How to make money from cryptocurrency
What is Bitcoin?
Bitcoin (lit. "bit" - the smallest unit of information and coin)
- is a payment system based on P2P (peer-to-peer) technology. It operates on the basis of an open data protocol. The system uses the unit of account with the same name, bitcoin, the first and best known cryptocurrency. The main feature of bitcoin is called full decentralization.
What does this mean?
Bitcoin operates without any supervisory authority or central bank; coin issuance and transaction processing are done collectively by the network's participants. Thus, no one can control bitcoin, block or cancel a transaction. However, anyone can join the network.
What is the difference between bitcoin and Yandex.Money, WebMoney, QIWI?
Yandex.Money, WebMoney, QIWI - all these platforms are payment systems through which transactions are made with various "traditional" currencies - rubles, hryvnias, dollars, euro, etc. In essence, it is electronic money, equivalent to its face value in one currency or another.
Bitcoin is generated by users themselves through computer power. Its price is formed by market forces (supply and demand). Bitcoin users do not have to go through the cumbersome and often lengthy authentication process of uploading personal documents. In addition, cryptocurrency transactions benefit from low fees.
How can bitcoins be used?
Bitcoin is a relatively young phenomenon, nevertheless, there are plenty of opportunities to use it as a means of payment for the purchase of real goods or services today.
Bitcoins can be used for inexpensive user-to-user transfers, no matter how far apart the sender and receiver are. Bitcoins can be used to pay for some catering establishments, hotels, airfare, digital content, website hosting and domains, training courses, software, legal services, online shopping and taxi services. There are special services that allow you to use bitcoin to top up your phone account. There is a growing number of online casinos that allow for cryptocurrency deposits.
There are also examples where the digital currency has been used to make expensive purchases such as houses, cars and yachts.
Finally, many enthusiasts see bitcoin as a long-term investment as well as an attractive asset for trading.
Who came up with bitcoin?
The concept of bitcoin was first described in a white paper published on 31 October 2008. Its author was Satoshi Nakamoto, but it is still unknown if it was a single person or a group of developers. The developer community is now responsible for further development and coordination of the network. However, this does not mean that only developers make decisions about the direction in which bitcoin will go. Any significant changes to the protocol can only be made after a majority of the mining pools - associations of owners of computing power, which are used to "give birth" to new bitcoins - agree to them.
And how are new bitcoins "born"?
The emergence of new bitcoins can be compared to the issue of money, only instead of government agencies printing new banknotes, the cryptocurrency is produced by users themselves. The process is called "mining". It is based on computers solving complex mathematical problems. The computers are located all over the world, and the miners are pooled together to work more efficiently. They are rewarded for their work.
There is a perception that bitcoin is a pyramid scheme....
It isn't. A pyramid scheme, while promising unrealistically high profits, assumes that the income of its members is secured by constantly raising money. The income of the first participants of the pyramid is paid out of the deposits of subsequent participants. As soon as the inflow of funds is significantly reduced or halted, the entire scheme collapses, leaving a small number of 'favorites' to cash in.
Bitcoin promises no benefits to investors. Its only promise is complete control over its own finances. And even if one accepts the assumption that demand for the cryptocurrency from newcomers or professional investors may lead to a rise in the exchange rate, early entrants do not receive any dividends from new entrants. Finally, the distributed nature of bitcoin itself suggests that there is no single central entity that could benefit financially.
What does bitcoin's value consist of?
There is a perception that bitcoin's value is not backed by anything. According to James Rickards, author of the best-selling book Currency Wars, any currency in the history of money is backed by trust, the same is true of cryptocurrencies. In the bitcoin community, this trust is called consensus.
how to make money from cryptocurrency