What is Bitcoin

Bitcoin is a virtual currency that was invented in 2009 by an unknown programmer using the alias Satoshi Nakamoto. Bitcoins can be purchased, earned from selling goods and services in Bitcoin currency or ‘mined’ by solving complex mathematical puzzles.

There is a finite number of Bitcoins that can be in circulation, a total of 21 million. The price of Bitcoin against other currencies can fluctuate wildly and in a short time has varied from a few dollars per Bitcoin to around $1000. This makes trading in Bitcoin quite risky. Imagine selling an item for $1000 and before you could cash out the value has dropped to $500. World events, Bitcoin security issues and other things can cause a fluctuation in a matter of minutes. Of course if the value rises that would not be a bad thing but a decrease could cause a catastrophic problem.

The Bitcoins that you own are stored in a digital wallet on your computer, on cloud servers or other electronic devices and therefore security should be taken very seriously otherwise you could find your wallet being emptied. There are a number of Bitcoin wallet providers and some are far more secure than others so do your research very carefully if you are going to buy Bitcoin.

There are many people who use Bitcoin but it is still in its infancy and has many downsides that the average person might well wish to avoid. Only get into using Bitcoin when you fully understand it and know how to minimise the risks involved. It could of course turn out to be good or it might simply disappear.


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