Why is everyone obsessed with bitcoin?
We all witness how cryptocurrency has crept into the real world. Now people are talking more about cryptocurrency as compared to traditional ones. If you are still new to this digital world, we will help you understand why everyone is obsessed with bitcoin and other cryptocurrencies.
Explaining crypto to a five-year-old
In simple terms, crypto is a type of digital money. Of course, you can’t store it like your traditional currency. Instead, it works in the virtual model. But, most of the characteristics of crypto are similar to traditional money. For example, the digital currency does not come up in a tangible form with shapes and sizes. But you can easily purchase it, sell it, and trade it.
How does Bitcoin function?
The most crucial aspect of any cryptocurrency is its decentralized nature. This means that the central authorities never gave any backup to these currencies. The virtual currency works on the cryptography method to get the needed security. Blockchain technology is the main hero behind the functioning of crypto. The technology works so that it makes hacking and counterfeiting difficult.
Are there any other virtual currencies in addition to bitcoin?
Most people think that bitcoin and cryptocurrencies are synonymous. But, this is not the reality. No doubt, bitcoin is the most ancient currency, but thousands of other cryptos came into existence after bitcoin.
- Litecoin: This virtual currency came into prominence in 2011, and it is one of the best alternatives available to bitcoin.
- Ether: Ether is the second most known cryptocurrency after bitcoin. An ethereum blockchain also powers it. The currency came into existence in 2015, and it is mainly used to purchase NFTs.
- Dogecoin: In the initial days, no one took Dogecoin seriously. The founders of Dogecoin created it as a part of the joke, but it is another best alternative to bitcoin.
Why are people so crazy about crypto?
If you are puzzled why people are so crazy about bitcoin, you need to know the reason behind the craziness. We hear constant chatter about the new technology from the day crypto came to this world. Therefore, a significant reason related to the craziness about crypto is the constant hype. In addition to this, experts like Elon Musk have also supported the concept of virtual currency. So it is another factor that led to the hype.
In addition to this, platforms like Coinbase and Robinhood have made investment simpler. Now, even beginners can invest in the asset. Another compelling reason behind the popularity is the pandemic. When people faced the wrath of lockdown, they looked for investment alternatives. Gold was the most preferred tool initially, but it did not offer protection against inflation. But, crypto offers protection against inflation, and thus, people began investing in crypto.
Is bitcoin safe or dangerous?
There are no concepts like safe or dangerous when it comes to any investment. Everything depends on the risk-taking ability of the investor. No doubt, bitcoin did not have a golden past. There were many cybersecurity-related issues with bitcoin. But, with time, the coin has gained traction. Many legal companies offer good opportunities to invest in bitcoin and other cryptocurrencies.
Are there environmental dangers of bitcoin?
Yes, we can’t shy away from the negative environmental impact of bitcoin. For example, the energy needed for bitcoin mining leads to a high carbon footprint. As per a study, bitcoin mining causes much more energy than a country uses for an entire year. But, technical advancement is being done to eliminate the harsh environmental consequences on bitcoin.
Are there risks of investing in bitcoin?
Yes, there are certain risks related to bitcoin investment. But, it also solves the problems of traditional fiat money. It also helps people in unbanked areas to get access to money. Bitcoin plays a vital role in financial inclusion.
Virtual currencies will stay here in the long run. Thus, if you plan to invest in cryptos, you have nothing to worry about. For people aware of the challenges, taking a calculated risk can help get profits in the long term. So, try to get details about the new currency and get ready with your new investment portfolio. To get additional details, you can contact the platform bitcoin-smarter.com.