the media, they keep growing in popularity and adoption among businesses and consumers. Here we will explain what is cryptocurrencies and how they work. Read on to find out everything you ever wanted to know about this new digital gold rush...

What is Bitcoin?
Bitcoin is a decentralized digital currency that is used as a store of value and a method of exchange. But what does that mean? Let's break it down: - Decentralized - Unlike fiat currencies like the US dollar, Euro or British Pound that are issued by central banks, bitcoins don't come from any central authority. Instead, bitcoins are created or "mined" by computers connected across the internet. - Digital - While paper money can be stored in physical wallets, bitcoins only exist as digital assets that are held in virtual wallets. - Currency - Although the word "coin" is often used to describe bitcoins, they aren't physical coins like dollars or pounds. Instead, bitcoins are a kind of virtual currency that can be traded, bought and sold electronically.

How Does Crypto Currency Work?
To understand cryptocurrencies, it is necessary to understand how the internet works. Essentially, the internet is a giant network of computers that spans the globe. These computers are connected through an open network that allows them to share information. Each computer connected to the internet has a unique address to identify itself and these addresses are assigned a series of numbers. This series is known as an IP address and is used to direct information to the correct computer. When you want to view a particular website, you type its address into your browser's search box and the computer identifies the website's IP address. Then it directs the website to your computer through the open network and displays the website's content on your screen.

Who Created Bitcoin?
While many people have made claims to be the inventor of Bitcoin, the identity of its creator remains a mystery. All we know is that the name Satoshi Nakamoto is a pseudonym for an individual or group of individuals who used the cryptography mailing list to discuss creating a new form of currency. After Bitcoin was created and began growing in popularity, people started to speculate about its creator. Some thought that the US government or some other powerful institution had created the currency to have a new method of controlling the economy. Others thought that the creator was a single person who just wanted to be free from government control. Finally, some people even thought that the creator was actually working for the government and created the currency as a way of monitoring citizens.

How to Buy and Sell Bitcoin?
One of the best ways to get involved with cryptocurrencies is by buying and selling actual bitcoins. Some call this owning bitcoins, while others call it investing in bitcoins. It should be noted that the difference between owning bitcoins and investing in bitcoins is significant. While investing in bitcoins is a type of speculation, owning bitcoins is a way to obtain a new form of currency that can be used for online transactions. To buy bitcoins, you need to create an account with a cryptocurrency exchange. These exchanges act as middlemen between buyers and sellers and charge a small fee for each transaction. After creating an account with an exchange, you need to deposit funds into your account and place a buy order for bitcoin. Once a seller accepts your order, the exchange will transfer the bitcoins from the seller's account to yours. To sell bitcoins, you simply place a sell order in your account and wait for a buyer to accept your price.

Why Is Bitcoin Rising?
Cryptocurrencies have gained a lot of attention in recent years. Some of this attention has been positive, while other reactions have been negative because of misinformation and uncertainty. In order to understand why Bitcoin is rising in popularity, it's necessary to understand its strengths and weaknesses. Strengths - Security - One of the biggest strengths of Bitcoin is its security. While it's possible to hack into an account, it is much harder than hacking into bank accounts. In addition, the currency is also only accessible by the person who owns it and cannot be frozen by banks. Decentralization - Another strength of Bitcoin is its decentralized characteristic. Unlike national currencies that are controlled by central banks, Bitcoin has no central authority. This means that it's less vulnerable to government changes. Weaknesses - Scaling - While Bitcoin has a lot of strengths, it also has some weaknesses that need to be addressed. One of these issues is the inability to scale which means that transactions take a long time and can be quite expensive. Regulation - Another weakness of Bitcoin is a lack of regulation. While this can be a good thing, it also creates uncertainty about the future of the currency.

Where to Store Bitcoin?
Once you own bitcoins, you need to store them somewhere. There are several different options for storing bitcoins and you can choose the one that best fits your needs. - Hardware wallet - One of the most secure ways to store bitcoins is through a hardware wallet. A hardware wallet is a device that holds your private keys in an offline storage device. This means that the device cannot be hacked unless you have physical access to the device. - Paper wallet - Another secure method of storing bitcoins is through a paper wallet. A paper wallet is simply a piece of paper that contains all of the information needed to access your bitcoins. Like hardware wallets, paper wallets are an offline method of storing your coins. - Online wallet - One of the least secure ways of storing bitcoins is through an online wallet. Online wallets are websites that allow you to store your coins. While online wallets are convenient, they are also more vulnerable to hackers.

Pros of Owning Bitcoin

• Actively participating in the new digital economy - A major pro of owning bitcoins is that it allows you to actively participate in the new digital economy. - Low transaction costs - Another benefit of owning bitcoins is that they have low transaction costs. This means that you won't have to pay high fees like you would for international bank transfers. - Accessibility - You can access your coins at any time, regardless of the time of day or where you are located. - No government control - Another pro of owning bitcoins is that they aren't controlled by governments. This means that you aren't subject to rising tax rates and you can avoid country-specific regulations.

Cons of Owning Bitcoin

• Volatility - A major con of owning bitcoins is their volatility. While this is great when they are rising in value, they can crash at any time. This can create uncertainty and risk for people who are using them as a means of purchasing goods and services. - Lack of regulation - While lack of regulation can be a pro, it can also be a con. Since no government or financial institution is backing up Bitcoin, it can disappear at any time. This can create a lot of uncertainty for people who are using them for transactions.

Final Words
Despite the excitement surrounding cryptocurrencies and their rapid growth, it's important to remember that these are still very new technologies. It can take years for new technologies to be fully tested, understood and accepted by the majority of people and businesses. As with any new technology, there will be growing pains and challenges. New ideas and innovations often take time to be fully understood and accepted. This is just as true for cryptocurrencies as it is for any other new technologies.