Bitcoin

    What is Bitcoin? Bitcoin is a piece of code that runs on a blockchain that was invented around 2009. The creator of Bitcoin is still anonymous since he presented Bitcoin on a subreddit and got assistance from developers online on launching this asset. Bitcoin is an asset not a currency. Many people speculate that it will eventually take over the dollar but that is not realistic. It is supposed to be used as a hedge against inflation.

    The reason that Bitcoin is so valuable is because there will only be 21 million Bitcoin ever created. This is not something that can be altered because that is the way the white paper (white paper is the purpose or the design of a project) was created. All the Bitcoin however has not been put out onto the market yet because it will take about 120 more years for all the Bitcoin to be mined by miners. The total amount of Bitcoin on the market right now is about 18 million Bitcoin. That means there is only about 3 million bitcoin left to be mined. Every 4 years however there is an event called the halving. This means that the amount of Bitcoin that miners will get is cut in half every 4 years. The result in this is that Bitcoin will only keep growing in value because there will always be more dollars coming into circulation but the amount of Bitcoin in circulation is set and new Bitcoin will continue to keep coming into the market at a slower pace after every 4 years.

    In reality I know I mentioned there is around 18 million Bitcoin out in circulation but that does not take into account all the Bitcoin that has been lost by owners forgetting their password, losing their wallets ( I will go over ledgers in another paper) or sending their Bitcoin to an incorrect address and losing their assets. In reality there is only about 15 million Bitcoin in the market. That number will keep decreasing since big investment firms are purchasing large amounts of Bitcoin and locking it into cold storage meant to be held for years. In my opinion Bitcoin is the safest and the best investment you can get if you plan on holding for years. Over the course of months and maybe a year Bitcoin will always fluctuate because it is still fairly new but once you understand the technology you start to realize there is not a better investment.  

Comments

  1. UnknownOctober 24, 2021 at 7:33 PM

    Hi Sergio,

    This was a great introduction to Bitcoin for me. What does it mean to mine Bitcoin?
    You say it is the safest investment to hold on to but are there any negatives to Bitcoin?

    -Shawn

    ReplyDelete
    Replies
    1. serNovember 12, 2021 at 12:09 PM

      Mining Bitcoin is verifying the transactions that go on in the blockchain by solving very complicated math problems that require computers to do so and energy. That is why when miners verify these problems they are paid in Bitcoin thus they are "mining" for new Bitcoin. The negatives of Bitcoin would be the volatility of it at the moment since it is still fairly new. If you invest money into it prepare to hold on to it for a couple of years depending on where in the cycle you made your initial purchase. If you hold it for at least 3-4 years you will make way more than any stock market purchase you can make and this is verified if you look at the history of the stock market vs Bitcoin.

      Delete

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