What are BitCoins?


Bitcoin was the pioneer in the subject of crypto currencies and they still are the most famous crypto currency on the market right now, holding the highest market share. Overall there are more than 3000 crypto currencies, with new currencies seemingly popping up every day. Although you can save and print BTCs, they are classified as virtual money.

After the big financial crisis back in 2008, which was mainly caused by the large banks, the desire for a non-inflationary currency grew. BitCoin is such a currency. Until now, states or banks decided which currency was needed to pay with in this or that city. So the currency was determined by the states and the citizens and companies had to accept them.

A banknote is basically a piece of paper on which something was printed to give „value“ to it. This imprinted paper isn’t even worth a few cents. Though, when society and companies accept a 100$ note, that’s what gives it its value. I.e the sheer acceptance as a payment method with an agreed on value is what’s important for a currency to work. Now, with a defined and accepted value, you can use the 100$ bill as a form of payment. This is pretty similar to how crypto currencies like BitCoins work. Through social acceptance the currency gets its value. BitCoin is still working on the social acceptance, but they are on the right path and have made great progress. Meanwhile big companies like Apple, Windows, Amazon, and even some travel organizations accept BitCoins as a payment method.

What makes BitCoins special?

In comparison to other currencies, BTCs are publicly accessible. They are not controlled by any states or banks. Thereby people who otherwise have no opportunity to open a bank account, now have access to an independent alternative. Another feature and probably the reason why Bitcoins could establish themselves on the market, is the fact that the currency is safe from inflation. The reason for that is that only a certain amount of Bitcoins are put into circulation. (For the number savvy people out there: Every 10 minutes, exactly 50 BitCoins are put into circulation.) The distribution of BitCoins started back in 2009. Every 4 years, the distribution of BTCs is cut in half. Since 2017, only 12,5 BTCs are put into circulation every 10 minutes.

How to get Bitcoins?

There are numerous ways to either earn, or buy Bitcoins. On the one hand, there is the so called Bitcoin Mining which isn’t profitable anymore, unless you own a powerful computer (a so called Bitcoin Rig), and have access to cheap electricity. The easier (and probably more cost effective) way to get Bitcoins is to simply buy them. When doing so, take care of scammers and only buy at platforms you trust, or go directly to the official homepage. Also, it pays off to keep an eye on the current rate by which Bitcoins are traded as their price still fluctuates a lot.

Who gets the newly distributed Bitcoins?

The newly distributed Bitcoins aren’t directly sold, but used as a form of payment for the Bitcoin miners. With their computers, they solve arithmetic problems and algorithms to encrypt the data. In theory everyone can become a Bitcoin miner to get their share of the newly distributed Bitcoins, but meanwhile the arithmetic problems are that complex, that a normal computer can’t solve them anymore. Specialized computers (so called Bitcoin Rigs) consume lots of energy, so they can only be operated cost efficiently in countries where the electricity is cheap. For example, due to usage of volcanic energy there is a surplus of electric energy in Iceland, leading to low electricity prices.

The Bitcoin trading range

In 2013, a Bitcoin wasn’t worth even 100€. This promptly changed. At the end of 2013, a Bitcoin suddenly was worth more than 500€. 2015, the value of Bitcoins significantly dropped, as members of the company parted and the created uncertainty led to a value loss. From last year in June (2016), the price of a single Bitcoin rose from 500€ to over 2000€+. The price for which a Bitcoin is traded still is highly volatile, mainly before and after important political or financial decisions concerning crypto currencies.

Selling Bitcoins

There are numerous platforms where you can sell your Bitcoins. Though not all of them are legit, and with the increased interest and gained acceptance of crypto currencies in the broader public unfortunately scammers are also on the hunt for some easy money. Alas, when selling Bitcoins use the official homepage, or verified and trusted trading platforms. Luckily, selling Bitcoins is easy. You wait for a good moment (good meaning that the value is on a local high), choose the desired amount of Bitcoins you want to sell, and ta-da, you got a deal.

Experience with Bitcoins

The advantages of Bitcoins are obvious. They are safe (again, take care of scammers!), are free from inflation, and can be used around the globe for trading (or even shopping as stated above). Furthermore, the value of Bitcoins has risen over the past years with an end not in sight.