You have probably heard about the digital currency bitcoin and its incredible price rally in the last six months. Since January 1, the value of one bitcoin has surged from around $1,000 to over $3,700. If you are still a little unsure about what bitcoin is and how it works, you will find out in this article.
The value of bitcoin has surged recently.
What Exactly is Bitcoin?
Bitcoin is a digital currency that runs on a decentralized peer-to-peer network called the blockchain. It was invented by an anonymous developer with the pseudonym Satoshi Nakamoto in 2008 and started trading as a digital currency online in 2009. It is a digital payment system that allows users to securely store, send, and receive bitcoin payments across the world within minutes without the need of a financial intermediary.
What is the Blockchain?
The blockchain is a publicly viewable distributed ledger of all bitcoin transactions that have taken place and are currently being processed. It is also the peer-to-peer technology that bitcoin is built on. Participants in the bitcoin blockchain ensure that no double spending can occur by using their computer power to solve complex equations that validate and process all bitcoin transactions.
The bitcoin price has rallied for many reasons.
Why Does the Price of Bitcoin Keep Increasing?
The price of bitcoin has rallied for several reasons. The key reasons have been the increase in demand for an alternative store of value in emerging markets, a fast-growing bitcoin ecosystem that allows users to use the digital currency as an actual spending currency, investors wanting to diversify their portfolio into a new well-performing asset class, and an improving regulatory environment for digital currencies in major economies such as Japan, Russia, India, and Australia.
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How Can You Buy Bitcoin?
There are several different platforms where you can buy bitcoin. The easiest way to buy bitcoin is using through bitcoin brokers such as CoinLoft or CoinTree. These platforms allow you to buy bitcoin online using various payment methods, including credit cards.
Alternatively, you can buy bitcoin on digital currency exchanges, such as Kraken or Bittrex for example. Digital currency exchanges function in the same way as online brokerages. You fund your deposit with dollars and then place a buy order for bitcoin on the exchange.
There are also bitcoin wallet providers that allow you to buy bitcoin within the app. An example of this would be Coinbase, which is one of the longest-standing bitcoin exchanges and wallet providers. Using Coinbase you can buy bitcoin online or through its smartphone app using a bank transfer or your credit card.