02-17-2024 icon

6 FAQs About Bitcoin and Their Answers

By Lucy Adegbe

Since the release of the Bitcoin whitepaper in 2008, the term cryptocurrency has gradually become a household word worldwide. The coin is now being used as a means of investment in several countries, including Nigeria.

In November 2021, Bitcoin achieved its all-time high price of $68,000. Bitcoin which remained in a bearish state since the beginning of 2023, has now picked up, currently trading at $2,800. Despite its volatility, the coin remains the largest cryptocurrency based on market capitalization.

In this article, we’ll answer six frequently asked questions about Bitcoin.

1. What is Bitcoin?

Bitcoin is a decentralized digital currency, without an intermediary, central bank, or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network.

Transactions are verified by network nodes through cryptography and recorded in a publicly distributed ledger called a blockchain.

Bitcoin was created in 2008 by an unknown person using the pseudonym Satoshi Nakamoto.

2. What are the features of Bitcoin?

Bitcoin has several features including:

Decentralization: No central authority controls the coin’s supply or distribution.

Digital: The coin is a purely digital currency and operates on a computer network.

Secure: Bitcoin transactions are secured using cryptography and are verified by network nodes.

Pseudonymous: Bitcoin transactions are recorded on a public ledger, but the identity of the individuals involved is not revealed.

Transparent: The entire transaction history of all Bitcoins is publicly accessible and verifiable on the blockchain.

Limited supply: The total supply of Bitcoin is pegged at 21 million, which helps to control inflation.

Fast: Transactions can be processed and confirmed within minutes.

3. Can Bitcoin be used for shopping?

Bitcoin can be used for shopping. Understandably, the coin is less widely accepted than traditional fiat currencies. But an increasing number of businesses, both online and offline, are beginning to accept it.

Those accepting Bitcoin as a means of payment include retailers, service providers, and even some brick-and-mortar stores. In addition, Bitcoin can also be used to purchase gift cards for a variety of popular retailers.

However, it is important to note that Bitcoin’s widespread adoption for everyday transactions is still in its early stages, and acceptance may vary depending on the location.

4. Things to consider before investing in Bitcoin

Currently, the number of Bitcoin investors has drastically increased compared to when it was first launched.

It’s important to understand that investing in crypto is quite different from that of stocks. This means you must take caution.

Before investing in Bitcoin, it’s important to consider the following factors:

Volatility: Bitcoin is known for its price volatility, which can result in significant price swings in a short period.

Regulation: The regulatory environment for Bitcoin and cryptocurrencies is still evolving and uncertain in many countries.

Security: The storage and safekeeping of Bitcoins require a high degree of technical expertise and security measures, and there have been numerous cases of theft and fraud involving Bitcoin exchanges.

Liquidity: Bitcoin’s market is still relatively small compared to traditional financial markets, and there may be limited liquidity in certain regions or during certain times.

Diversification: Bitcoin should not be seen as a standalone investment, but rather as one piece of a diversified investment portfolio.

It is important to thoroughly research and understand the risks and benefits of investing in Bitcoin before making any decisions. It may also be helpful to consult with a financial advisor.

5. Where can I safely trade Bitcoin in Nigeria?

Nigerians have shown keen interest in Bitcoin over the years. This has paved the way for the seamless buying and selling of crypto assets in the country. Several crypto exchanges facilitate Bitcoin trading in Nigeria.

With Nairaex being one of these high-ranking exchanges, Nigerians can seamlessly trade Bitcoin at flexible rates. If you’re looking to trade Bitcoin, visit https://nairaex.com to begin.

6. What does the future hold for Bitcoin?

While some see the future of Bitcoin as uncertain and highly speculative, other experts believe that it has the potential to become a widely accepted form of currency.

It isn’t unlikely for others to be more skeptical and see it as a risky and speculative investment.

Here are some factors that may impact the future of Bitcoin:

Adoption: The wider acceptance and use of Bitcoin as a form of payment will play a significant role in its future success.

Regulation: The regulatory environment for Bitcoin will play an important role in its future, and changes in regulations could impact its use and value.

Competition: The emergence of new cryptocurrencies and blockchain technologies could impact the future of Bitcoin.

Security: The security and stability of the Bitcoin network will continue to be a critical factor for its success.

Technical developments: Ongoing technical improvements and developments to the Bitcoin network and its underlying technology could impact its future.

Ultimately, the future of Bitcoin is dependent on several factors. It is important to thoroughly research and understand the risks and benefits of investing in Bitcoin before making any decisions.