In the digital world of cryptocurrency, bitcoin is considered to be one of the most popular trading currencies leading worldwide. Just like any market in the world, the price movements keep on fluctuating, same is the case with bitcoin. Its value has many ups and downs but in the recent statistical study, it can be seen that bitcoin has made a massive comeback and is now on the upward trends and is now leading.
A beginner crypto trader who has just stepped into the market of crypto trading might have a lot of questions going on in his mind. And to understand the basics of cryptocurrency it is always advised to do your research and understand the currency better. So in this article, we have chosen the topmost questions nearly every newbie has in his mind that will help him understand the concept and will make him a better trader.
What is Bitcoin?
This is one of the most important basic questions to which everyone should know the answer to. It is a virtual or as you can say digital currency that is used by people all over the world and is now an alternative to all physical currencies. It is a more secure and reliable way to transfer money or buy and sell goods or services, locally or internationally.
Bitcoin Era is one of the digital currencies which allows people to make purchases for digital and physical products. It is based on a blockchain network that is completely peer-to-peer based. This makes it even more secure and stops the interference of third parties. By analyzing today's crypto market it can easily be inferred from it that there are over 70 million bitcoin wallets, which tells us that not only individuals are investing in it but also big companies and businesses are investing in it.
How is bitcoin a safe-haven asset?
The second most common question that is asked is this one. Bitcoin is a haven asset not just because of its popularity but because it has only a limited number of it that can be produced. The creator of Bitcoin whose name is Satoshi Nakamoto had put a 21 million restriction on the number of tokens that were to be added to the market. It is just like gold and oil, and this is the reason why bitcoin has made such huge success in the crypto trading market.
Another big reason why bitcoin is deemed to be a haven asset is that bitcoin has to face a decrease in its worth. Also, the supply does not depend on any sort of company or policy. And another reason is that it has zero effect on the financial or economical crisis which may be going on in a country. Since it has no direct influence on the above-mentioned things, its value is increasing in the market day by day.
How is Bitcoin made?
Bitcoins work in a blockchain network which is one of the most advanced underlying technologies in the crypto world of Bitcoin and other currencies. Whenever a bitcoin transaction is made, the bitcoin is created and recorded with each block. Just like every system needs a team to make it function well, some miners work on a complex computer system to ensure that all the blocks of the transaction are added to the network and also verify the transactions after all these new tokens of bitcoin are issued.
The production rate of Bitcoin is throughout affected by the level of complexity of mining as well as the halving of bitcoin. Satoshi Nakamoto the creator of Bitcoin also created the halving event just to create bitcoin as a deflationary currency.Blockchain The outcome of this event led to the quantity of bitcoin which is created is halved including the block rewards of the miners.
The last halving that happened resulted in almost 3 million Bitcoins which are given to be mined and the block reward which is left is almost worth 6.25 Bitcoin. During mining the difficulty level increases which result in the slowing down of the minors who are running the network. This is all based on the computer power in the whole blockchain system.
How is Bitcoin secured?
The bitcoin transactions which happen in a blockchain are secured by a consensus algorithm which means proof of work. Now, this happens only when the miners approve the block of transactions that happens throughout the network. This also stops the possibility of double-spending which usually occurs in other currencies. Moreover, all the blocks of transactions are joined through cryptography and another layer of security is given through the network of computer systems which are the number of nodes. competition is very high in the market.