Bitcoin (BTC) Price Today, Chart and Value in Dollars USD

What is Bitcoin?

Bitcoin is a decentralized digital currency that allows you to buy, sell and exchange directly, without the need for intermediaries such as banks. It was created in 2009 by Satoshi Nakamoto, who described the need for "an electronic payment system based on cryptographic proof rather than trust".

Every Bitcoin transaction that has ever been carried out exists on a public ledger accessible to everyone, making transactions difficult to reverse and difficult to forge. This is by design: fundamental to their decentralized nature, Bitcoins are not backed by the government or any issuing institution, and there is nothing guaranteeing their value except the proof built into the heart of the system.

“The reason it has value is simply because we as people decide it has value – the same as gold,” says Anton Mozgovoy, co-founder and CEO of digital financial services company Holyheld.

Since its public launch in 2009, Bitcoin's value has increased dramatically. Although it sold for less than $150 per coin, as of June 8, 1 BTC is equivalent to about $30.200. Since its supply is limited to 21 million coins, many expect its price to continue rising over time, especially as more institutional investors begin to treat it as a kind of digital gold to hedge against market volatility and inflation. There are currently more than 19 million coins in circulation.

How Does Bitcoin Work?

Bitcoin is built on top of a distributed digital ledger called blockchain. As the name suggests, blockchain is a set of interconnected data made up of units called blocks that contain information about each transaction, including date and time, total value, buyer and seller, and a unique identification code for each exchange. The entries are connected in chronological order, creating a digital chain of blocks.

Once a block is added to the blockchain, it becomes accessible to anyone who wishes to view it, acting as a public ledger of cryptocurrency transactions. Blockchain is decentralized, which means it is not controlled by any organization. It's like a Google document that anyone can work on. No one owns it, but anyone who has a link can contribute to it. As different people update it, your copy will also be updated.

While the idea that anyone can edit the blockchain may seem risky, this is what makes Bitcoin trustworthy and secure. For a transaction block to be added to the Bitcoin blockchain, it must be verified by a majority of all Bitcoin holders, and the unique codes used to recognize users' wallets and transactions must comply with the correct encryption standard.

These codes are long, random numbers, which makes them incredibly difficult to produce fraudulently. The level of statistical randomness in the blockchain verification codes, which are required for each transaction, greatly reduces the risk that someone could make fraudulent Bitcoin transactions.

Blockchain is a revolutionary technology that makes the existence of decentralized cryptocurrencies like Bitcoin possible. It ensures that transactions are secure and reliable, without the need for bank or government intermediaries.

How does Bitcoin mining work?

Bitcoin mining is the process of adding new transactions to the Bitcoin blockchain. It's a difficult job. People who choose to mine Bitcoin use proof of work, deploying computers in a race to solve mathematical puzzles that verify transactions.

To encourage miners to keep racing to solve puzzles and support the overall system, Bitcoin's code rewards miners with 6,25 BTC for each new block. This amount of BTC is equivalent to almost R$1.000.000.

“This is how new currencies are created,” and recent transactions are added to the blockchain, says Okoro.

It was possible for the average person to mine Bitcoin in the early days, but that is no longer the case. Bitcoin's code is written to make solving its puzzles increasingly challenging over time, requiring more and more computing resources. Today, Bitcoin mining requires powerful computers and access to massive amounts of cheap electricity to be successful.

Bitcoin mining also pays less than it used to, making it even harder to recoup rising computational and electrical costs.

“In 2009, when this technology first emerged, every time you received a stamp, you received a much larger amount of Bitcoin than today,” says Flori Marquez, co-founder of BlockFi, a crypto wealth management company. "There are more and more transactions [now, so] the amount you get for each stamp is less and less." By 2140, it is estimated that all Bitcoins will have entered circulation, meaning that mining will not release new coins, and miners may have to rely on transaction fees.

How to Use Bitcoin

Bitcoin can be used both as an investment and as a form of payment. In the United States, many people use Bitcoin as an alternative investment to diversify their portfolio of stocks and bonds. However, there are some sellers that accept Bitcoin as a form of payment.

Large companies that accept Bitcoin include Microsoft, PayPal, and Whole Foods, among others. Some small local retailers and specific websites may also accept Bitcoin, but you will have to look for them.

You can also use a service that allows you to connect a debit card to your cryptocurrency account, which means you can use Bitcoin in the same way you would use a credit card. This usually involves a financial provider instantly converting your Bitcoin into dollars.

In other countries, especially those with less stable currencies, people sometimes use cryptocurrencies instead of their own currency.

Bitcoin offers an opportunity for people to store value without relying on a government-backed currency. It gives people an option to protect themselves in case of a worst-case scenario. You are already seeing people in countries like Venezuela, Argentina and Zimbabwe (highly indebted countries) where Bitcoin is gaining huge traction.

When you use Bitcoin as currency, rather than as an investment, in the United States, you must be aware of certain tax implications.

How to Buy Bitcoin

Most people buy Bitcoin through cryptocurrency exchanges. Brokers allow you to buy, sell and hold cryptocurrencies. Setting up an account is similar to opening a brokerage account - you'll need to verify your identity and provide a funding source, such as a bank account or debit card.

Top exchanges include Coinbase, Kraken, and Gemini. You can also buy Bitcoin at an online brokerage such as Robinhood.

Regardless of where you buy your Bitcoin, you will need a Bitcoin wallet to store it. This can be called a “hot wallet” or “cold wallet”.

A hot wallet (also called an online wallet) is maintained by a broker or cloud provider. Online wallet providers include Exodus, Electrum and Mycelium. A cold wallet (or mobile wallet) is an offline device used to store Bitcoin and is not connected to the Internet. Some mobile wallet options include Trezor and Ledger.

Some important notes about buying Bitcoin: Although Bitcoin is expensive, you can buy fractions of Bitcoin from some sellers. You'll also need to be aware of fees, which are usually small percentages of the crypto transaction value but can add up on small-value purchases. Lastly, Bitcoin purchases are not instantaneous like many other stock purchases. Since miners must verify Bitcoin transactions, it may take at least 10 to 20 minutes to see your Bitcoin purchase in your account.

How to Invest in Bitcoin

Just like stocks, it is possible to buy and hold Bitcoin as an investment. Now it is even possible to do this in special retirement accounts called Bitcoin IRAs.

Regardless of where you choose to keep your Bitcoin, people's philosophies about investing it vary: some buy and hold for the long term, others buy and sell after a price rise, and others bet on the price falling. The price of Bitcoin over time has experienced wide price swings, going as low as $5.165 and as high as $28.990 in 2020.

"I think in some places, people might be using Bitcoin to pay for things, but the truth is that it's an asset that looks like it's going to increase in value relatively quickly for some time," says Marquez. "So why sell something that's going to be worth a lot more next year than it is today? Most people who own it are long-term investors."

Consumers can also invest in a Bitcoin mutual fund by purchasing shares of the Grayscale Bitcoin Trust (GBTC). However, the minimum investment requirement is $50.000. This means that most Americans cannot invest in this fund. In Canada, however, diversified Bitcoin investing is becoming more accessible. In February 2021, the Purpose Bitcoin ETF (BTCC) began trading as the world's first Bitcoin ETF, and the Ontario Securities Commission also approved the Evolve Bitcoin ETF (EBIT). American investors looking for exposure to Bitcoin or similar cryptocurrencies may consider blockchain ETFs that invest in cryptocurrency technology.

An important note: While cryptocurrency-based funds can add diversification to cryptocurrency holdings and mitigate some risk, they still carry substantially greater risk and charge much higher fees than broad index funds with histories of steady returns. Investors looking to grow their wealth steadily can opt for index-based mutual funds and ETFs.

Should You Buy Bitcoin?

Many financial experts support their clients' desire to buy cryptocurrencies, but do not recommend it unless clients express interest. The biggest fear is that the chosen investment will not work out and the investor will no longer be able to pay their children's college tuition.

The speculative nature of cryptocurrency leads some planners to recommend it as a “side investment” for clients. They suggest keeping cryptocurrency investment away from the long-term perspective and ensuring that it does not become too large a portion of the investment portfolio.

Bitcoin is like a single stock, and just as financial advisors would not recommend placing a significant portion of the portfolio in a single company, they suggest placing a maximum of 1% to 10% of the portfolio in Bitcoin if the investor is truly passionate about he.

“If it were a single stock, you would never allocate a significant portion of your portfolio to it,” says Hammel. It is important to remember that, like any investment, cryptocurrency has risks and it is important to understand these risks before investing.

FAQ

How does Bitcoin work?

Bitcoin is a decentralized cryptocurrency that allows financial transactions without the need for intermediaries such as banks or governments. All transactions are recorded on a public ledger called the blockchain. The Bitcoin network is maintained by the users themselves, who validate transactions and receive a reward in Bitcoins for their work.

Who created Bitcoin?

Bitcoin was created by a person or group of people under the pseudonym Satoshi Nakamoto. Satoshi Nakamoto's true identity was never revealed, and he disappeared from the public scene in 2011.

How to buy Bitcoin?

There are several ways to buy Bitcoins, including cryptocurrency exchanges, brokers, and Bitcoin ATMs. Before purchasing Bitcoins, it is important to understand the risks involved and ensure that you are purchasing from a reliable and safe source.

What is Bitcoin halving?

Bitcoin halving is an event that occurs every 210.000 blocks on the Bitcoin blockchain. At this point, the Bitcoin reward for miners is halved. This helps control the supply of Bitcoins and is one of the characteristics that make Bitcoin a deflationary currency.

Is Bitcoin considered real money?

Although Bitcoin is not a fiat currency issued by a government, it is widely considered to be real money. Bitcoin can be used to purchase goods and services around the world, and many merchants now accept Bitcoins as a form of payment.

Is Bitcoin a good or bad investment?

Like any investment, Bitcoin has risks and rewards. The value of Bitcoin can be volatile and is affected by a variety of factors, including political and economic events, as well as the adoption of Bitcoin by companies and governments. As such, it is important to do your own research and carefully evaluate the risks before investing in Bitcoin.