2017 was an excellent year for Bitcoin. The cryptocurrency reached new heights and became one of the hottest commodities of the year. However, the concept of Bitcoin is still complicated to most people, and even some of the most tech-savvy individuals have difficulty fully understanding it.
As it stands now, Bitcoin is only eight-and-a-half years old, yet it is the oldest and most valued cryptocurrency on the market. The interest to invest in Bitcoin is at an all-time high. However, before you go ahead and make that investment, there are some things to consider.
The price of Bitcoin, like most things in a market, relies on the laws of supply and demand. Currently, the supply is limited to 21 million Bitcoins. Increased demand will force the price to go up as well. The number of people in the world who actually use Bitcoin is relatively small, so the price tends to fluctuate on a daily basis. As more people begin to use Bitcoin, the price will continue to grow. In early 2011, the cost of one Bitcoin was worth less than $1. Predictions suggest that as Bitcoin’s popularity increases, it will be worth hundreds of thousands of dollars to accommodate this demand.
Bitcoin Has No Central Command
No one person owns Bitcoin. It can be compared to the ability to use email as anyone has access to the technology, but there is no single person or company in control of it; no one can block you from sending or receiving bitcoins to others, including banks and governments. This level of freedom also comes with great responsibility. It is important to note that Bitcoin transactions are irreversible. For this reason, it is essential to be very careful when making transactions as there is no central authority to rely on if things go array.
It Is Not Completely Autonomous
All Bitcoin transactions are stored in its public ledger known as the blockchain. This can make it possible for someone’s identity to be linked to a deal over time. There are various tools offered by some companies to increase privacy. However, it is still a great effort to use cryptocurrency anonymously. To improve privacy, most new Bitcoin wallets use a new address every time they receive the cryptocurrency.
You Must Secure Your Wallet
While there are a variety of Bitcoin wallets, the most crucial distinction comes in relation to who is in control of the private keys required to spend bitcoins. These portfolios or wallets act similarly to banks, as they hold the user’s private keys on their behalf. If you decide to use a wallet, you must understand that certain wallets are designed such that the security of your bitcoins is out of your control. There are several wallets, however, that give the user control of their private keys. If you are looking to own a lot of Bitcoin, it would be best to spread your holdings amongst different wallets. However, when you control your wallet, no one can help you if you forget the password or lose access to your keys for whatever reason.