Bitcoin (BTC) is the leading cryptocurrency in terms of market capitalization, and it is the first public use of blockchain technology. If you are not yet familiar with blockchain technology, it is essential to understand why the price of Bitcoin continues to rise.

You can think of a blockchain as a distributed database. This database includes all previous Bitcoin transactions, and each Bitcoin miner stores a copy of this database (also known as a ledger) on their computer. A new block is created on Bitcoin’s blockchain every 10 minutes, and once a transaction is uploaded to the blockchain, it is irreversible and immutable.

Theoretically, you could hack a blockchain by carrying out a 51% attack. To attack 51% Bitcoin, you must simultaneously hack 51% of the miners on the network and then download malicious transactions. As it is economically impossible to do, Bitcoin’s blockchain has never been hacked.

Want to learn more about Bitcoin? Our guide will help you learn how to use cryptocurrency and how you can invest in digital assets today.

Bitcoin price movements

Cryptocurrencies are among the most volatile assets in which you can invest. That being said, compared to other cryptocurrencies, Bitcoin is much less volatile than many altcoins. On average, Bitcoin has appreciated by around 200% year over year since its inception, making it one of the best investments you could have made in the past decade.

Since last year, Bitcoin has entered another bull market, alongside the rest of the cryptocurrency industry. With institutional investors like Tesla, PayPal and Microstrategy adding Bitcoin to their balance sheets, the digital asset has gained legitimacy.

After Tesla CEO Elon Musk announced that Tesla would suspend acceptance of Bitcoin as payment, the price of the asset fell. Days later, China announced strict regulations against digital assets, creating even more selling pressure on Bitcoin. On May 19, 2021, the price of Bitcoin fell below $ 30,000 for the first time in 4 months, providing a great buying opportunity for investors looking to buy Bitcoin.

Within 24 hours of this drop, Bitcoin rebounded to over $ 40,000 per coin. Bearish investors may see this as a dead cat rebound, but cryptocurrency enthusiasts see it as a bullish signal for the digital asset.

How to use Bitcoin

When you buy Bitcoin on a cryptocurrency exchange, you will be able to send or receive Bitcoin with your Bitcoin address. Your Bitcoin address is similar to an email address, but it’s a unique string of numbers and letters that identifies your Bitcoin wallet.

The most common use case for Bitcoin is as an investment store of value. Most Bitcoin owners use it to preserve their wealth, but there are other ways to use Bitcoin.

Investors who want to use their Bitcoin to earn interest, get loans, or provide liquidity on decentralized exchanges (DEX) wrap their Bitcoin on the Ethereum network. Since Ethereum’s blockchain supports smart contracts, it opens up unlimited possibilities for using Bitcoin. Wrapped Bitcoin (WBTC) is a synthetic Bitcoin on the Ethereum blockchain, and each WBTC is backed by 1 Bitcoin of reserves.

Best Bitcoin Exchanges

There are many cryptocurrency exchanges that you can use to invest in Bitcoin. For investors based in the United States, Coinbase, Gemini, Kraken, and eToro are great options. These exchanges offer mobile apps on iOS and Android, making it easy to manage your portfolio on the go. If you are interested in trading between different cryptocurrencies, Coinbase is a great option because it has a convert feature that allows you to trade between cryptos for free.

If you trade stocks on Robinhood, you can also trade certain cryptocurrencies on the platform. Robinhood offers major cryptos like Bitcoin, Ethereum, and Dogecoin, but the platform does not have a dedicated crypto wallet. This means that you will not be able to send, receive or use your Bitcoin through Robinhood.

Will Bitcoin Evolve?

In 2017, Bitcoin turned into Bitcoin and Bitcoin Cash. A blockchain fork occurs when there is disagreement over network upgrades. Bitcoin Cash aims to evolve Bitcoin by increasing the number of transactions that can be entered into a block of the blockchain.

However, the ideology that Bitcoin should be used as a payment currency is outdated. There are many other cryptocurrencies that are much more efficient than Bitcoin, which makes them much more viable as payment solutions.

Instead, Bitcoin is seen as a store of value. Since there is a limited supply of the asset, investors have the security of scarcity. As more and more retail and institutional investors embrace Bitcoin, the price of the asset will continue to rise. Thinking of Bitcoin as digital gold is a much more accurate representation than thinking of Bitcoin as a peer-to-peer payment system.

Is Bitcoin a Good Investment?

Historically speaking, Bitcoin has been a great investment. If you are a risk tolerant investor, adding Bitcoin to your portfolio may be a great decision for you. Although cryptocurrencies are volatile assets, they have provided much higher returns than almost any other asset you could invest in. Is bitcoin a good investment.

Frequently Asked Questions