Everything You Need to Know About Bitcoin

Do you already know what a bitcoin is and how to buy one? Well, clear up any questions you have about this cryptocurrency and see if it’s worth it for you to make this investment.

Have you been hearing a lot about Bitcoin, cryptocurrencies, and virtual money, but don’t know what they are or how they work? 4KST has put together a guide to answer all your questions and help you understand once and for all what they’re all about and whether it’s really safe to start investing in the currency of the future.

What is Bitcoin?

Bitcoin, often described as a cryptocurrency, is a virtual or digital currency. It’s like an online version of cash. You can use it to buy goods and services, but not many stores accept Bitcoin yet, and some countries have banned it entirely.

However, some companies are beginning to acknowledge its influence, which has only been growing. In October of last year, for example, the online payment service PayPal announced that it would allow its customers to buy and sell bitcoin.

In Brazil, companies such as Tecnisa and Grupo Reserva already accept Bitcoin as a form of payment. Some hotels and inns have also started accepting the virtual currency. 

How does it work?

Each bitcoin is essentially a computer file that is stored in a “digital wallet” app on a smartphone or computer. People can send bitcoins (or a fraction of one) to your digital wallet, and you can send bitcoins to other people. Each transaction is recorded in a public ledger called the blockchain.

This makes it possible to trace the history of bitcoins to prevent people from spending coins they don't own, making copies, or reversing transactions.

New bitcoins are generated through a competitive, decentralized process called “mining.” In this process, individuals are rewarded by the network for their services. Bitcoin miners process transactions and secure the network using specialized hardware, and in return, they receive new bitcoins.

Why do people buy Bitcoin?

There are basically three ways to obtain bitcoins: buying them with real money, selling goods and receiving payment in bitcoins, or mining them on a computer.

For beginners, the best approach is to link a bank account, debit card, or credit card to make your first bitcoin purchase on most exchanges. Linking a bank account is recommended for buying large amounts of bitcoin, as transfer fees tend to be lower. Credit and debit cards are recommended only for smaller purchases, as they involve higher fees.

Some people like the fact that Bitcoin isn't controlled by the government or banks. People can also spend their bitcoins anonymously. Although all transactions are recorded, no one would know which account number is yours unless you provide that information.

Currently, the publicly traded company MicroStrategy holds the most bitcoins on its balance sheet, followed by Tesla, Galaxy Digital Holdings, Voyager Digital, Square, and Marathon Digital Holdings. MicroStrategy holds approximately 105,085 bitcoins, worth $3.6 billion based on the price as of June 28, 2021. 

Is it safe to buy Bitcoin?

Every transaction is publicly recorded, which is why it is very difficult to copy bitcoins, create counterfeits, or spend bitcoins you don't own.

However, it is possible to lose your Bitcoin wallet or delete your Bitcoins and lose them forever. There have also been cases of theft from websites that allow you to store your Bitcoins remotely.

The value of bitcoins has fluctuated greatly over the years since they were created in 2009, and some people don’t think it’s safe to convert their “real” money into bitcoin.

Keep following our blog and social media channels to learn more about cryptocurrencies and other trends in the worlds of technology and finance.