Why do we need bitcoin – just about the complicated
In this article, we will explain in simple and understandable words why you need Bitcoin. After all, every day it is more and more part of our everyday life. But for some reason, people practically did not increase their knowledge about cryptocurrency.
Today we decided to correct this misunderstanding. And let’s do it in simple words, without delving into complex terms. Because we sincerely believe that a scientific degree is not needed to understand such things.
Therefore, feel free to scroll through this article below to find out what bitcoin is for.
What is bitcoin in simple words
Since we agreed to speak in simple terms, bitcoin is just an electronic currency. Exactly the same as a dollar or 🪙. With one exception, that it is not physically expressed at all. It is absolutely impossible to put it in a pocket or in a leather wallet. To withdraw from an ATM or buy a coin from a seller in the market – too. And if you are offered this, they are definitely scammers.
The fact is that bitcoin is a crypto currency. Try not to get distracted now, we will definitely explain everything. The word “cryptocurrency" came about after combining two words. The second – currency – is very familiar to you. But the prefix “crypto” comes from the word “cryptography”, that is, “encryption”.
Bitcoin is produced on the basis of mathematical calculations and transactions between users. In fact, this is a small cog in a huge mathematical formula. And this cog has a certain price, which was agreed upon by all participants in the system.
And to make it all safe, each bitcoin is encrypted with a digital signature that helps confirm its authenticity. Thanks to all of the above, one main feature of bitcoin can be distinguished. It cannot be:
This is how the system was originally built. And it makes interaction with bitcoin completely safe and, most importantly, anonymous.
Why do you need bitcoin
To answer this question, let’s imagine ordinary physical money. They tend to wear out, get lost, tear. It is absolutely impossible to send them somewhere to another country without problems with banks and huge commissions.
Here you will say that you can keep money on the card, and such problems will not arise. Here you are right, but there is one big BUT. The money on your bank card is not yours. You are simply borrowing some cash space from the bank while it is quietly using the entire array of cash for its operations. And at any moment this bank, even the greenest and largest, can collapse.
And along with it, as usual, and all your honestly earned savings. The outlook is not at all bright, is it? That’s what we think. Because there is nothing nice about it.
And as you might have guessed, nothing like that can happen with bitcoin. No uncle in an expensive suit can simply withdraw all the money from your account. Because only you have access to your bitcoin wallet. Strictly one single password. And if you do not know this password, you will not be able to return access. Even you.
Why do you need bitcoin
So, we have already determined what bitcoins are and why they are needed in principle. But let’s think about why you personally need bitcoins. Because it can be used in different ways. And these methods depend directly on your goals.
The use of bitcoins can be roughly divided into two categories:
- Personal use.
- Use for income.
You probably already understood everything from the names of these categories. But let’s still go through the examples to consolidate this understanding. Do you agree? Good.
Why You Need Bitcoin – Personal Use
The personal use of bitcoin is an incredibly simple and banal thing. It lies in the fact that you use bitcoin in the same way as any other currency.
You buy goods on the Internet, send them to your nephew for his birthday, save up in your wallet to periodically wither over gold. In general, everything is according to the classical scheme.
In civilized countries where bitcoins are not looked down upon, this practice has been developed for almost a decade. Any tourist, say, in the conditional USA or China, is no longer surprised by ATMs with bitcoins. Many banks have successfully integrated this e-currency into their services and allow anyone to freely use it.
In our country, the attitude towards cryptocurrency has not yet settled down. We do not have any official ban on the use of bitcoins, do not be alarmed. But our authorities are in no hurry to openly declare support for electronic currencies. We will not go into the reasons. Because the article, after all, is not about that.
Why do you need bitcoin – making money
You don’t have to be a third-generation wolf from Wall Street to make money on bitcoin either. Because no matter how coaches from advertising banners convince you, the principle of making money on bitcoins is simple.
It consists in the following:
- You replenish your bitcoin wallet in any convenient way. It can be a purchase, mining, a gift from aliens – it doesn’t matter.
- Wait for the price to go up.
The fact is that bitcoin has a high level of so-called volatility. This means that its rate is not characterized by any super-high stability. He is always mobile. Today it costs conditional 10 thousand dollars, tomorrow – only 8 thousand, and the day after tomorrow – 16 thousand.
Well, here you will ask a fair question: why do we need a currency in which one cannot be sure? This is an absolutely correct and healthy everyday position, it has its own logic. But many traders make good money on this volatility just according to the three-step scheme that we indicated a little higher.
Judge for yourself: it is always nice to buy a currency for a small amount, and in a month to sell it twice as much. Then wait for the price to drop, buy some amount again and sell again later.
Under ideal conditions, you can get almost ten times the amount originally invested in a few months. Especially if you fix your profits on time and invest money correctly.
Where do bitcoins come from
At this point, you should have another fair question. So many people invest their money in bitcoin, perform some operations with it and generally trust such a strange and incomprehensible system. But where do bitcoins come from?
Cryptocurrency is the result of complex mathematical calculations. Participants in the system provide the computing power of their computers to make these calculations faster. When some part of the mathematical algorithm is solved, the participant is rewarded with bitcoin.
This whole process is called mining. From English it can be translated as "prey". But the problem is that the complexity of calculations is constantly increasing. And in order for the mining reward not to get smaller, people have to increase their computing power.
That is, for the day of these calculations back in 2008, you could get dozens of bitcoins. And today, with the same intensity, a person will receive about 0.01 bitcoin. As a result, the bitcoin itself becomes smaller, and the price for it increases.
Why is Bitcoin safe to use?
So, what is bitcoin and how to use it is now clear to you. Where does bitcoin come from? Now we only have to tell you why using bitcoin is a completely safe thing.
But first, we note that many large companies agree with the security of bitcoin. They successfully use it, implement it to receive payments from customers and, in general, eagerly collect them from themselves.
Among these companies are the following:
- Victoria’s Secret;
Pretty eminent company, don’t you think? Remember how many times they were at the forefront of progress. Some of them got up on it. Perhaps it would be wiser to be somewhere near them. In order to grab a piece of profit in time, of course.
But support for cryptocurrencies is developing far for a reason. This is due to several of its properties, which no classical currency in the world can boast of. Namely:
- Small commissions
- Limited issue.
We have already touched on some of this list in the discussions above. But some things, perhaps, should be considered separately. To cover the whole topic completely and not to miss any details.
The entire Bitcoin coin system, as well as many other cryptocurrencies, has been and remains peer-to-peer. This means that all participants in this system are completely equal, regardless of the contribution they make to the operation of the currency.
There is no board of directors that decides who gets the coins and how much. There is only a regulatory system that confirms the correctness of the solution of the mathematical algorithm. But she does not do this out of any selfish convictions.
It works simply as a verification of digital signatures. So that some cunning scammers who decide to make money on honest miners do not join bitcoin mining.
When you register your own bitcoin wallet, you will not be asked for detailed personal details. It doesn’t matter to the system at all.
As a result, all transactions will occur through an identifier that the system will assign to you. This is a great opportunity for those who are wary of sharing their personal data on the Internet.
And for those who do not want the state to follow their every step. Although many hide so predominantly from tax structures, not wanting to pay fees on their personal earnings.
Openness and security
This is also one of the most basic principles of any cryptocurrency. And they appeared in response to the strange use of the national currency by the bank and government agencies.
When you use money in a bank, you can never be completely sure that it really is there. You receive all information directly from the bank. But it may not be true. In addition, banking structures often become victims of hacker attacks. And here, not only your funds, but also personal data are at risk.
In the Bitcoin system, this is completely excluded. You can verify each transaction in the general blockchain. And only you have access to your funds. This already favorably distinguishes bitcoin from alternatives.
How do states treat their state currency? As to its absolute property. At any time, they can print an additional print run, enter a different face value, and so on.
You can’t say the same about bitcoin. Because its maximum amount is determined from the very beginning, and it is simply impossible to change this amount. When the counter of existing bitcoins reaches 21,000,000 BTC, it will stop.
This significant event will happen only by the middle of the 22nd century. Namely, in 2149, but active mining of coins will actually stop a hundred years before that. And getting coins will be much easier if you just buy them.
But judge for yourself: mining already now, in 2021, seems to be a rather difficult task. And only a little more than a decade has passed since the creation of bitcoin. In another ten years, the amount of mined currencies will be halved. And so every ten, twenty and thirty years.
But this is good news for all owners of this cryptocurrency. Because a decrease in the number of bitcoins means a gradual increase in its value. There are many stories about this among the people. Like, for example, the man who paid 100 bitcoins for a pizza delivery in 2009.
Now imagine how much that one hundred bitcoins is worth today. If the cost of one bitcoin at the moment is 828 thousand 🪙.
How to get bitcoin
I hope all of the above does not now seem to you a description of something alien. Because we tried to tell what bitcoin is in simple words and simplified all this pile of technical information as much as possible.
And now you might be wondering exactly how to get bitcoin in 2021. Well, there are fewer and fewer ways to get it shareware every day. And the list now looks like this:
- Mine bitcoin on a rented mining farm. Many companies offer to rent technical computing power so that you can mine bitcoin for your wallet. Unfastening, of course, a certain percentage.
- Mine other cryptocurrencies on your own. There are many other coins besides bitcoin. And it’s much easier to get them. And then you can always freely exchange them for bitcoin for a sense of confidence and security.
- Buy bitcoin. The simplest, but at the same time the most expensive way. Suitable for people who already have start-up capital and experience in investing.
So, now you have the basic information about what bitcoin is, why you need it and where to get it. We really hope that this was enough to create a general idea about the field of cryptocurrencies.