Most people know how the fiat currency of their country looks. However, nobody has seen Bitcoin because it's a virtual currency. But the popularity of this cryptocurrency has risen over the years. Today, conversations around Bitcoin are widespread, and this shows its rising popularity. However, you may have many questions for which you need answers before investing in Bitcoin. Here are common Bitcoin FAQs and their solutions.
What is Bitcoin?
The simplest Bitcoin definition describes it as a computer code that a publicly available program or software generates, allowing people to send and store value online. This open-source code emerged more than a decade back, and it uses a network that comprises private computers worldwide. This code groups and verifies transactions in a public record called the blockchain. Bitcoin ledger includes details of all transactions that people make in the network.
How is Bitcoin made?
People make Bitcoin by mining it digitally. Bitcoin mining entails using powerful computers to solve complex math puzzles and getting Bitcoins as a reward. For this reason, most people compare Bitcoin to gold, with some calling it digital gold. Gold is valuable because people agree it has it, and its availability is limited. A similar idea governs Bitcoin's value. People invest in Bitcoin via platforms because they believe the cryptocurrency has value. Such platforms allow people to exchange fiat money for Bitcoin. Perhaps, you can check the Oil Profit of this platform for more information. Satoshi Nakamoto limited Bitcoin supply to 21 million tokens. Once miners have produced this amount, they won't generate more Bitcoins.
Is Bitcoin the Only Cryptocurrency Available?
No. Bitcoin was the pioneer cryptocurrency. However, other virtual currencies emerged after Bitcoin's introduction in 2009. But none of these virtual currencies has beaten Bitcoin in terms of value and popularity. Ideally, Bitcoin has better brand recognition and a more rich history. Additionally, computers that run free, open-source code control virtual currencies. Today, Bitcoin holds over 70% of the total cryptocurrency market. However, its share may have dropped due to China's regulatory hurdles.
Where Do People Store Bitcoin?
Technically, people don't store Bitcoin anywhere. You can't save Bitcoin in a hard drive or folder. Instead, the blockchain keeps the evidence that proves the number of your Bitcoins. The system updates the Bitcoin ledger across the network whenever a transaction takes place. Thus, this ledger contains up-to-date information on the Bitcoins that people mine and when they transfer their tokens. People use private keys to access their Bitcoins. This key is a complex password that the code generates whenever a person creates a digital wallet.
How Do People Send Bitcoin?
Traditional payment methods depend on banks for transaction verification. With cryptocurrencies, miners verify Bitcoin transactions on the blockchain. And they do so by running mathematical checks to ensure the validity of every transaction. Most nodes have to agree that a transaction is valid before its addition to the blockchain.
Crypto exchanges allow people to transfer funds to their digital wallets. People can also use these platforms to convert Bitcoin to fiat money and send it to their bank accounts. To send Bitcoin to another person, you need their public key or address to which you send the tokens. Also, you can scan a QR code and then confirm the amount to send to another person.
Does the Government Regulate Bitcoin?
No. Bitcoin is unregulated and decentralized. That means no government or single entity can regulate Bitcoin. That's the main reason why so many people are investing in Bitcoin. Ideally, nobody can control Bitcoin's value or price alone.
People have many questions about Bitcoin. Luckily, the internet is awash with data about this virtual currency. Thus, a little research will generate all the information you need to decide whether and how to invest in Bitcoin.