To understand whether bitcoin is reliable or not, we have to understand the story behind t differentiate it from common assets.
One is the decentralized form of digital monehe currency from 2009 until now. Thus, the first cryptocurrency to be created, has characteristics thaty that eliminates the need for traditional intermediaries, such as banks and governments, to make financial transactions.
In addition, Bitcoin is powered by a combination of peer-to-peer (P2P) technology – a network of individuals and software-controlled encryption, the science of passing on secret information that can only be read by the sender and receiver.
I think you may have realized by the decentralized word and end-to-end cryptography that bitcoin is reliable, but let’s explore this statement a little further.
How does Bitcoin works and why is it reliable?
Each bitcoin is a file stored in a digital wallet on a computer or smartphone. So to understand how cryptocurrency works and if bitcoin is reliable, let’s learn the terms and a little bit of context:
Blockchain: Bitcoin is powered by an open source code known as a blockchain, which creates a shared public ledger. Thus, each transaction is a “block” that is “chained” to the code, creating a permanent record of each transaction.
Blockchain technology is at the heart of more than 6,000 cryptocurrencies that have followed the trail of Bitcoin.
Private and public keys: A bitcoin wallet contains a public key and a private key, which work together to allow the owner to digitally initiate and sign transactions, providing proof of authorization.
Bitcoin miners: Miners – or members of the end-to-end platform – independently confirm the transaction using high-speed computers, typically within 10 to 20 minutes. As such, miners are paid in bitcoin for their efforts.
Everything you need to know about blockchain
How to make money with Bitcoin?
Bitcoin’s value follows the law of supply and demand – and as demand increases and decreases, there is a lot of volatility in the price of cryptocurrency.
In addition, it is possible to mine bitcoin, which requires technical knowledge and investment in high-performance computers.
Therefore, most people buy bitcoins as a form of monetary speculation – betting that the value in reais of a bitcoin will be higher in the future. But this is difficult to predict.
If Bitcoin is reliable, what is the way to make it more secure?
As you can see from the items listed above, bitcoin is reliable, but what if we could make it more reliable and storable? It is possible to store bitcoins in two types of digital wallets:
Virtual wallet: digital currency is stored in the cloud at a trusted provider that can be accessed through a computer browser, desktop or even smartphone application.
Cold wallet: an encrypted portable device, much like a pen drive, which allows you to download and load your bitcoins.
So basically, a hot wallet is connected to the internet; a cold wallet, no. But you need a hot wallet to download bitcoins on a cold portable wallet.
Buying Bitcoin: the pros and cons
Private and secure transactions anytime: Once you have bitcoins, you can transfer them anytime, anywhere, reducing the time and potential expenses of any transaction.
Thus, personal information, such as name or credit card number, does not appear in transactions, which eliminates the risk of stealing consumer information, for fraudulent purchases or identity theft.
So, remember that to buy bitcoins on an exchange, you usually need to link your bank account first.
The potential for great growth: Some investors who buy and hold the currency are betting that when Bitcoin matures, there will be more confidence and more widespread use, and then the value of Bitcoin will increase.
No traditional banks or government intermediaries: because the old currency is decentralized, investors buy bitcoin, to escape bureaucracies.
Therefore, although hacks have occurred on some exchanges that have already affected the loss of millions, the currency remains more secure than traditional assets.
Price volatility: the 2017 rise in Bitcoin price was due to investors rushing to the bitcoin market.
Hacking issues: Although the blockchain technology behind bitcoin is more secure than traditional electronic money transfers, exchanges that trade bitcoin and other cryptocurrencies are attractive targets for hackers.
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