Bitcoin

Year	2007
Founders	Satoshi Nakamoto
Origin	China

Today practically everyone has heard about Bitcoin. High liquidity, extensive demand, mind-blowing growth and lots of hopes tied to BTC – that’s what attracts even more investors.

The essence of Bitcoin

Bitcoin is the most famous and demanded cryptocurrency in the world with the total capitalization exceeding $ 100 trillion. Cryptoinvestors, sceptics and even common people are keeping an eye on the Bitcoin’s exchange rate with interest. What can be expected from this cryptocurrency and how to make money with it?

The essence of Bitcoin consists in using of this decentralized currency by people without regard to the currency market, politics and economy in the fastest, easiest and most comprehensible way. All transactions are guided collectively through a network, and the system’s transparency allows any user to check a key’s validity. Interest in the coin is being promoted by the availability of only a limited amount of coins which appear gradually – namely 21 million. Moreover, it’s becoming even more difficult to mine them each year due to the decreasing emission. Also, a lack of backing adds volatility – it’s not clear what will happen to the currency in future.

History of creation

The history of Bitcoin dates back to 2007: at that time Satoshi Nakamoto (there is no certainty whether it’s a real name or a pseudonym) started to develop a conception of Bitcoin. A year later he published a document containing the concept of work of the coin.

The first virtual coin was issued on January 9th, 2009. At that moment a version 0.1 BTC appeared which was supported only by a few Windows versions. In the same month, Satoshi Nakamoto mined the first 50 coins and conducted the first transaction.

In another 6 months the first exchange of the cryptocurrency for fiat money occurred: Martti Malmi got a little more than 5 dollars for 5 050 BTC. The price of the first Bitcoin didn’t even exceed $ 0,001.

Already in December of the same year a version 0.2 was released, and in 2010 – ver. 0.3. Generation of blocks started in a number of flows.

The first astonishing rise of the Bitcoin’s exchange rate took place in the summer of 2011. The most impressive increase was observed in March-December 2017 when 1 BTC cost nearly $ 20 thousand.

Positive and negative feedback

Users who trade Bitcoin actively or use it for long-term investments note the specific nature of the coin and cryptocurrency as a whole. The following can be considered as advantages for consumers:

• full anonymity;
• comprehensiveness, easiness and accessibility of transactions;
• strong interest in this currency causes its high liquidity;
• swiftness and autonomy of conducted payment operations;
• independence from governments, economy and politics, lack of inflation;
• a high (nearly instant) transactions’ speed.

Even professional investors recognize unlimited opportunities for Bitcoin’s growth. Moreover, people who have been working in IT-sphere for a long time also praise it.

There is also a significant number of negative reviews on the Internet. Someone consider Bitcoin to be some sort of an MLM pyramid, others presume that interest surrounding it is created artificially to blow a bubble and make money on common people and investors. The notable minuses are a lack of backing and high volatility.

Development forecast

The Bitcoin exchange rate is a little more than ₽ 431 340 or about $ 6 363. Only 5 years ago this value was nearly 40 times less. And initially, as many as 1 309 Bitcoins could be bought for one dollar!

The high popularity of the coin ensured an enormous growth of its exchange rate, the high liquidity of the currency and its introduction almost into every aspect of life. Today it’s not only possible to trade or exchange Bitcoins for traditional money but also to pay with them for purchases, goods on the Internet.

Despite its unique success, it’s hard to talk about the future of Bitcoin. Even opinions of the most well-known experts vary significantly. On the whole, two major theories can be extracted:

1. The Bitcoin exchange rate will increase even more and reach the value of $ 50-100 thousand already in 2020. This opinion is promoted by the crypto investor Petros Anagnostou. The major part of specialists in this field tend to think that Bitcoin will have regained its positions already by the end of 2018 and will reach a mark of $ 25-40 thousand. Nevertheless, the current exchange rate dynamics remains disappointing. One of the possible reasons for the increase of the Bitcoin’s price is its partial legalization in a number of countries.
2. Reduction of interest in Bitcoin will occur in a few years and the coin will become practically worthless (the reason for the decrease may lie in the shifting of interest of investors towards another cryptocurrency or outflow of investors from the market in general). Before it happens, sharp fluctuations in the exchange rate with gaps reaching thousands or even tens of thousands of dollars are expected.

Any of the forecasts of the Bitcoin exchange rate provided above cannot be called reliable – too much depends on external factors.

How Bitcoin may be applied?

Global popularity and record-breaking dynamics of growth of the cryptocurrency’s value in 2017 caused raising of questions how to earn Bitcoins and how they can be generally put to use.

Mining: how to earn Bitcoins?

Mining is a classical way to obtain Bitcoins and other coins. The point is to create special structures which ensure the functioning of the cryptocurrency platform. It’s difficult to make money with classical mining today. And, if only 8 years ago it was just enough to have a powerful computer in order to get Bitcoins, nowadays separate farms with specialized equipment which unite tens or hundreds of graphics cards simultaneously are required. It’s almost impossible for an average user to get a hold of such resources.

The classical format of mining is now being replaced by cloud mining. It allows avoiding expenses for the graphics card, their mounting and setting up special software – it’s only necessary to buy capacities of already installed equipment and start to make a profit. The resources themselves are located in data centres. This way of earning Bitcoins is easier, but it’s crucial to choose a supplier thoroughly in order not to be scammed.

Bitcoin storing

People are accustomed to keeping regular money in a wallet, at home under a mattress, in a safe or in a bank deposit. Such variants aren’t available for Bitcoin and other digital currency. A lack of a physical form has caused emerging of a number of ways to store the digital money:

• On a personal computer. Storing is provided via the software which is installed on the computer. It utilizes multilevel protection, encryption and reliable passwords in order to secure the funds. The direct location of storing is called a wallet, it can be presented in a full (requires a lot of space on a computer as the blockchain is downloaded completely) and a lightweight (works via third-party services, so it’s easier to use it) forms.
• On a mobile phone. Coins may be stored with the help of special software which is installed onto the device or a special mobile wallet where Bitcoins may not only be kept but also traded, exchanged or sold.
• In removable storage. They look like flash drives. Such devices serve as offline vaults for Bitcoins. They are characterized by advanced security of funds, availability, ease of use and possibility to work with them from a computer or a mobile phone. But the wallet itself should be purchased. According to its type and functionality, the price differs from $ 60 to $ 200.
• On paper. Suitable for those who want proof of availability of Bitcoins in their hands. In order to visualize them in a form of a QR code, a private key and an address are generated and printed. Such wallets are fully resistant to cyber attacks, but the papers itself should be kept in a safe place where outsiders couldn’t reach them.
• On an exchange. This way isn’t the most reliable one, so experts advise to keep only minor or actively used sums on such platforms.
• On a Bitcoin card. They look like plastic bank cards but are more reliable. A Bitcoin address and a QR code are situated on opposite sides.

You should choose a way of storing according to your own preferences, aspects of working with Bitcoin, capabilities of available devices and a pace of your movements. The perfect choice is to use a number of formats simultaneously and not to keep all Bitcoins in one place.

Ways of withdrawal

BTC is a digital currency which doesn’t have a physical form. So users should know how to withdraw Bitcoins. A usual bank transfer won’t work as the money are stored in special wallets and are out of control of financial institutions. Owners of coins can use the following methods:

1. exchange Bitcoins via an exchanger into fiat currency with a transfer to a bank card (VISA, MasterCard) or a personal account in one of the popular payment systems (Yandex, QIWI, PerfectMoney and others);
2. withdraw from the cryptocurrency exchange if it supports working with fiat money;
3. withdraw directly from the wallet via an electronic payment system (to perform that anonymously, you may use Payeer or Advcash payment systems);
4. sell currency on one of the P2P exchange platforms.

Platforms may charge their own fee for a withdrawal and place restrictions concerning amounts and daily limits.

Earnings using Bitcoin

Mining allows earning cryptocurrency. After obtaining it can be withdrawn in fiat money (or the currency can be bought for regular money), stored in an account in expectation of the growth of the exchange rate or shifted to active trading. Among the ways to earn via Bitcoin the most popular ones are:

• purchase of Bitcoins in exchangers – usually applied for a long-term investment with the expectation of a significant exchange rate growth;
• activities on the Bitcoin exchanges – more experienced investors know how to earn using them. The point is to get profit from exchange rate fluctuations. Platforms set their own conditions (types of orders, availability of futures contracts, amounts of fees, ways of deposit and withdrawal of funds);
• cryptocurrency faucets – allow earning Bitcoins without any investment by performing some actions in special online services, but the income is quite low there.

Active trading is suitable for advanced users who understand processes which occur in the cryosphere. Novices should be very careful and aware while investing in this way.

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