02-21-2023 icon

What you should know about Bitcoin

By Lucy Adegbe

Since the release of the Bitcoin whitepaper in 2008, the crypto cryptocurrency is gradually becoming a household word around the world. 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. Despite its decline in price in the past months, the coin remains the largest cryptocurrency based on market capitalization.

In this article, we’ll explore the features of Bitcoin and things to consider before investing in it.

Let’s take a look!

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. 

This digital coin was created in 2008 by an unknown person using the pseudonym Satoshi Nakamoto.

What are the features of Bitcoin?

Bitcoin has several features including:

Decentralization: There is no central authority controlling the supply or distribution of the coin.

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 in the transaction 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.

Can Bitcoin be used for shopping? 

Bitcoin can be used for shopping. Understandably, the coin is not as widely accepted as traditional fiat currencies. But an increasing number of businesses, both online and offline, are beginning to accept it. 

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

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

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 this coin, it’s important to consider the following factors:

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

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

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

Liquidity: The coin’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: This virtual coin 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 this coin before making any decisions. It may also be helpful to consult with a financial advisor.

What the future holds 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 this popular virtual asset:

Adoption: The wider acceptance and use of this coin 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 this coin.

Security: The security and stability of the coin’s 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.