What is Bitcoin? | Bitcoin Wallet | BTC Explained

What is Bitcoin?

Bitcoin is a digital currency created in 2009. Yes, it is a currency and is completely digital there are no physical bitcoins only balances kept on a public ledger in the cloud that along with all Bitcoin transaction is verified by a massive amount of computing power. So basically bitcoins are just set of you numbers or codes backed by complicated mathematical problems which are reflected on the public ledger you hold in a digital wallet. So if you own some bitcoins then it will be reflected on the ledger of your digital wallet and that is all and the only proof you have of owning this currency bitcoins. Look, something like this bitcoin was invented by a mysterious person or group under the pseudo name Satoshi Nakamoto in the year 2009. Satoshi Nakamoto published the paper named Bitcoin. Which talked about the need for a truly digital currency which is not under anyone's control bitcoin is an open-source software this means that no person company or country owns this network. Just like no one owns the Internet the system is peer-to-peer that is users can transact directly without an intermediary like a bank a credit card company or a Clearing House something similar to cash transactions today.

How can a set of codes become a global currency?

Let me first explain what are the factors which determine if a commodity or any product can become a currency. Currency should be durable rare divisible and portable. If all these factors satisfy then that thing can become a currency. It started with the precious metals - currency notes today and maybe the Bitcoin in future. So our currency notes and coins are durable as they do not get spoiled for a long time and can be exchanged from the bank they are rare as they are limited notes printed by regulatory authorities like RBI. They are easily divisible and surely portable similarly for digital transactions that are transactions by credit card or debit card. Their durability that is security and accounts is maintained by RBI and credit or debit card bank or payment company like Visa or MasterCard rest factors are similar to currency notes. Now literally anything can become a currency if these four parameters are sorted and Bitcoin has proved that bitcoin is durable as these mathematical codes are secured by Bitcoin network where multiple users verify each transaction and record them in a public ledger called blockchain. Now since all transactions are public and can be seen by everyone. Therefore, this negligible chance of fraud.

How Bitcoin works?

Bitcoin is rare as only 21 million, Bitcoins will ever be created and out of them almost 80% are already created and rest will be created in another 123 years. So basically bitcoin program is designed in such a way that bitcoins always remained rare and experts say it cannot be altered. This Bitcoin creation is called Bitcoin mining where bitcoins are created as an incentive for users to verify the transactions one Bitcoin can be divided into 100 million.

5 REASONS TO OWN A BITCOIN IRA

1. FREEDOM FROM BANKS

Bitcoin is a decentralized form of currency and free from government regulations. Bitcoin gives you heightened control of your money.

2. SECURE & PRIVATE

Bitcoin is a completely anonymous and private form of personal currency. With our multisignature Bitcoin wallet service, it’s also 100% secure.

3. LIMITED SUPPLY & INVESTMENT RETURNS

The Bitcoin supply is inherently limited – there can only ever be 21 Million Bitcoins in existence. In late 2011, a $200 investment in Bitcoin would now be worth over $194,000!

4. HEDGE AGAINTS CURRENCY AND PAPER ASSETS

Similar to gold, Bitcoin is not tied to the dollar or the stock market and moves in opposite directions. The government can’t print more Bitcoin like it does with paper money.

5. TAX INCENTIVES

With a Bitcoin IRA, you can now buy Bitcoin using your tax-deferred retirement funds. This means you don’t need to have cash in the bank to buy your Bitcoins today.

Key features of Bitcoin

First is blockchain. The blockchain is the foundational technology of Bitcoin every transaction in the Bitcoin world generates two parts one is public key second is private key public key goes to a public lock called block key and the private key remains with your wallet thus, making all your transactions anonymous. So a blockchain is basically a global running tally of every Bitcoin transaction think of blockchain as an open and distributed digital ledger that is used to verify ownership of goods and to verify financial transactions every time a transaction is completed using Bitcoin computers distributed across the network validate the inputs and the outputs only the wallet IDs of the buyers and sellers are revealed in these logs and no other identity.

Second is fast b2b networked. Bitcoin transactions are typically verified and completed within 10 minutes, so you can send money to anyone in the world without access to the banking system with just an internet access within 10 minutes no double spend problem. Double spending is a problem unique to digital currencies because digital information can be easily reproduced with the digital currency. There is a risk that the holder could make a copy of digital token and send it to the merchant or any other party by retaining the original with blockchain technology and open-source character. Bitcoin network essentially works by using individuals greed for the collective good. This is the network of tech-savvy users called miners. Who keep the system honest by pouring their computing power into blockchain this blockchain prevents rogues from spending the same Bitcoin twice and the miners are divided for their efforts by being gifted with the occasional Bitcoin and this is how new bitcoins are created as well.

Currently, transaction fees are charged by banks and financial institutions on every digital transaction and it can go up to one to two percent on each transaction as well. But with bitcoins is people verifying your transactions are getting new bitcoins as a reward this zero transaction fees. You have an option to give small transaction fees for the faster processing of your transaction. However, in future when no more bitcoins will be able to get created then transaction fees will be charged but it will be negligible to what we are used to paying today.

Read more about Bitcoin - https://coinira.com/

A RED-HOT MARKET

After the powerful rise of the local market in recent times, it seems more than prudent to know how to take (part) of the profit

The photo of the Argentine economy is quite complex. Twin deficits, exchange rate backwardness, high tax pressure, strong labor informality, serious competitiveness problems and almost 30% of the population living in poverty. With a long-term vision, perhaps the most worrisome data are the relative deterioration in our human capital (basic education, fundamentally), physical (infrastructure) and demography, which will still play for us in the next two decades and then see us grow old as a country, where potential growth drops sharply.

From a rather more optimistic perspective, the world begins to recover showing a more widespread growth, international trade is reactivated and financial conditions continue to be very favorable. If these global conditions are maintained, with a more efficient management of economic policy, our country could show a healthier picture in the future. By this I mean a rational fiscal deficit, lower inflation, moderately lowering the tax pressure, having a sustainable debt dynamic and reducing the risks associated with our external deficit.

A healthier economy increases the probability of growing in a stable and sustained way. For our historical parameters, growing for several years at moderate rates (3%) would be quite an achievement.

Therefore, even being optimistic (personally I am), Argentina could grow steadily at rates of 3%. A more dynamic growth would be practically impossible given our external constraint. We can not generate enough foreign currency to pay for imports that leads to growth of more than 3%.

Now let's go back to ours. Since the new government took office, equities showed an impressive price rally. Basically, the behavior of the shares should reflect the future growth potential of the companies and their ability to generate returns for their shareholders. For this, of course, companies need good macroeconomic dynamics. Clearly, observing the quotes, the market is being much more optimistic than the average of the analysts.

During 2017, the Merval grew 75% in pesos and 50% in dollars. Moreover, considering the heterogeneous composition of the index in terms of the actions that comprise it and its weightings, we find considerably higher returns, given that the oil sector detracted from the index.

Without going into the detail by company, let's analyze some numbers (with absolute simplicity) to measure the rise of the market in the last time. Since the change of government, the MSCI Argentina (to compare equity indices in dollars from the same source) grew 112%. In the same period, the MSCI Latin America climbed 59% while the MSCI for emerging economies rose 49%. Also in the same period, the American market (S & P) jumped 49%. Making round numbers, half of the increase in the local market is explained by the simple correlation with global markets while the other half corresponds to domestic factors.

In the same sense, when one analyzes the correlation between the price of the shares and the country risk, it is very high. As can be seen in the graph below, the dynamics of the Merval in dollars is practically a reproduction of the evolution of country risk (its inverse). In principle, this is nothing else than the increase in confidence in the ability to pay and in the political, economic and institutional path. Only in the last quarter these two variables showed some decoupling, and the Merval showed a considerably greater increase than the drop in country risk.

First conclusion. The exuberance in quotes is striking in the face of the complexity of the macroeconomic scenario. I reiterate, even for the optimists. Now, looking at a longer-term chart one could understand certain market behaviors. Quotes in dollars practically lateralized between 1992 and 2015, with our characteristic volatility. Since mid-2013, the Merval started the current bullish rally. But at the end of 2014 the index in dollars reached the previous peaks of June 1992, September 1997 and January 2011. Marking a long-term trend, only in 2015 the market begins to show genuine growth.

Let's separate the market in two components. The first is the long-term trend or structural behavior. As we emphasize, from a broader perspective, the local market is recovering the lost ground practically in a decade and a half. Without going into detail, we leave it for a future column , the local market valuations in the last time reached similar levels in relation to other developing markets. For a long time, the valuations showed ridiculous levels product of our highest country risk. Second conclusion, which does not invalidate the first: recently the valuations reached more reasonable levels.

The second component is the cyclical, associated with the typical volatility of the shares in shorter terms. You raise them, take profits, bounce, and so on. Impossible to predict these behaviors, given that the quotes do not stop being a random variable. What one could do is lower the risk level of the portfolio and be prudent in certain contexts. Change equities for fixed income assets, with lower volatility.

In this context, where stocks on average rose almost 25% in dollars in the last three months, it seems more than prudent to know how to take (part) of the profit. Moreover, given the volatility of our market, it probably gives us an opportunity to buy cheaper in the not so distant future.

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