Bitcoin is a currency traded only by digital means and is the pioneer in the world of cryptocurrencies (digital currencies). Unlike ordinary currencies, Bitcoin works in a decentralized manner, that is, without central control through banks or governments.
To ensure that transactions take place on a regular basis, Bitcoin and other cryptocurrencies use Blockchain. This system guarantees the viability of the currency, making all operations on the network public, in addition to preventing double counting for cryptocurrencies.
How does Bitcoin work?
Bitcoin works as a kind of file sharing on the internet, but for exchanging currencies and information about transactions.
Through the Blockchain system, each Bitcoin transaction is verified and approved by several computers that perform this work around the world.
The protection of the system is done by all computers that volunteer to work and that must solve complex mathematical problems to approve each operation.
This process, known as “mining”, adds information from the operation in digital blocks. Thus, together they form a kind of accounting book, hence the name Blockchain.
The block information is protected by a code known as hash or proof of work, which still guarantees that the system is interconnected, since each block has its own hash and that of the previous block.
Bitcoin is a currency that only exists in the digital environment. Therefore, to buy or pay, the user must have a password protected online account, and this part is not exposed to the network like Blockchain operations.
The creation of more Bitcoins is also controlled by the system, which emits less and less and is scheduled to stop when it reaches 21 million Bitcoins in circulation.
These amounts are issued to new buyers and to coin miners.
Bitcoin’s value derives from other currencies, such as the dollar, and is determined by supply and demand. That is, with an intense increase in demand, more dollars are needed to acquire the cryptocurrency.
If you are interested in learning more about how Bitcoin works, better understand how the Blockchain system works.
How to buy Bitcoin?
To carry out transactions on the Bitcoin network, it is necessary to create a “virtual wallet”. Wallets in the Bitcoin system are composed of two cryptographic keys: one public and one private.
The public key will be used by the Blockchain to become aware of the transactions, while the private key only the account owner knows and uses to do its operations.
The user who wishes to obtain Bitcoins must provide a document number that identifies him, such as the Individual Taxpayer Register (CPF).
There are different companies that carry out this service over the internet, but first it is recommended to know your reputation well, researching the experiences of other users.
To complete the process and start buying the cryptocurrency you will need to exchange reais, providing a bank account, or a credit or debit card that connects directly to the account.
Bitcoin emerged in late 2008, being featured in a white paper by an author named Satoshi Sakamoto, whose true identity has never been revealed.
Through this document, the functionalities of cryptocurrency and the Blockchain system were presented as guarantor of operations.
In January 2009, the first block containing 50 Bitcoins (BTC) was mined, officially launching the digital currency. From this year on, Bitcoin technology was expanded and updated in new versions, until it started to grow from 2010.
In recent years, Bitcoin has attracted the attention of investors as it is a currency that acts independently. In addition, its market value grew exponentially, reaching $ 19,000 at the end of 2017.
After the creation and success of Bitcoin, other digital currencies, known as Altcoins, were created, with characteristics and parameters different from their precursor.
Is Bitcoin a Safe Currency?
Despite not being a currency controlled by any institution, Bitcoin has won many followers in recent years because of a secure system, such as Blockchain.
In addition to the system, the Bitcoin market is composed of companies that act as a buying and selling platform. And some of them have already suffered virtual attacks.
The biggest of these attacks occurred in 2014, when MtGox was stolen at $ 473 million, leaving all of its customers without Bitcoins.
Pump and dump or pyramid schemes have also taken place amid cryptocurrencies, where a high financial return is promised to users who are encouraged to attract more people to the scheme.
As an investment, you need to understand that both Bitcoin and all other cryptocurrencies have a value that derives from uncertain market behavior.
In short, it can be valued and devalued. Having Bitcoin as an investment means having a variable income, which can bring gains or losses.