What is Bitcoin?
Bitcoin is one of the most extensively used cryptocurrencies that was introduced in 2009 by Satoshi Nakamoto. Bitcoin, also known as virtual currency or digital currency, is an unregulated digital private currency which operates on encryption technique but does not have legal backing from the central bank. It uses peer-to-peer technology to operate without central authority or banks.
One can use Bitcoin to buy furniture on Overstock, book hotels on Expedia, and buy Xbox games, but it is mostly hyped for trading. Its price skyrocketed in thousands during 2017 and has grown a lot since then. However, the central banks of countries, including France, China, and the US, have shown concern over Bitcoin’s increasing popularity for being a private currency. India’s central bank has also opposed cryptocurrencies, stating that they can be a medium for money laundering and terrorist financing. Despite the study going on by the Reserve Bank of India, the use of cryptocurrencies is assumed as a violation of foreign-exchange rules.
How to Use Bitcoin?
Bitcoin is a computer file, saved in a ‘digital wallet’ app on your computer or smartphone. Storing Bitcoins on local hardware is referred to as cold storage, which allows it from getting stolen. One can also store Bitcoin on the internet, known as hot storage, which risks getting stolen. It is estimated that nearly 4 million Bitcoins have been stolen from the exchanges and cannot be recovered. Bitcoin can be bought using the ‘real’ currency. It can also be created using a computer. The public list mentions the blockchain stores including every single transaction that is made and allows to trace the history for safe transactions.
Cryptocurrency, a decentralized digital or virtual currency, uses encryption techniques to verify the transfer of funds and regulate the generation of currency units. Cryptocurrencies ensure more effortless funds transfer between two persons without trusted third party interference like a bank. It has been opposed for many reasons, such as its use for illegal activities, vulnerabilities of the infrastructure underlying them, and exchange rate volatility. Nevertheless, cryptocurrencies have glorified divisibility, inflation resistance, portability, and transparency.
Bitcoin vs. Cryptocurrency
The cryptocurrency, launched as an independent digital option to the currency, is legal and comes with a guarantee to pay the value that comes encrypted. Bitcoin comes without any value, as it is a digital form of private currency. Central banks of many countries have shown concern about Bitcoin being used as private currency.
Countries like China have stated that their central bank will have control over cryptocurrencies. However, it hasn’t given provision to the private digital issuers to exchange trading of cryptocurrencies.
Bitcoin aims to simplify and improve the speed of transactions without any government restrictions. While, cryptocurrency makes it clear to provide low cost, safe and secure transactions. Cryptocurrencies incorporate various currencies that are used for trading. At the same time, Bitcoin is a type of cryptocurrency that can be used to trade and exchange with others. Out of other cryptocurrencies, Bitcoin has got much popularity because of its price.
The Best Cryptocurrencies to Invest in 2020
1. Bitcoin (BTC)
It is the first-ever cryptocurrency. Bitcoin price skyrocketed in 2017; since then, it has witnessed prices rising over $10,000 and a market cap of around $200 billion. Bitcoins account for over 57% of the cryptocurrency market.
2. Bitcoin Cash (BCH)
Bitcoin Cash, a fork of Bitcoin, is supported by the biggest Bitcoin mining company and a manufacturer of ASICs Bitcoin mining chips. Due to Bitcoin’s growing popularity, its transactions got slower with increased fees. To address this issue, Bitcoin Cash developed in August 2017, which can store 8MB of data with more frequent transactions at lower fees. Though it is newer in the market, it has soared to the top five cryptocurrencies.
3. Litecoin (LTC)
Charlie Lee created Litecoin, intending to create a “lite” version of Bitcoin that could be the ‘digital silver’ compared to Bitcoin’s ‘digital gold.’ Unlike its predecessor Bitcoin, it is faster. For instance, a Bitcoin transaction takes 10 minutes to approve, while Litecoin takes under three minutes.
4. Ethereum (ETH)
Ethereum, a software platform, is based on blockchain technology used to exchange cryptocurrency named Ether. Cryptocurrencies are primarily familiar for their decentralized nature. Rather than the decentralization of currency, Ethereum takes it further, intending to decentralize the internet by rearranging servers with a worldwide system of nodes, building ‘one computer for the whole world.’ By market capitalization, Ether is the second-largest cryptocurrency with a market cap of around $40 billion.
5. Binance Coin (BNB)
Binance Coin formerly hosted on Ethereum until the Binance decentralized exchange or DEX featured online in 2017. Like Ethereum, Binance DEX is a platform that holds a different mission. The Binance DEX provides a decentralized platform that is used to buy or sell Binance coins and uses BNB to convert other cryptocurrencies from one to another. Thus, Binance DEX has become the largest cryptocurrency exchange on the planet in terms of volume and has helped improve the digital asset’s popularity.
Bitcoin is the most popular cryptocurrency. Since 2009, several cryptocurrencies have been introduced in the market specializing in different sectors. Its continuously evolving nature is consistently paving the way for innovation, security measures, and enhanced performance. Cryptocurrency blockchains hold high security, but other aspects, including wallets and exchanges, possess the threat of hacking. Nevertheless, there are proven potential advantages of cryptocurrencies, such as the possibility of preserving value against inflation and facilitating the exchange.