There will be few Dutch people who have never heard of it: Bitcoin, the popular crypto currency. Almost everyone experiences that at the office next to the water cooler or during a birthday suddenly it is about Bitcoin and the most exotic, technical terms are used. Bitcoin is a perfect example of a technological revolution that has rapidly established itself in society. Bitcoin has been frequent in recent years front pages and the NOS Journal opened. But because the advance was so fast, there are also hordes of people who have little control over the entire Bitcoin phenomenon. That is why today: five things that every layman should know about Bitcoin.
1. Why is Bitcoin so popular?
Strictly speaking, Bitcoin is a means of payment, a digital currency. The previous really big revolution in the field of money was the introduction of book money: no coins or paper, but virtually in your bank account. Bitcoin is now unleashing a new revolution in the financial world. The price of the Bitcoin is volatile, which has enabled smart investors to make large profits. In countries with high inflation and where their own currency is under pressure, virtual currency can offer some security. Digital currency is completely separate from the central banks.
2. What distinguishes Bitcoin from euros and dollars?
The Bitcoin is anonymous and is being developed by computer software (mined). It is certain in advance that a total of 21 million Bitcoins can be created. There is no central bank that can suddenly print digital coins, which can cause the value of the coin to fall. The European Central Bank, for example, has done this for the euro.
A Bitcoin transaction cannot be traced, which is one reason why Bitcoin has become popular as a means of payment in the criminal circuit, among other things. Finally, Bitcoin is not traded on traditional exchanges, but via online trade offices.
3. Can anyone get started with Bitcoin?
Basically it is. The technology behind Bitcoin (the blockchain) is quite complicated, but you don't necessarily have to fathom it to get started with Bitcoin. In fact, every layperson can buy and sell Bitcoin today, as long as you have an internet connection and a possibility to transfer money, for example via PayPal, iDEAL or a credit card.
4. What do I need to buy or trade in Bitcoin?
You trade Bitcoin, as well as other crypto currencies, via one crypto wallet. A crypto wallet is a kind of digital wallet that only you can access via your computer or your smartphone. Crypto currencies that you buy end up in your crypto wallet, where you can take them out later to make payments or to buy other crypto currencies. Buying and selling crypto currency is done via a crypto exchange. There are all kinds of different types of wallets and exchanges, so make sure you read carefully before you get started.
5. Which risks or disadvantages should I pay attention to?
Buying bitcoin is tempting because there are many success stories going around from people who quickly became rich with it. Realize that those stories are exceptions; don't buy Bitcoin because you want to get rich, but do it mainly because you like it or find it interesting. Like any investment or investment, there is a risk attached to it and you can also lose your investment. Also pay attention to which exchange you use. They all have their own characteristics and rules with regard to, for example, commissions that are charged. Finally: forget your passwords and keys not. A key is a code that gives you access to your Bitcoin. Because everything is anonymous and there is no Bitcoin bank, you have to rely on yourself. Unfortunately, stories are known of people who have lost an asset to Bitcoin because they have forgotten or lost their key. So don't become one of those people.