what is bitcoin

What is Bitcoin? Everything you need to know about the cryptocurrency in our dummies guide

Should you be investing in the new currency?

Cryptocurrency Bitcoin is currently at a record high, but what is Bitcoin?

And, more importantly than that, should you be investing?

Here’s everything you need to know about the cryptocurrency that’s currently making headlines around the world.

picture of a laptop
Bitcoin is a cryptocurrency, but is it safe to use? (Credit: Pexels)

What is Bitcoin?

Bitcoin is a cryptocurrency that was launched in 2008.

It was created by an unknown person or group of people called Satoshi Nakamoto.

Each Bitcoin is essentially a computer file that is stored in a digital wallet app on your smartphone or computer.

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People can send Bitcoin – or part of one – to you and you can send yours to other people.

It enables a new payment system and is completely digital money.

It was the first decentralised peer-to-peer payment system that’s powered by its users with no middleman.

In laymen’s terms, it’s pretty much like cash for the internet.

To buy your first one, you have to download a free Bitcoin wallet which is available from all major operating systems and devices.

Can you cash out of Bitcoin?

Bitcoin users can cash out, yes.

Coinbase lets you sell the currency for cash, which you can withdraw into your bank account.

You can also sell it to investors for cash.

However, there are some risks involved.

what is bitcoin
There are a number of risks involved, but what are they? (Credit: Pexels)

What are the risks of the currency?

It is essentially gambling.

It isn’t an asset that produces value – it has no minimum value except for what other people are willing to pay for it, which is based on speculation.

There are also fears that it’s a bubble that will burst, and it isn’t protected by any Government FCA schemes, so if the value of it goes down to zero, you will lose your money.

Once you own some of the cryptocurrency, it’s important to protect it from hackers.

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Experts say you shouldn’t leave it in an exchange for too long – move them to a location that’s within your control.

A software wallet allows you to safely store them on your own computer.

You can also store your cryptocurrency in a paper wallet that isn’t in your virtual wallet or computer.

But these are harder to spend.

Why is the currency in the news right now?

The cryptocurrency is currently in the news because Elon Musk’s Tesla company has bought $1.5 billion of Bitcoin.

This has caused the currency to spike by a record 17%.

Days earlier, he added #Bitcoin to his Twitter profile, causing an earlier spike.

It’s thought Tesla will soon start accepting Bitcoin.

However, the Bank of England has revealed that the price can be very volatile and said it was “very nervous” about people using Bitcoin for payments.

Bank of England governor Andrew Bailey said: “I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value.”

He added: “It may have extrinsic value in the sense that people want it.”

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