Bitcoin is the most valuable and most traded digital crypto currency in the world. It was also the first one developed by an anonymous person by the name satoshi Nakamoto. In order for someone to take advantage of the currency one should have enough knowledge about bitcoins. Crypto currencies are peer to peer and based on the blockchain technology.
1. You need a wallet to be able to trade bitcoins
This is one of the major things you should acquire before anything else. A wallet is simply a point of storage for your bitcoins. There are several forms of wallet that you can use to store your bitcoins.
A paper wallet is the most secure form of bitcoin wallet as they are immune to hacking. The paper wallet is a document containing a public address and a private key. The public address would be used to receive bitcoins while the private key would enable you to transfer or spend bitcoins stored in that address. Paper wallets can be generated from sites like bitaddress.org or bitcoinpaperwallet.com. They are then presented inform of QR codes that can be scanned.
Physical bitcoins are quite similar to the paper currency that is commonly printed by governments the major difference is that the physical bitcoin paper has got a tamper proof seal which is able to hide the private keys. There was bitbill which had the shape of a credit card. The major drawback to this wallet is that you may be apprehended by the authorities as they are not considered a legal tender. Since cryptocurrencies are actually a grey area where legislation may not cover it.
Mobile wallets are apps running on your phone which stores your private keys and giving you a chance to spend or transfer your bitcoins from there. While mobile wallets are the most convenient wallets they prone to hackers or anyone who can get access to your phone.
This are much like mobile wallets you are able to store your keys to a company offering such services
These are software that are downloaded and installed on your computers storing your keys. This makes it relatively more secure than mobile or online wallets.
2. Bitcoin transactions are not anonymous.
While bitcoin transactions are considered anonymous that might not be completely true because most bitcoinaddresses have a real identities behind them. The origin of a bitcoin transaction can be traced by anyone since multiple bitcoin addresses are clustered together and tied to the same user, many bitcoin service providers have started implementing know-your-customer or anti-money-laundering techniques making it equally hard to undertake transactions anonymously
3. Bitcoins are received without the need of any third party.
There are multiple copies of the transaction database making it almost impossible to seize bitcoins. Banks and bank system use intermediaries connecting them like visa and MasterCard.
4. Bitcoins are either mined or transferred from another bitcoins holder
In order to get bitcoins you can either mine them by using the relevant hardware and software. Bitcoin is rather costly for an individual as one has to buy dedicated equipment and foot their associated cost like electricity.
Bitcoin is also available on many bitcoin exchanges which allow you to buy bitcoins. If you are a store owner you consider bitcoins as a mode of payment in order to receive them. Many organization also allow donation or payments in form of bitcoins
5. Bitcoin prices are volatile
Bitcoin prices are highly volatile with unimaginable gains and lose every minute. For example at the start of this year bitcoin was less than $1000 and it was able to peak $20,000 within the same year. Bitcoin slumped back to 12,000 after reaching almost $20,000 within a week. This volatility makes it a risky investment
6. Your bitcoins can be stolen
Yes you read it right
Your bitcoins can be stolen partly through attacks on online services holding many keys. This has already happened and mostly done by insiders by copying the bitcoin keys
7. BItcoin acceptance is still low
Not many business and organization accept bitcoin as a mode of payment hence you cannot spend it just like your cash. While the number of stores accepting bitcoins is growing, there is still a long way to go to be fully accepted.
8. Bitcoin usage might be regulated in future.
Financial experts are calling for the regulation of bitcoins and other crypto currencies which might hinder the exponential growth that has been witnessed the last few months.
9. Number of bitcoins has already been predetermined
Number of bitcoins to mined or traded are already predetermined at 21,000,000 bitcoins mining is only tenable as long as all the bitcoins have not been mined.
10. Bitcoin value may be a bubble.
Since the current value of bitcoin is driven speculation by investors leading to the high demand witnessed within the year.