08-11-2023 icon

Five FAQs on Bitcoin and their Answers

By Lucy Adegbe
Bitcoin FAQs

The concept of cryptocurrency has become widespread. Cryptocurrencies are digital assets that are powered by blockchain technology. The rapid adoption of cryptocurrencies such as Bitcoin means more people will need education on the subject.

This article answers five frequently asked questions (FAQs) about Bitcoin such as what it is, how to make money from it, how to invest in it, and exchanges to buy this asset.

What is Bitcoin?

Bitcoin is a virtual currency that operates in a decentralized network powered by the blockchain. It relies on cryptography for its security.

The blockchain is a collection of blocks containing recorded transactions that form a widely distributed database across several computer nodes linked to a central computer. 

The use of blockchain to validate Bitcoin transactions prevents duplication and unauthorized spending of this virtual coin.

Bitcoin was developed by Satoshi Nakamoto, an anonymous group, in 2008. The coin is highly volatile and speculative. Its upward and downward movements have either made many billionaires overnight or lose large sums. 

Bitcoin stands out among other cryptocurrencies due to its market capitalization. Currently, Bitcoin is also being used as a medium of exchange – paying for items online and donating to charity.

How can you make money from Bitcoin?

Trading Bitcoin and other cryptocurrencies now serve as a great way to generate passive income. However, getting passive income doesn’t come from buying and selling this coin alone.

Below are strategies for generating passive income streams from Bitcoin:

Buying and HODLing: This is the most common method of earning passively from Bitcoin. It involves buying Bitcoin at a certain price and holding onto it with the expectation that its value will increase over time. Should the price rise, they can sell it for a profit.

Trading: Active traders buy and sell Bitcoin on various cryptocurrency exchanges to take advantage of price fluctuations. Short-term traders aim to profit from quick price movements, while long-term traders may make decisions based on technical analysis, news, and trends.

Mining: Bitcoin mining involves using powerful computers to solve complex mathematical problems that validate transactions on the Bitcoin network. Miners are rewarded with newly created Bitcoins and transaction fees. However, Bitcoin mining has become highly competitive and resource-intensive, requiring significant upfront investment.

Staking: Some certain versions of Bitcoin offer staking opportunities. Staking involves holding and locking your coins in a wallet to support network operations and earning from them in the form of interest.

How can you start investing in Bitcoin?

Choosing to invest in Bitcoin is a great step. However, it may not seem rosy at the beginning.

Luckily, you employ the strategies listed below to have an easy ride.

Researching: Before you start investing, take the time to understand what Bitcoin is, how it works, and the basics of blockchain technology. Research its history, potential benefits, risks, and the overall cryptocurrency market.

Choose a Wallet: After you’ve researched and are fully convinced that it’s time to invest, start by choosing a wallet. A Bitcoin wallet is a digital tool used to store, send, and receive Bitcoin. Wallets are of different types and you should choose that which aligns with your objectives.

Select a Reputable Exchange: Exchanges facilitate the buying and selling of Bitcoin and other virtual currencies. Research and choose a reputable and secure exchange that is user-friendly and available in your region. 

Sign up, verify your identity, and start trading: Create an account on the chosen exchange. You’ll need to provide identification and personal information to comply with Know Your Customer (KYC) and anti-money laundering (AML) regulations.

Once done, you can find your account and start exploring the amazing world of Bitcoin.

What is the price of Bitcoin now?

Bitcoin is highly volatile and prone to rapid changes. Between October and November 2021, Bitcoin attained an all-time high price of $69,000. Things took a different turn when the value crashed by almost 50% in 2022.

Bitcoin currently trades at $29,400 based on data from CoinMarketCap. This is up by 0.71% in the last 7 days.

Where can I buy Bitcoin?

The sale of Bitcoin is facilitated by crypto exchanges. Several exchanges exist, so it’s up to you to research and choose an exchange that aligns with your preferences.

Given that only a few exchanges are global, the rest work depending on your location.

If you’re in Nigeria, you have an array of exchanges to choose from. However, one stands out and that is Nairaex. Nairaex is Nigeria’s Premium Bitcoin exchange and it facilitates the buying and selling of Bitcoin and other common crypto assets.

Starting your Bitcoin journey with Nairaex is simple – sign up on the website, verify your identity, fund your account, and trade on the go. The platform is easy to navigate and has a supportive customer service team to handle all complaints and inquiries.

Start your journey today by signing up on Nairaex.com