What is Bitcoin? How much is one Bitcoin worth? Am I the only one who doesn’t understand what Bitcoin is? These are all valid questions and concerns that many people have.
Bitcoin (or BTC) is a decentralized cryptocurrency or digital currency that was created in the early 2000’s and has lately gained a jolt of popularity. In the past decade, the value of Bitcoin has risen tremendously.
Currently one Bitcoin is worth about $47, 814.50 USD. But just like other industries in the stock market, the price of Bitcoin is subject to change at any time. Detailed below are some of the common questions and concerns about Bitcoin.
Bitcoin is a digital currency that was created in 2009 by Satoshi Nakamoto. Unlike traditional currency (the U.S dollar or European euro), bitcoin isn’t backed by any government or bank. Nor is there any physical form of it. Bitcoin is completely digital. It can only be accessed online. Bitcoin’s success has sparked the creation of many other cryptocurrencies such as Dogecoin and Ethereum.
Because Bitcoin isn’t governed by a bank or government. There is no central authority behind it, thus Bitcoin is considered a decentralized currency.
Instead of having one governing authority, Bitcoin is controlled by the users themselves who verify the transactions as they happen. Bitcoin allows the secure transfer of Crypto assets from person to person. There is no middle man in these transactions.
While apps like Paypal or Venmo rely on a bank to administer a transfer, Bitcoin does not. Third-party payment apps can be used, however, to pay for the exchange of Bitcoin from person to person
Generally people buy bitcoin from one another and not a retailer like Target, Walmart, or Amazon. Not only can you sell whole Bitcoins but you can also sell portions. For example you could sell half a Bitcoin and keep the other half. If you wanted you could go smaller in size and buy smaller fractional pieces.
Although there is no physical form of Bitcoin it functions the same way as any other currency. The only difference being you can’t physically hold it. Some places will accept Bitcoin as payment, but transferring the funds could be a safer option.
How Much is 1 Bitcoin Worth in Cash?
At the time this article was written, the Bitcoin price was $47,814.50 USD. That’s the value of 1 unit of Bitcoin. But Bitcoin prices constantly fluctuate over time. In the United States a dollar will always be worth one dollar. But if inflation causes market prices to go up there’s less you can do with that one dollar. The price of the products may change but the value of the currency stays the same.
That doesn’t happen with Bitcoin. Instead of the whole market increasing or decreasing, only the value of the currency does. That is why there is so much fluctuation of Bitcoin prices. The idea here is that market prices don’t shift, instead the value of the currency does.
Bitcoin can be subject to some volatility. Looking at the price change statistics throughout the 2021 year, it looks like there were two peaks in Bitcoin pricing. One around May and the other around October. Other than that has fairly consistently held its value of $30K to $68K.
How Often Does the Bitcoin Price Change?
Bitcoin prices can change daily, but not always dramatically. The price can change by $1,000 or more within a day.
There are a few factors that influence what the price of one Bitcoin is, including supply and demand, cost of production, competition, and geo-political developments. Basically the same factors that affect any regular bank currency can also impact Bitcoin currency.
Supply and demand fluctuations are pretty straightforward. If Bitcoin is plentiful, prices go down, if it is scarce, prices go up. The total supply of Bitcoin rarely changes but the trading frequency does. Just like we can’t simply print more money, we can’t just create more Bitcoin.
The cost of production is determined by Bitcoin mining and is a common reason for prices to go up or down. Bitcoin mining is the term used to describe the miners competing to solve complex math problems. When the problems are solved they receive a reward, a new block of Bitcoin.
The hardware and software required to mine Bitcoin is very costly. In all reality it probably takes about ten minutes to mine one block of Bitcoin. But that includes ten minutes of running high tech Bitcoin protocol processing equipment.
It takes a lot of electricity and tools to mine for Bitcoin. The more Bitcoin mining costs, the more money one Bitcoin is worth.
What is a Bitcoin Blockchain?
The Bitcoin blockchain is a public running list of every Bitcoin transaction. Bitcoin users can see all transactions from the market. Although the data is accessible by everyone, you don’t have access to the names on the transactions, so it is considered pseudonymous. It will not reveal any personal data, it is only concerned with the monetary transaction.
But what is a block? A block is basically a set of transactions from one period of time. One block is dependent on another, therefore a blockchain.
By going through the blockchains, users can gain access to bitcoin price history data. Think of it like looking at your bank account to see your list of transactions, except you have access to everyone’s transactions and not just your own – except the names of other people making these transactions are kept anonymous.
Finding the new blocks and publishing them is how miners earn Bitcoins. When you’re waiting for your Bitcoin transaction to be confirmed, you’re actually waiting for the miners to find your block.
Since the blockchain is public there are various resources you can use to access the data online. And anyone in the world has access to it. Blockchain.com is a good resource for gaining information about cryptocurrency exchanges on the Bitcoin network.
How Do I Cash Out My Bitcoins?
To cash out your Bitcoins, you can sell your Bitcoins to someone or transfer the funds using a broker exchange. You would cash out your Bitcoin for the current price of USD or whatever currency you want to receive.
If you decide to sell your Bitcoin to someone, you and that person decide on the payment method. Venmo and Paypal are strong options. All you would need is the value of your Bitcoin and the person’s information and you can send a payment request. Using this option is ideal because Venmo and Paypal offer a transfer option without processing fees. This way you’re getting all of the money.
Using a broker exchange might have some transaction fees, but here you don’t have to find an individual party. First sign up for a Bitcoin exchange like Coinbase. Then transfer your funds into the app. Next, transfer the funds into your bank account. Be aware that there might be transaction fees associated.
Pro Tip: New to Coinbase? Sign up for Coinbase through the free Swagbucks rewards app and get a free $30 cash bonus.
Final Thoughts on the Value of a Bitcoin
Bitcoin is likely the most popular cryptocurrency. The whole process is public and very secure, and you can find a wealth of support and informational resources at the Bitcoin Foundation.
If this is something you’re interested in it can be a great investment with the proper research. The popularity of cryptocurrency is at an all time high so now is a great time to start investing.
Disclaimer: Nothing in this article should be construed as investment advice. The information contained is based on the opinions and personal experience of the writer. Please seek your own financial advice from a qualified professional.
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