<style>.lazy{display:none}</style>Bitcoin: What is it and how to invest in it | Money Investors

Although it took until 2009 for a mysterious person calling himself Satoshi Nakamoto to introduce the idea of ​​Bitcoin, the concept of a cryptocurrency actually stems from a 1998 post by a man named Wei Dai.

What started as an idea to create an economy outside of the restrictions of the federal government quickly gained momentum and has now grown into a multi-billion dollar global financial system a year.

Bitcoin has been in the news for quite some time. It has become an entity that has delivered multi-bag returns. Although, many industry leaders have had a wide range of opinions on Bitcoin.

Some strongly believe and support the idea that BTC and similar currencies are the future of free-moving economies. But some people reject the idea, describing it as a digital entity of questionable and uncertain value.

Although it is among the most discussed topics, it remains an enigma for many.

Let us make our way into the world of bitcoin.

What is Bitcoin?

Bitcoin is a currency, just like the dollar, the euro, the yen, the British pound sterling, and the Indian rupeeBut that is the only similarity between traditional currencies and Bitcoin. 

The traditional currencies underlined above are issued and managed by a centrally authorized bank under the respective governments. Fiat currencies are issued and managed by central banks, which is why they are called centralized currencies. 

Let’s better understand the term cryptography: crypto which means secret; Cryptography is the secure communication practice that uses algorithms to convert the transmitted message into unreadable data that can only be decoded/decrypted by authorized senders/receivers.

Bitcoin is a decentralized digital cryptocurrency that operates on a peer-to-peer basis. It is a computer code with value encrypted with a strong cryptographic algorithm to maintain its integrity of being authentic.

Bitcoin can pay for goods or services if the service provider accepts it, similar to traditional currency, but as digital messages

How and why was Bitcoin created?

In 2008, a person or group of people with the pseudonym  SATOSHI NAKAMOTO published a whitepaper defining “Bitcoin: a peer-to-peer electronic cash system“.

Later, on January 9, 2009, his code was released as open-source and Satoshi Nakamoto started mining Bitcoins.

Satoshi, after being involved in the development of Bitcoin until December 2010. That is all the information about Nakamoto, available in the public domain. 

Now that we know who created Bitcoin, it is crucial to understand why it was incorporated.

The idea behind the creation of the decentralized currency was to create an ecosystem, parallel to the centralized system of economy that is managed by the rules established by the authorities, where people had to trust the central bank to maintain the value of their currency. The currency operated entirely at the discretion of the government.

Bitcoin mining

The easiest way to acquire Bitcoin is to have someone else give it to you or sell it to you. Currency is created through a process called mining, but today it requires specific hardware and insider knowledge.

Trading real-world currencies for virtual currencies essentially allows you to buy Bitcoin as well.

All transactions are managed both privately, with extensive security encryption, and publicly for all members of the network.

This system of checks and balances allows users to maintain a small level of anonymity while ensuring that no one tries to play with the system.

Since there is a limit of 21 million bitcoins in circulation, it is important to know where they are and where they are going.

How does Bitcoin work?

Bitcoin is a digital currency that needs a platform to record your transactions called a ledger. Bitcoins use Blockchain, another revolutionary technology for an accounting operation. 

Before continuing, let me give you a brief blockchain technology.

Blockchain, also called distributed ledger technology, forms the foundation of Bitcoin by keeping records of all transactions. Since it is a public and open source book, any user can access the transactions for verification. This system also eliminates the need for third-party verification, eliminating trust-based transactions that currency banking systems follow. 

Bitcoin has a few key terms. A public key, private key, wallet . 

The public key is the location where transactions are deposited and withdrawn. This key represents the digital signature of the headlines on the blockchain ledger, similar to a username on a social media newsfeed. The private key is the password required to buy, sell and trade bitcoins in a wallet.

A  private key must be a kept secret and should only be used to authorize Bitcoin transmissions. Some users protect their private keys by encrypting a wallet with a strong password and, in some cases, choosing the cold storage option; i.e storing the wallet offline.

A  cryptocurrency wallet is an application used to store cryptocurrencies. There are many types of wallets like hot wallets, cold wallets, which are used on different platforms like mobile devices, desktop computers, etc.

Is Bitcoin a good option to invest?

It is important for everyone to consider the pros and cons before launching into opening a bitcoin account. Even if everything is managed virtually, it is still your money and financial stability that are at risk.


The use of Bitcoins has clear benefits, and these benefits explain the rise in popularity of Bitcoin.

Bitcoin, like all cryptocurrencies, is available at all hours, every day of the year. Transactions are fast, secure and do not depend on the hours of banks or other institutions.
The list of companies and individuals that accept this type of payment for products and services is growing, both online and in the real world.

Transparent fees are the norm and are typically lower than those found when trading other currencies, such as the dollar or the euro.
If you are in the business of selling a product or service, accepting Bitcoins also has advantages. Customers or consumers cannot reverse payments. You would have to issue a direct refund if they dispute the transaction. Also, the lack of personal information passed on with payment means you have less to worry about the security of company databases.

Desventages of the Bitcoin

Although the popularity of using virtual currency is increasing, it still cannot compete with the power and convenience of regular money.

Using a credit card offers more protection to the buyer because it can file claims and chargebacks. Cash transactions take out any other type of acceptance of payments.
Everything seems to be digital these days, but having your currency stored only on the web or in the cloud creates vulnerability. There is no gold bullion vault to back Bitcoin. You cannot carry them in your pocket. If someone hacks or locks your online wallet or virtual currency storage, you could lose everything.

Lost Bitcoin cannot be recovered and may end up completely out of circulation.
Compared to real currencies around the world, the value of Bitcoin experiences much more volatility based on current market trends. This is mainly due to the comparatively small number of services and businesses that use it.

A small change can create big ripples on the network.
There is always the possibility that international governments will change the rules on cryptocurrencies and decimate their value. According to CNN’s latest map, only Iceland and Vietnam have made virtual money illegal. Many other countries, such as Russia and China, are in constant dispute over its use.
Due to the supposed privacy of transactions, Bitcoin is unfortunately also used for illegal activities.

How to get Bitcoin and trade online

Although people can get Bitcoin and use it to buy goods or services, others with a more entrepreneurial spirit can learn to trade with this currency and grow their virtual wallet

This process carries some risk and, due to its ever-changing value, should only be attempted by users with a good understanding of business practices and an excellent system behind it.

The profit method mimics commodity trading or any type of wholesale-retail transaction: buy low, sell high.

In simple terms, you want to buy Bitcoin at an affordable price and wait until each one is worth more before selling it again. The difference is the profit.

Although the process may sound straightforward, anyone who gets involved needs sufficient knowledge of the market, where to buy and sell, associated fees, and best practices.

Currency trading is not something to jump into blindly. However, if done right and closely watched, it can be quite lucrative.


From humble beginnings as nothing more than a newsletter idea, cryptocurrencies and Bitcoin, in particular, have grown into virtual powerhouses of independent finance.

As the network grows and more people and businesses adopt its use, prices should stabilize and give merchants a greater chance to win than ever.

Open a Bitcoin wallet and you can start filling it with virtual currency that can grow without government interference or regulations.

Learn more about cryptocurrencies on our blog dedicated to digital assets, or access our blockchain and cryptocurrency course to dominate the crypto market.

The Trading from Scratch team is in charge of training in financial markets at an international level. We try that our students do not fall for scams and deceptions, in addition to teaching them to invest by reducing losses. Access our website for more information or read more of our articles here.

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