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Bitcoin was the very first cryptocurrency and one of the most popular ones as well. It’s understandable if it piques your curiosity.

Nevertheless, it’s important that new investors like you learn more about Bitcoin before you buy digital coins with your hard-earned cash. In this article, you’ll find out what Bitcoin is and how it works, as well as discover the perks and risks of this cryptocurrency.

What Is Bitcoin?

Bitcoin refers to a decentralized digital currency that you can purchase, sell, and exchange directly. It does not require the intervention of banks and other intermediaries. It was created by Satoshi Nakamoto and launched publicly in 2009.

This type of cryptocurrency is founded on a blockchain. This distributed digital record is composed of units that are known as blocks. Each block holds data about every transaction, such as the buyer, seller, value, date, time, and identifying code. These blocks are connected in a digital chain that is organized in chronological order.

Bitcoin has increased exponentially in value since its 2009 launch. During its early days, one coin could be purchased for less than $150. The average selling price now is tens of thousands of dollars.

Advantages of Bitcoin

Bitcoin features certain benefits that could draw the interest of investors. These are some of its advantages:

Rising Value

The value of Bitcoin is expected to continue to grow over time. After all, the supply of Bitcoin is limited to 21 million coins — so long as the demand stays high, the value will as well. Some institutional investors call it “digital gold.”

Public Transactional Information

Information about Bitcoin transactions is open and accessible to the general public. All the transactions are recorded in a public ledger to discourage the reversals of transactions.

Disadvantages of Bitcoin

In spite of its popularity, Bitcoin also has its own share of disadvantages. These are some of the risks and drawbacks of the cryptocurrency:

Decentralization

Bitcoin has a decentralized system, meaning it is not regulated by a single organization. The governments of some countries are concerned about the lack of taxation and the uncontrollable nature of this cryptocurrency.

Anonymity

While Bitcoin transactional data is publicly available, buyers and sellers always remain anonymous. Only the wallet IDs of investors are revealed, but not their names. This setup provides privacy for sellers and buyers, yet it also gives them the opportunity to participate in illicit activities like scams and get away with it.

Security Issues

Bitcoins are kept in a virtual wallet that is stored in the cloud or in the computers of buyers and sellers. Although this digital wallet is convenient, it is also vulnerable to security issues. Wallets in online servers could be hacked, while wallets in local computer systems could be deleted by users or wiped out by viruses.

Be Cautious if You Are Planning To Invest in Bitcoin

Bitcoin may have points of interest as a cryptocurrency, especially if you’re getting into investing. However, keep in mind that it comes with its own risks as well. Make sure to exercise caution if you are planning to invest your hard-earned money in Bitcoin.