To people who have only heard about bitcoin through popular culture and mainstream media, bitcoin is an Internet money that has made fortune for a few people who have first invested and took interest in it several years back. Because of that said fortune, people recently are catching up with the craze. But should you too?
This article will let you know the fundamentals of bitcoin so you can decide whether you should jump the bitcoin bandwagon or not.
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Getting to Know Bitcoin
In early 2009, bitcoin has been initially and exclusively mined by Satoshi Nakamoto. He envisioned bitcoin to offer a dependable monetary system that is free from political intervention and unbounded inflation. Nowadays, it specializes in its dominant role as digital gold with a market cap of over 10 billion USD.
Making Money Out of Bitcoin
Bitcoin becomes profitable when mined with specialized ASIC hardware which runs on very low cost electricity. High-end ASIC hardware costs over $2000 per unit and has no purpose other than mining bitcoin. The pace of ASIC hardware advancement is slowing as it approaches the limits of semiconductor miniaturization technology; it can be hoped that this process, perhaps in combination with the increasing power generation efficiencies, will eventually lead to a more widely-dispersed bitcoin mining network.
The Advantages of Bitcoin
Bitcoin is decentralized, meaning cryptocurrencies are not backed by any government nor dependent on traditional financial institutions. That’s why it has low transaction fees, usually in the range of about five cents or so. It even makes micro-payments possible, so if you’re running a publishing website, you can make money by paying somebody for 10 or 20 cents to read an article.
The Disadvantages of Bitcoin
For people who are not well versed in computer security, bitcoin is actually hard to understand. It has no built-in consumer protection. So if you spend a bitcoin and then decide you want it back, there’s no one to complain to except the person who took your bitcoin. The system is also prone to bugs since it doesn’t utilize the latest technology available in the cryptocurrencies making it slow and impractical for retail transactions.
There are threats to the widespread use of bitcoin and not as many people are accepting it. It has an uncertain, market-based value which can vary quite a bit from day to day. It even makes controversial headlines whenever it gets used for black market and tax evasions. Hence, there are also big businesses finding it risky to accept bitcoin in many cases.
Like any other cryptocurrencies out there and even though it is the most dominant of all, it also has its own share of ups and down. Now that you know all that, it’s up to you to decide whether to try investing in bitcoin or use it in your Internet transactions.