What is Bitcoin?

Bitcoin is a form of digital currency, or ‘cryptocurrency’. It differs from fiat currency (Euros, Dollars, Pounds) because there is no government or central bank control.

You might have heard more about Bitcoin recently, with endorsements and involvement pouring into cryptocurrency from celebrities such as Elon Musk, Maisie Williams, Paris Hilton, Kanye West, and Lindsay Lohan.

Bitcoin was invented by an anonymous source in 2009, who went by the alias ‘Satoshi Nakamoto’. Rumours speculated that the creation of Bitcoin was in response to the failures by banks and governments in the 2008 crisis. The financial crisis caused people to question the control of central banks and governments. Bitcoin has the power to remove their centralized authority over financial transactions and processes.

How does Bitcoin work?

Bitcoin is based on blockchain technology, meaning that no central authority controls it. The technology is decentralized and runs on computers around the world. It is a ledger of data that everyone can see and that is controlled by a rigorous code.

Different types of information can be stored on a blockchain but the most common use so far has been as a ledger for transactions. Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, this means that transactions are permanently recorded and viewable to anyone.

Bitcoin is created through a process called ‘mining’, which involves solving complicated computational puzzles. However, it is not necessary to mine Bitcoin to obtain it. Digital currencies like Bitcoin can be bought and sold on digital exchanges and through trading platforms.

What is Bitcoin used for?

Once Bitcoin is acquired, through an exchange, trading platform, or by mining, it is held in a digital wallet, from which it can be transferred to others, exchanged for goods and services, or held as an investment. Investment in Bitcoin works similarly to investment in stocks and bonds. As the value increases, so does the price, meaning that an investor stands to make returns on their initial investment.

Bitcoin’s many uses as a means of payment are expanding. Microsoft, AT&T, Burger King, and Pizza Hut are some household name companies that accept Bitcoin payments. Social media giant Twitter also allows users to tip their favourite creators using Bitcoin.

Bitcoin is a way for people to exchange money over the Internet without relying on an intermediary such as a bank, giving users more control over their money. Without intermediaries, there is a higher degree of user control, which allows users to make purchases without worrying about where their data is being collected and without having to pay costly processing fees to third parties.

What are Bitcoins risks?

The price of Bitcoin can be volatile. In 2021 alone, the value of Bitcoin has varied immensely, ranging from just over €23,000 in February to over €57,000 by October. As with any investment, there is a risk that investors can lose money if the value of the asset drops.

Although the removal of financial intermediaries is a revolutionary idea, the influence of such intermediaries creates safety and security in financial markets. Bitcoin has value only because the people who are trading it say it has value. There are no governments or regulatory bodies to help Bitcoin retain its value, meaning regulation or a shift in sentiment may cause investors to lose out.

There is also a risk that Bitcoin wallets can be hacked. While the Bitcoin network — its underlying blockchain technology — is trustless, and therefore protected against fraud, holdings stored in wallets and exchanges can be stolen. When investing, it is important to ensure that your wallet provider is sufficiently secure by researching its security protocols and compliance.

How to buy Bitcoin

There are a range of ways that people can buy Bitcoin, like through banking apps or exchanges which allow you to purchase the crypto through fiat currencies.

The Stablehouse platform allows you to purchase Bitcoin using another digital asset like an array of stablecoins. Once you establish your Stablehouse account, the purchase, selling, and exchange of Bitcoin is a straightforward and accessible process.

Earn Bitcoin on Stablehouse

Stablehouse is designed to help both newcomers and seasoned cryptocurrency traders make strategic investments. Stablehouse’s frictionless, easy-to-use platform offers low fees and allows users to set up an account in minutes and get verified quickly, so they can start to explore the world of digital assets almost immediately.

Stablehouse’s expert wealth managers invest the assets under management on the platform to generate sustainable returns for its customers. For all Bitcoin investments, Stablehouse users have the potential to earn an introductory flat-rate of 6.5% return on investment (ROI).