What does owning Bitcoin really mean?

“People have made fortunes off Bitcoin, some have lost money. It is volatile, but people make money off of volatility too,” notes Richard Branson, and, indeed, what does it mean in reality to own a Bitcoin?

Let’s talk a bit about the father of Crypto and all the issues related to it.

What is Bitcoin?

Bitcoin, created in 2009 by a mysterious creator known as Satoshi Nakamoto, is the first and most valuable cryptocurrency. It has risen from obscurity to become one of the world’s most popular investments.

It is a digital currency that does not need a central authority like banks or governments. Instead, Bitcoin uses a peer-to-peer internet network to verify transactions.

How does Bitcoin work?

 

Each Bitcoin is a file kept on a computer or smartphone in a digital wallet. To understand how bitcoin works, it is helpful to grasp the following words and context:

Bitcoin is powered by Blockchain, an open-source technology that provides a shared public history of transactions grouped into “blocks” that are “chained” together to avoid manipulation. This system keeps a record of every transaction and lets everyone who uses Bitcoin know who owns what.

A Bitcoin wallet has both a public and a private key, which operate together to enable the owner to start and digitally sign transactions. It allows Bitcoin’s core purpose: safely transferring ownership from one user to another.

Bitcoin mining: On the Bitcoin network, users verify transactions via a process known as mining, which is meant to check that new transactions are compatible with previous ones. It guarantees that you cannot spend a Bitcoin that you do not own or have already paid.

So, is owning Bitcoin a good idea?

Cryptocurrencies, in general, are a risky investment. Bitcoin is no exception here. 

So, when you own a Bitcoin, you should consider some of its benefits and drawbacks.

Bitcoin’s advantages

• Secure transactions anytime, anywhere – with lower costs. Once you hold Bitcoin, you may send it to anybody, anywhere, saving time and money. In addition, transactions do not include personal information like names or credit card numbers, reducing the risk of fraud or identity theft.
• Large growth potential. Some Bitcoin investors believe that it will gain confidence and broad usage as Bitcoin grows, increasing its value.
• Decentralization. A decentralized currency that is not controlled by banks, governments, or other third parties is appealing to some investors after the financial crisis and the Great Recession.

Bitcoin’s disadvantages

• Volatility. While Bitcoin’s value has increased considerably, investors’ fortunes have significantly varied based on timing. 
• Hacking risks. Although supporters claim Bitcoin’s blockchain technology is more secure than conventional electronic money transfers, there have been some high-profile thefts. 
• Useful but limited. Only a few businesses now accept Bitcoin. But they are the exceptions.

Final remarks

So, as you can see, owning a Bitcoin is a bit of a risky business, but this asset is the first and most well-known of the over 5,000 cryptocurrencies now in existence. 

And the reason behind this is that, no matter what, it has value. And according to Anton Mozgovoy, co-founder and CEO of digital financial service company Holyheld, “why it’s worth is simply because we, as people, decide it has value – same as gold.”