Even if you aren’t particularly interested in tech news and don’t follow any trends or developments that closely, you’re still likely to have heard of Bitcoin. It seems like every few months there’s a reason for it to pop up in mainstream media conversations. Sometimes, it’s talking about the amazing highs it’s reached, or the political and economic ramifications of having a decentralized global currency. Other times, it’s fears over a market crash or tragicomic anecdotes about wallet passwords being lost.
It’s enough to make anyone at least a little bit curious
All the press discussion and the specialized terminology can also make you feel like it’s already too late to invest. There’s a learning curve and it can feel a little embarrassing to know you’re starting at the beginning when it feels like everyone else is miles ahead. Every cryptocurrency investor has to start somewhere though!
This article is the perfect place to get that start. We’re going to give you a brief explanation of what Bitcoin is and how it works. Then we’ll discuss ways that you can invest in it. If you’re thinking about starting your cryptocurrency journey, we’ll give you the basic tools to do just that.
Before we dive into Bitcoin, we need to explain the underlying technology that makes Bitcoin possible — blockchain. In the simplest terms, a blockchain is a digital ledger. It’s a way to record transactions. The nature of the blockchain makes it incredibly secure.
The blockchain is composed of individual blocks that hold data. Each block is verified before being attached to the chain. Once verified and attached, nothing about the block can be altered. This is how the blockchain is kept secure — every step in the creation of the chain is public and is verified. Blockchain is both how cryptocurrencies are created and how they’re stored.
Nearly every cryptocurrency uses some form of blockchain.
Just what is Bitcoin?
Bitcoin is the original cryptocurrency. It is a decentralized, digital currency. Being decentralized means that it is not under the control of a specific government or financial institution. It exists without the constraints and regulations that national currencies have and is truly global.
Bitcoin was created in 2008 and entered the public market in 2009. No one knows the identity of the person or people who invented Bitcoin, but they use the pseudonym Satoshi Nakamoto. The release of Bitcoin was accompanied by a white paper explaining what it was. The description of Bitcoin in the title of the paper — “A Peer-to-Peer Electronic Cash System” — is the clearest summation we’ve come across.
Once it has been acquired, whether by purchase or mining, Bitcoin is stored in a digital wallet. There are two types of crypto wallets. A hot wallet is one that is connected to the internet. Hot wallets are used to transfer coins, but because they are connected, they are more vulnerable to hacking. A cold wallet, on the other hand, is where coins are stored. The cold wallet is not connected to the internet but is less convenient.
Today, Bitcoin has fully entered the mainstream. While it was difficult in the early days of crypto to find a way to actually spend what you had mined or invested in, these days it is much easier. Many businesses accept cryptocurrencies, both digital and brick-and-mortar ones. There are now hundreds of rival cryptocurrencies, but only Ethereum and one or two others come close to Bitcoin in terms of investor trust and longevity.
How can you invest?
There are two ways to invest in Bitcoin: mining and purchasing on an exchange. Mining is how Bitcoin is created and it is an expensive and time-consuming process. In order to mine Bitcoin you would need a high-powered computer system with top GPUs that are capable of handling the amount of data that needs to be processed. Mining Bitcoin also uses a huge amount of electricity.
It is much simpler and more efficient to buy Bitcoin on a cryptocurrency exchange. A number of these exist to facilitate these purchases and the transfer of one crypto to another. A glance at the OKX cryptocurrency prices shows that Bitcoin is the highest valued coin on the market. As of June 25th, 2022, a single Bitcoin is valued at just over $21,000.
These exchanges closely resemble a traditional stock exchange. This means that there’s much less work required in understanding and using them. For the vast majority of people involved in the cryptocurrency world, using an exchange is a better option than mining.