So you want to buy Bitcoin? Are you ready and do you have what it takes to get there? Do you know the risks involved in Bitcoins? Most importantly, do you even know what Bitcoin is?
Must-knows about Bitcoin
One thing for sure, no one is able to grasp everything there is to know about Bitcoin. In fact, even the most sound investors or the most tech-savvy ones would need time before they get the hang of it. The basic idea is that it is a digital currency and is among the 800+ out there. Bitcoin is the oldest cryptocurrency in the market which has been around for slightly less than a decade. How it works and everything, you can read them here. But we want to give you the drill down.
Top things you must know about Bitcoin
Here are the top things you should know about Bitcoin before considering jumping into this market.
- How it started – Bitcoin started in 2008 by Satoshi Nakamoto. The date of its birth was actually 3rd January. Nakamoto published a proof of concept that was published but he just vanished in 2010 which was then picked up by other developers. It must be stated that the true creator of Bitcoin is still unknown as Nakamoto has denied it all this while. Some names have surfaced but nothing is confirmed
- You can use Bitcoins for spending – the first bitcoin transaction took place in May 2010 which was to buy pizza. Since then, it has been used for all types of transactions that include paying for air tickets and hotel stays. The first pizza was purchased for 10,000 bitcoins which was at a very low value then. In November 2017, 10,000 bitcoins is equivalent to almost USD100 million.
- Illegal trading using Bitcoin – the US FBI shut down a darknet site Silk Road in 2014 where bitcoins were used to buy and trade drugs. Then, the US government took over all the wallets that contained about 150,000 bitcoins. That was a moment when the US government became the largest bitcoin holder before selling them off to bidders.
- Risk from hackers – Bitcoin is not entirely safe from hackers. Like any financial engine and the fact that it operates fully online, it is open to threats. The biggest setback came in 2014 when about USD$460 million of bitcoin currency was hacked and stolen from Mt Gox.
- What the billionaire investors think? – so far, Bitcoins have a bit of both. Warren Buffet has warned against investing into Bitcoin. Others have supported it. The main challenge is spending your money in something virtual (online). But that was what happened when E-Commerce first came in.
- Bitcoin Billionaires – There has been some really remarkable successful investors which include the Winklevoss twins (Cameron and Tyler). In 2013, they bought USD11 million worth of Bitcoin. They were later declared the first Bitcoin billionaires when the value hit USD11,000. This has even attracted celebrities like Gwyneth Paltrow and Ashton Kutcher, to name a few
- Financial institutions taking notice – although Bitcoin is not regulated by any agency, it has attracted a lot of interest from large financial institutions. Among them is Fidelity Investments while many others have become more receptive although rejected it initially.
- What is going on now? – as at the end of 2017, the value of Bitcoin is USD10,000 per unit. About 16.7 million Bitcoins are circulated around which is about a market capitalization of around USD167 billion. To put that into context, it is higher than top firms like IBM and Disney.