Regardless of how popular Bitcoin becomes and how often we talk about it, there are still numerous mysteries that surround this cryptocurrency. As Bitcoin managed to break all barriers and spike in value this year, it became one of the most talked-about subjects in the global financial industry.
Many people are now looking to get more familiar with it, which is why they search for various questions about this cryptocurrency. We decided to spare them some time and answer some of the most frequently asked questions about Bitcoin.
Who Created Bitcoin?
Bitcoin is created by Satoshi Nakamoto. The reason why this question is so frequently asked is that Satoshi is actually a pseudonym; a nickname. Satoshi’s real identity has never been confirmed. Nobody knows whether this individual is male or female, his/her nationality, age, etc. All that we know is that this person invented Bitcoin in 2008.
What is Blockchain?
Blockchain is the technology that powers Bitcoin. This is a log that contains all transactions made with Bitcoins. The beauty in it is that it is managed by all Bitcoin users. How? Every miner records individual transactions by solving complex puzzles. Each puzzle that they solve means that they’ve successfully added another block (transaction) to the network. Thanks to this technology, Bitcoin manages to operate successfully, even though it is highly decentralized.
Is bitcoin anonymous?
You will often hear the term “anonymous currency” associated with bitcoins. This is because of the special numbers that are the identity of a person.
Every participant of Bitcoin has a public address through which he/ she is known. However, this identity is not just a simple name or number, it is actually a long string of characters. This contains at least 30 virtually incomprehensible characters.
Therefore, it is difficult to remember them because they won’t make any sense to a layman. But you can keep a record of different identities on your computer. Every time you deal with them, their identity will be the same. And these addresses are viewable to the public. So there isn’t anything hidden.
But because of their complex addressing structure, people often call it anonymous. Therefore, they also link it to illegal transactions but that’s just their way to attack. In reality, Bitcoins are not anonymous.
What can bitcoin do?
Bitcoin is much more than just a currency. In the capital market, cryptocurrency is now having its definite position. There are malls and online sellers and buyers who make transactions through bitcoins. Furthermore, the giant Tesla is also now open for these transactions. So if you have enough coins in your wallet, you can actually go there and buy yourself a car.
But apart from all this, cryptocurrency is changing the financial landscape. It acts as a currency, a reputation application, and a voting mechanism. You can get global identification through it and can start any crowdfunding platform and can also initiate funding programs.
In addition to this, everything that you can think of doing with finance can be done with this cryptocurrency. This also includes future markets, decentralized domain names (DDN), and initiating contracts, wills, and trusts.
The person or authority in charge of Bitcoins?
Bitcoin is not a company nor does it has any organizational structure. It is a software protocol just like email and HTTP address. There is no proper governing body for it. Despite that, it reached where it is now. The creator hasn’t come public and therefore, no one knows the proper operating and governing body.
However, some groups have a way to deal with Bitcoins and their functions. These groups include developers, miners, and users but even they contain varying opinions.
What happens if you lose your bitcoins?
Once you lose it, you actually lose it. There is no way of getting back your coins. Every wallet has a key password and that’s the most important thing to remember. If you forget the key password, you won’t be able to get your coins back.
However, if you have the latest wallet, they offer backups. You can make a backup before getting and buying coins. This backup file will help you to make a new key that you can use on your new wallet. But this is only possible for the latest wallets, if you had an initial wallet, you really don’t have a way out.
How do Trading Sites Operate?
To explain how trading sites operate, we are going to take one of the most reputable sites – the Bitcoin Storm platform. This site acts as more than just a marketplace. Once traders register, they are provided with an additional service.
An AI system that collects all of the data about Bitcoins can predict their future fluctuations with great precision. This information is shared with the sellers and in doing so, they know when is the best time to sell their Bitcoins is, thus maximize their profits. Artificial intelligence has been on the rise recently and trading sites like the one we mentioned are taking full advantage of it.
What Are Halving Events?
Halving events take place when 210,000 Bitcoins are mined, which is approximately every 3 or 4 years. These events control the flow of Bitcoins that are released into the network and help to stabilize it. They do that by cutting the circulation by more than half.
Since Bitcoins become extremely hard to obtain, their value rises shortly after halving events end. So far, there have been 3 halving events – 2012, 2016, and 2020. These periods can predict future surges in the value of Bitcoin which is why it is worth knowing everything about them.
What Does Bitcoin’s Volatility Represent?
We often hear the phrase ‘Bitcoin is a highly-volatile cryptocurrency’. The volatility is an indicator of how often its price changes, regardless if it goes up or down. Since Bitcoin is a highly-volatile cryptocurrency, its value changes each day.
It is almost impossible for traders to determine their future price, which is why they rely on the expertise of trading sites to help them.
How Can You Earn Bitcoins?
There are two ways to earn Bitcoins. The first one is to buy them at a trading site. But, if you want to sell them and make a profit, this may be a risky move because of Bitcoin’s volatility. You may end up buying Bitcoins at a higher price than the one that you can sell them for.
The second way to earn Bitcoins is through the aforementioned process of mining. Mining is the most frequently chosen option because even though it is very hard to mine them, mining is free. Every dollar the traders make afterward is a pure profit.