Download
1 / 2
20 likes | 20 Views
Most people, when they hear the word "Bitcoin", their eyes glaze over. However, as with a lot of the finance world, which deliberately uses obscure terminology, you only need to chip away at a few of the basic ideas suggested by experts like Steven Eidelkind and you'll realize you're not so out of the game as you thought.<br>
E N D
Steven Eidelkind-How to Invest in Bitcoin and Cryptocurrencies? Most people, when they hear the word "Bitcoin", their eyes glaze over. However, as with a lot of the finance world, which deliberately uses obscure terminology, you only need to chip away at a few of the basic ideas suggested by experts like Steven Eidelkind and you'll realize you're not so out of the game as you thought. Cryptocurrency is a digital currency that can be stored on your computer or phone, and it can be sent person-to-person without the need for a bank. There has only been one cryptocurrency, Bitcoin. Bitcoin does not use the traditional method of a bank or credit card company verifying a customer's identity but instead uses a set of private and public keys to help protect both sides of the transaction. Anyone can send Bitcoin to a public key address, just like an email address. Private keys serve as passwords for e-mail accounts. You need to carefully guard and protect it if you want to prevent unauthorized access to your Bitcoin. Bitcoin is created through a process called mining. Digging for gold is the analogy for mining Bitcoin. Miners compete against each other by solving a math puzzle that becomes more difficult as more people try to win. Mining bitcoins become more difficult as more people compete to win it. Bitcoin is a deflationary currency, like gold, which has created a hoarding situation as predicted by many economists. Hoarding creates a feedback loop: As Bitcoin becomes more valuable and scarcer, more people are motivated to hoard it, which further increases its value, which further drives the price up.
The Bitcoin network also accepts transactions based on the decisions of the miners. When users send money over the Bitcoin network, they pay miners a small fee for accepting their transactions. Steven Eidelkind says that it's similar to paying a fee to your bank when you wire money. Since Bitcoin can only process about 25,000 transactions per hour, miners generally take the transactions with the highest fees first. This will soon increase to millions of transactions per hour.
