Many thought that Cryptocurrencies and all of their iterations were merely just a trend, with it’s volatility and rebellious user base. Notwithstanding, in 2008 an anonymous Satoshi Nakamoto pronounced himself as the lead developer for his new experiment: a decentralized cryptocurrency. Nakamoto mined the very first block of Bitcoin and is recognized as the inventor and founder of Bitcoin.
Blockchain and Cryptocurrencies
Cryptocurrency has not had an easy ride, with several scandals plaguing the currency in the early days. In September of 2012, the Bitcoin Foundation was founded in an attempt to restore the reputation of bitcoin while also promoting its development and adoption. It was modeled after the Linux Foundation and received several grants before shuttering in 2015.
Digital currency has come a long way since then and has become more and more popular, finding its way into the mainstream while earning trust among bitcoin users and proponents. Today companies all over are starting to accept cryptocurrency as payment, while some countries who see the writing on the wall are investing heavily in its progression to mainstream acceptance. Countries like Vietnam, India, Pakistan and Ukraine made major investments in the last year alone.
Nowadays, you can buy anything from a Whopper to a Domino’s pizza to KFC with bitcoin. Current trends show the US leading the global crypto economy, followed by Canada and Singapore, and to a lesser extent the UK and Germany.
But what exactly is bitcoin and how does it work? Here is a quick primer:
Since 2009, a variety of denominations of cryptocurrencies have flooded the market. If you were to imagine each digital coin as a different currency (Bitcoin, Ethereum, Cardano, Chia) where its value is tracked on the Blockchain, not unlike the value of most stock indexes such as the S&P or NYSE.
For this article, we will be discussing Bitcoin specifically as it continues to remain the leader of cryptocurrencies in terms of market cap, user base, and popularity.
The Blockchain ledger keeps track of all of the transactions that occur on that specific cryptocurrency, while blockchain technology allows for secure encryption (via a cryptographic algorithm). With bitcoin, there is no central authority or banks, instead, bitcoin uses peer-to-peer technology for bitcoin mining.
To become a successful miner one requires considerable mining power, this means an investment in the vicinity of $20,000. Bitcoin mining is also resource-intensive, using volumes of energy in computing power to run the processes.
On the Blockchain (aka the Bitcoin network), Bitcoin transactions are recorded with an immutable cryptographic signature called a hash that the bitcoin miners record on the bitcoin ledger. The computational process is an incredibly complex mathematical calculation, which is what provides its security.
When mining bitcoin, one must wait for the bitcoin network to send out a transaction request and if your computation matches the requesting transaction, you will earn a block reward in the form of a new bitcoin. Bitcoin block rewards are earned with newly created bitcoins., however for every 210,000 blocks mined, the reward is cut in half.
Buying and trading bitcoin – exchanges
Cryptocurrency exchanges, or digital currency exchange (DCE), are platforms that facilitate the trading of cryptocurrencies for other assets, including digital and fiat currencies.
On these platforms, you can buy, sell, and trade Bitcoin. For example, you can trade Bitcoin for another denomination, say Cardano. You can also buy Bitcoin with standard currency, such as the U.S. Dollar or the Euro.
When buying bitcoin, cryptocurrency exchanges act as the broker between a buyer and a seller and earn their revenue through commissions and transaction fees. Like fiat currency, Bitcoin prices will fluctuate and as you are aware, can vary tremendously. You will purchase your bitcoins from other bitcoin traders on the exchange. When you buy, sell, trade, or otherwise perform a bitcoin transaction you will be subjected to transaction fees.
You will need to set yourself up with an account on one of the Bitcoin exchanges, be sure to read the reviews, and learn about the exchange you plan to use and what level of service you require, depending on your trading needs. Different exchanges target different bitcoin users depending on their requirements. Some may skew their services to the heavy trader, while others to the long-term investor.
Once you know what you plan to use your bitcoins for, you need to set up an account, which is not unlike a bank account where the exchange holds and stores your funds. You will need to go through a verification process, each process is different depending on the exchange and the level of trading you expect to do. Exchanges will often accept credit card payments, wire transfers and other forms of payment in exchange for bitcoins.
With your investment securely stored in your account, you will require a Bitcoin wallet to make purchases. A Bitcoin wallet functions very much like a traditional wallet, but instead of paper currency, it holds proof of your digital cash.
Your wallet can come in the form of an app, a website, a service offered by your exchange or cold storage, such as a USB key. Your wallet stores the public and private keys required to buy, sell and send bitcoins, providing the digital signatures authorizing the transaction. Most digital wallets offer an array of security features such as encryption, two-factor authentication in addition to password protection.
After buying your bitcoins, you will be ready to start making transactions and trades, obviously, you will want to keep in mind the bitcoin price before making any transactions. Cryptocurrencies are very well known for volatile price swings over a short period, like a day or two.
In 2017 a group of activist Bitcoin traders spun an alternative or ‘fork’, which they called Bitcoin Cash and then again later that year into Bitcoin SV. Compared to Bitcoin, Bitcoin Cash has lower transaction fees and can expedite data transfer. Another benefit is that Bitcoin Cash can also be used by more people at the same time on the network.
Regardless of which you choose, mainstream adoption is becoming more prevalent, with the number of Bitcoins processed on a single day reaching its highest valuation at the beginning of 2021.
It is difficult to avoid bitcoin, signs of adoption are everywhere. PayPal is expanding its crypto investment in the UK, Amazon is currently hiring a Head of Digital Currency and Blockchain, MicroStrategy allocated more than $1 billion of capital toward bitcoin and Morgan Stanley is buying up more and more shares of Grayscale Bitcoin Trust. Even popular companies from Subway to Pizza Hut to the Dallas Mavericks now accept Bitcoin as payment.
Willy Woo, founder of The Bitcoin Forecast, and Chart guru has been a pioneer in developing on-chain metrics for trading analysis. He recently illustrated in a tweet, the “projected worldwide bitcoin users expressed in internet years.” According to Woo’s analysis, bitcoin is now at the stage in its evolution that the internet was in 1997 (just starting to get mainstream adoption).
Still not convinced? Celebrity entrepreneur and NBC Shark Tank investor Kevin O’Leary was originally hesitant about the Crypto market but has since retracted those remarks, instead saying that he wants to at least double his cryptocurrency portfolio by the end of 2021. Furthermore, he predicts that if crypto becomes a new asset class, that “trillions of dollars” could pour into the market.
As a bitcoin user, you need to decide on what your goal is with bitcoin, whether you wish to become an investor, trader, or simply use it as currency in the new digital economy. With the acceleration of bitcoin’s adoption, it should not be hard finding companies that now accept the currency. With this adoption, markets are expected to eventually stabilize, offering investors more peace of mind when it comes to this volatile currency.
ServerMania Now Accepts Bitcoin
As a provider of data infrastructure and IT services, Servermania takes pride in remaining on the cutting edge of information technology which is why we now accept bitcoin as payment. If you are looking to use Bitcoin as payment, please review our bitcoin payment walk-thru.
This does not constitute a recommendation by Servermania to buy, sell, or hold any security, financial product, or instrument referenced in the content, and does not constitute investment advice, financial advice, trading advice, or any other sort of advice. This content and any information contained therein is being provided to you for informational purposes only.