8 Things You Should Know About Bitcoin

On May 22, 2010, Laszlo Hanyecz was the first person to use cryptocurrency to buy products in the real world. Bitcoin Pizza Day commemorates the two Papa John’s pizzas that Hanyecz bought.

You need to do your research if you plan to start a crypto portfolio. Each type of cryptocurrency has its own history, nuances, and risks.

Just like you would do your research when investing in a business or retirement plan, you need to research your chosen crypto to ensure you’re getting to most out of your investment.

Keep reading for more info on the eight things you should know about Bitcoin.

Bitcoin Mining

Acquiring Bitcoin is an incredibly complex process. Bitcoin needs to be mined to get new Bitcoin to enter circulation. Cryptocurrency mining is performed with sophisticated hardware that solves complex computational math problems.

The first person or computer to solve the math problem is rewarded with cryptocurrency and the next problem becomes available. This means it is a constant race to see who can solve the problem the fastest. 

To successfully mine cryptocurrencies, you need to make costly hardware investments. Upgrading your hardware also doesn’t always mean you’ll reap the rewards.

Mining appeals to many investors as you receive rewards for your work and investment. Similar to the gold rush, if you’re technologically inclined (or open to learning), mining cryptocurrencies seem like a good way to make money without constantly working at it. 

In the beginning, it was possible to mine Bitcoin using your personal computer. As more people started mining, personal computers just couldn’t cut it anymore. This is where it started to get expensive to mine crypto.

If you only have access to your personal computer, your best course of action will be to join a mining pool. Mining pools consist of groups of miners that combine the computational power of their personal computers. This allows the mining pool to compete with large ASIC mining farms. 

If you have the means, you can also consider purchasing an ASIC miner. These systems are expensive to purchase and can be costly to maintain. 

How Bitcoin Works

Bitcoin isn’t tied to a bank or government, so once you’ve bought or mined your coins you can spend it anonymously. Initially, Bitcoin was only meant to be used as an investment and as a peer-to-peer payment method. As the value increased and more people started investing in Bitcoin so did the ways to use the cryptocurrency. 

Luckily, the process of using cryptocurrencies to pay for real-world items has become much simpler compared to what Laszlo Hanyecz had to go through. Using cryptocurrencies isn’t as simple or as widely accepted as cash, but these days you can even find crypto ATMs. 

There are over 60,000 Bitcoin ATMs across the country. These ATMs work in one of two different ways:

  1. Unidirectional ATMs where you buy cryptocurrencies with cash
  2. Bidirectional ATMs where you can buy and sell cryptocurrencies for cash

Some machines, like the Ethereum ATM, allow you to buy Ethereum with Bitcoin.

How Much Is It Worth?

The value of Bitcoins is constantly changing. The current market cap for Bitcoin is 446.6 billion dollars. 

Since the value of Bitcoin can change at the drop of a hat, it’s important to track the value and any instances that can affect its value. In the same way, the Dollar is affected by economic news and inflation, so is Bitcoin. It’s a good idea to stay up to date with any financial news and updates to ensure you invest at the right time.

Like precious metals, Bitcoin is a rare asset. The algorithm that controls how much Bitcoin is produced has a cut-off date of 2140. After that, there won’t be any new Bitcoin added to the economy.

Elon Musk also has some pull when it comes to cryptocurrency prices. Whenever Musk talks or tweets about cryptocurrencies, the market tends to listen. Musk has personally impacted the price of bitcoin and dogecoin, but also made waves in the cryptocurrency market.

Musk has made pronouncements about which coins Tesla will accept as a purchase method that have drastically changed the value of some coins.

When an asset or resource is rare it makes for an attractive investment, but it also makes it volatile. Since Bitcoin hasn’t been around for a long period of time yet it makes investors question the future of the currency. A volatile investment will always be questioned floating around regarding its survival.

Bitcoin Has Mysterious Origins

The beginning of Bitcoin can be traced back to 2008. An anonymous developer or group of developers introduced Bitcoin to the world and used the name Satoshi Nakamoto to distribute the news. No one knows who or what Satoshi Nakamoto represents, but it is widely assumed that the name is a pseudonym.

20% Of Bitcoin Has Been Lost

Bitcoin users have misplaced about 20% of all existing tokens. This combines Bitcoin that is stuck in wallets, and Bitcoin that can’t be accessed.

Satoshi Nakamoto holds a significant amount of tokens. The general consensus is that the founder will never touch the coins, meaning they won’t ever be put back into circulation.

After the founder’s tokens, the main two culprits for lost Bitcoin are:

  1. Death
  2. Lost keys

If a person passes away without giving someone access to their Bitcoin, it means those coins are out of out-of-circulation forever. This is one of the reasons why it’s important to include your assets like your crypto portfolio in your will.

In the same way, bank account passwords are needed to access your accounts, you need a key to access your cryptocurrencies. Unlike with your bank, you don’t have the option to simply recover your password or key. If you lose the key, you usually won’t get access to your Bitcoin again.

Hardware crypto wallets are an incredibly secure way to protect your investment, but it also makes it harder to recover your crypto if you get locked out. You need to carefully consider the pros and cons of these wallets as they might be safer from hackers, but you need to have access to it yourself.

The Bitcoin Ban

Crypto-based mortgages are the way of the future. In America, a few mortgage lenders have announced that they will be accepting Bitcoin and other cryptocurrencies as mortgage payments.

While there are numerous countries like America that have embraced cryptocurrencies, some aren’t as progressive. Nine countries including China, Egypt, and Morocco have all banned the use of cryptocurrencies.

While completely banning Bitcoin is an extreme stance that only a few countries have adopted, many countries advise citizens to be careful when using crypto. These countries don’t accept crypto as legal tender, but they haven’t banned its use entirely.

Some countries have also stated that they’re concerned about the environmental impact of mining crypto. Since mining systems require large amounts of electricity to mine and cool down the systems, it’s can be environmentally taxing. This is one of the reasons some countries are considering controlling or completely banning cryptocurrencies.

Goldmine in a Landfill

A U.K. resident has been trying for years to get his Bitcoins back. He claims he threw out a hard drive that has 7500 Bitcoins stored on it. When it became clear how much Bitcoin is worth, he went searching for the hard drive, only to realize he threw it out.

Since then, he has been trying to persuade his local city council to excavate the landfill in an attempt to find the hard drive. He offers to give a portion of the proceeds back to the city if they allow him to go through the landfill.

Bitcoin Millionaires

Since Bitcoin transactions are anonymous, it’s harder to determine how many Bitcoin millionaires there are out there. At current exchange rates, a person needs just over 40 Bitcoins to be a millionaire. Over 67,000 digital addresses have more than 1 million dollars worth of Bitcoin in them.

While cryptocurrencies are volatile and the number of Bitcoins needed to count as millionaires can easily change, many people have seen success with this investment. Forbes even included 12 cryptocurrency billionaires on its 2021 Billionaires List.

Invest in Bitcoin Today

Bitcoin is not only the largest cryptocurrency on the market, but it is one of the best cryptos to invest in. The longstanding ranking as one of the top cryptos makes it a great addition to your investment portfolio. Cryptocurrencies are here to stay, so it’s time to invest in crypto. 

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