WHAT IS BITCOIN?
Bitcoin is a cryptocurrency, which was first introduced in 2008 by an unknown person or a team going by the name of Satoshi Nakamoto. It is distributed across a decentralized peer-to-peer network, meaning that it is not controlled by a central bank as fiat money is. The code of the protocol of the Bitcoin network is open source. Nevertheless, the network’s security is guaranteed by the fact that everybody has to accept the same rules in order for the network to function.
Increasing the supply of the Bitcoin units is called mining. Since the users of the network send Bitcoin to each other, somebody has to see to the authenticity of each transaction, which is the miners’ main job. The miners are essentially servers, whose computing power is used to verify the correctness of the cryptocurrency exchange and then to include each transaction into the so-called blockchain - the ledger of the Bitcoin network. As a reward, the miners receive new Bitcoin tokens, which effectively increases the supply of the cryptocurrency. The system functions in a way that the miners receive this reward less and less often. This means that the provision of new coins is reduced as time passes and it will cease when the number of available Bitcoins reaches approximately 21 million. This is the main benefit of Bitcoin as it protects the currency from losing its value due to inflation, unlike fiat money, which is currently often printed without any backing.
You can pay with Bitcoin anywhere in the world instantly without the huge bank fees and any intermediaries. Each transaction is irreversible, which protects users from the types of fraud typically associated with credit cards. In the meantime, your personal information is untraceable. This is why the number of businesses that accept Bitcoin payment is growing fast. The cryptocurrency is also a great instrument for making international money transfers as the corresponding substantial bank fees could be avoided, especially if currency exchange is involved. The ever-growing price, the decentralized network and the immunity against inflation make Bitcoin an interesting investment opportunity and is often compared to gold as a great store of value.
The Bitcoin price is highly volatile. This means that the price of your asset can substantially go south or north in a short period of time. The price trend since inception is towards a constant upward movement in the long run; however, in the short run, the value of Bitcoin can rise quickly followed by a steep price correction. Unfortunately, it is impossible to predict whether this tendency will continue in the future, which is why Bitcoin is considered a high risk investment but the potential of the digital currency is enormous.
The price of Bitcoin is influenced by the supply and demand of it and the latter depends on various factors. Generally speaking, the optimistic views about the distribution and usefulness of the cryptocurrency affect its value in a positive way. As Bitcoin is “immune” to inflation, given the controlled and decreasing supply of new Bitcoin units into the network, it is considered that the price will continue to grow, as long as there is no abrupt demand reduction.
1 Bitcoin could be divided into 1 million bits, called satoshis, named after the inventor of the digital currency Satoshi Nakamoto.
This is the equivalent of a bank account, where you can store your cryptocurrency. It is necessary to have a wallet to be able to send and receive Bitcoin. Each wallet has a public and a private key. While the former is like your "IBAN", the latter should be known only by you in order to guarantee the security of your funds.
There are both software and hardware solutions, which allow you to store your Bitcoin assets. You have the freedom to choose the type of wallet that meets your security and UX requirements. Our recommendation is free and flexible and is offered by Jaxx.io. The wallet currently has 7 different software versions - mobile and desktop applications for different operating systems as well as extensions for Firefox and Chrome. If you download your desktop version to a USB stick, you can use it on different devices as a hardware solution. Please bear in mind that the service offered by xChange.bg does not depend on the wallet you are using and xChange.bg does not receive any monetary or other kinds of reward for its recommendation.