Bitcoin hasn’t been around all that long – since 2008 – but it’s created a lot of waves. In the beginning, bitcoin had a shady reputation, as it was considered the currency of choice for hackers and traders on the Dark Web. Today, whilst it hasn’t quite become a mainstream currency, it is perfectly possible for the man on the street to buy and sell bitcoin.
If you are still in the dark about bitcoin, here’s what you need to know.
What is Bitcoin?
Cryptocurrencies are digital coins. Bitcoin is the best-known of the current crop of cryptocurrencies. Others include Ethereum, Ripple, and LiteCoin. Nobody owns bitcoin.
The first bitcoin was mined in 2009, allegedly by someone called Satoshi Nakamoto, although no-one of that name has ever been found. It began life as an open source project designed to reduce corruption and misuse of money in the banking sector through the creation of a decentralized transactional system.
How much is Bitcoin worth?
When bitcoin was first invented as a concept, it had little monetary value. In 2010, Lazlo Henitz, an early adopter of bitcoin, managed to pay for two pizzas with one bitcoin. Today, those two pizzas would be worth a lot more than a few cents.
Bitcoin’s value has rocketed in recent years. In March 2015, 1 BTC was worth $200-$300. Today, 1 BTC is worth $7,1620 with a market cap of $124,111,648,993 USD. At the end of 2017, fuelled by an intense interest in cryptocurrencies, the price of one bitcoin shot up to an all-time high of nearly $20k, but this didn’t last long.
Since then, bitcoin has experienced a number of peaks and troughs but has mostly leveled out around the $7k mark.
How can I buy Bitcoin?
Bitcoin is mined, but you need considerable computer power to create new bitcoins. The easiest way to acquire bitcoins is to buy them online. You can use credit and debit cards to fund your purchases via reputable currency exchanges.
Well-known exchanges include Coinbase and Coinsquare. There is also a growing network of bitcoin ATMs. In addition, you can sell a product or service in return for bitcoin.
How do I store Bitcoin?
Like all digital currencies, bitcoins are stored in a digital wallet. Anyone can create a digital wallet. Hot wallets are connected to the internet, so you can access your bitcoin and use it to pay for goods and services immediately.
These are the equivalent of an online bank account. If you want someone to send you a bitcoin payment, you could give them the digital address of your bitcoin wallet, so they could make a transfer. Cold wallets are offline. These are more suitable for large amounts of bitcoin.
Examples of digital wallets include Trezor, MyCelium, and Electrum.
What can I buy with Bitcoin?
Bitcoin is increasingly being adopted as a payment method and the list of big brands that accept bitcoin is growing. You can now use bitcoin to pay for goods and services on Expedia, Microsoft, Subway, and Shopify. Other brands that accept bitcoin payments include Namecheap, Overstock.com, and even Save The Children.
Some brands have done an about turn and no longer accept bitcoin. Stripe stopped accepting bitcoin in January of this year, citing price volatility as a major issue. Steam also no longer accepts bitcoin payments for the same reason.
How can I trade in Bitcoin?
Anyone can trade in bitcoin. Most major online trading platforms offer bitcoin trading as part of their forex service. It is important to note that bitcoin is more volatile than other currencies, as the market is new and highly fragmented, but you can make money trading bitcoin.
What factors affect the price of BTC?
Bitcoin, like most commodities, is affected by supply and demand. There are approximately 16.7 million bitcoins in circulation, but there can never be more than 21 million bitcoins in total, so as the available supply falls, bitcoin’s value will rise.
The price of bitcoin tends to rise during periods of political instability. For example, bitcoin’s value rose during the US presidential elections. Increased regulation has had the opposite effect.
The likelihood is that bitcoin and other cryptos will continue to enter the mainstream. One day we might all be using digital currencies to pay for groceries and everyday items. By then, coins and notes will almost certainly be obsolete.
Executive Editor at Best in Australia. Mike has spent over a decade covering news related to business leaders and entrepreneurs around Australia and across the world.