How does the bitcoin market work? Its features and playing field

How does the bitcoin market work? Its features and playing field

The financial market is a complex system, and with the emergence of the cryptocurrency in this environment, the question “how does the bitcoin market work?” became one of the most topical today. What are the rules of the cryptocurrency market? What are the risks and challenges traders face? It would also be interesting to know about the future of investments, which are now at the peak of their activity.
 
Table of content:
- The most important BTC features
- What the cryptocurrency rate depends on?
- Risks related the investments and legal status
- How to get bitcoins?
- How are BTC transactions made?
- Earning money on the digital gold
 
Bitcoin main features
 
You know what bitcoin is, so instead of a detailed explanation the most important features must be identified and we are going to present them in the form of short points. Most users see BTC as a computer program that allows you to access the virtual wallet for transactions. In fact, this is a complicated system with special rules and laws inside.
 
Bitcoin is a digital asset that hasn’t got material form and is based on a peer-to-peer computer network without a single center.
 
Bitcoin has got a public registry, called blockchain. It contains a complete history of all transactions that have been ever made.
 
Cryptography replaces the central control body, performs the function of the issuer and allows transactions.
 
Despite the fact that the BTC code is open, the virtual money is protected from burglary and forgery using the SHA-256 encryption algorithm.
 
Cryptocurrency is stored in a special wallet, presented online or in the format of the software for a PC, a mobile application or a hardware device.
 
The exchange is a web platform for buying and selling bitcoin, making profit on the rate changing and also transforming crypto into the real money.
 
Each owner can pay bitcoins for goods and services, because many retailers accept cryptocurrency as payment.
 
What makes the bitcoin rate?
 
Bitcoin in general and cryptocurrency in particular are extremely volatile. On the one hand, it attracts players, because you can earn a lot of money on the difference in rates during the day, and on the other hand one can lose investments. Also, volatility in the opinion of the majority of experts does not allow the bitcoin to become a full-fledged monetary unit. At the beginning for 1,000 coins 1 USD was given. In 2012, for one BTC 5-7 dollars were offered but the first serious price jump occurred in 2013 to 900 USD, and now the cost is thousands of dollars.
 
Financial and legal risks
 
Despite the growing popularity in many countries, the cryptocurrency has not yet been legalized. It has no legal status. Moreover some states have banned its circulation. There is also convincing information that some types of altcoins and bitcoin itself are used on the black market. From all this we can conclude that, with its investment attractiveness, bitcoin has a shaky position in the traditional financial sphere and the controlling bodies can apply sanctions against the cryptocurrency at any time.
 
How to get Bitcoin?
 
To be involved in the crypto environment or simply get bitcoins, users can use the following methods:
 
Mining
 
Mining means the generation of crypto coins or, if you go into the technical details, making blocks using the special equipment. In the case of bitcoin, graphics chips and processors have not been used for a long time. They were replaced by ASICs – narrowly targeted devices with a high hashrate at a certain power consumption. Weak and average miners can not do without pools - services that help work together with an appropriate share of reward for each participant. As an alternative to active mining, cloud mining is used.
 
Exchange
 
Do you have traditional money or altcoins and want to invest them? You can get bitcoin by means of an exchange. This service is provided by exchanges, special terminals and P2P platforms, where users, interested in selling digital assets, are registered. As for the level of fees, the best choice is the exchange. The exchanger allows you to receive a currency quickly and in some cases without the registration. If you are going to use your bank cards for the purchasing of cryptocurrency and the amount is large, be ready to provide your personal data.
 
Goods and services for cryptocurrency
 
Many retailers and companies providing services in various areas, offer their customers to pay crypto coins. This business direction is only developing, because not every company risks dealing with bitcoin because of its high volatility and semi-legal status. Moreover, it is not so easy to keep accounts, make tax reports and arrange other documentation. Bitcoins for goods and services are still exotic, but it is a good way to get a cryptocurrency without mining or using exchanges.
 
ICO projects
 
Bitcoins can be turned into a living currency that will help implement the ICO. The Tokens of the Initial Coin Offering projects are sold not only for Ethereum, but also bitcoin is accepted for payment. This is the most popular cryptocurrency, and it can be easily and practically exchanged for any asset on any service to put real money into your start-up. Also, bitcoins can be offered as rewards or bonuses to team members, freelancers and bounty program participants.
 
Transactions with bitcoin
 
It is impossible to give a complete answer to the question "how does bitcoin market work" without the detailed analysis of the technology by which transactions with cryptocurrency are carried out. We have repeatedly told about bitcoin wallets, so most readers of our blog know what BTC address is.
 
An address is a set of numbers and symbols, often presented not in its open form, but in the QR-code format for the instant scanning by a mobile phone camera. If you want to get coins from another user, he or she should know your address to transfer funds. And vice versa: you send the virtual money to the address of the bitcoin of another person’s wallet.
 
You have got a private key as well. No one should know it, since private and public keys form the complete access to your finances. That's why experts advise to store large amounts of cryptocurrency in the so-called cold storage facilities, even if it is an ordinary piece of paper or “paper wallet”.
This is much more reliable than using light wallets or mobile applications.
 
An interesting fact is the first transaction in the history of the bitcoin (the genesis block) was made on January 12, 2009 personally by Satoshi Nakamoto, who sent funds to Hal Finney, who is well known as the the earliest Bitcoin pioneers. You've probably heard about pizza, worth a million dollars? The programmer from Florida in 2010 bought it for 10,000 bitcoins. In those days this amount was really small.
 
How to make money on bitcoins?
 
This is the main subject of our article, because the market is an opportunity to earn. Generation of bitcoins can not be accelerated, because they are created with the speed set in the algorithm. As we have already said, mining is one of the ways of income, but it is quite expensive and difficult to realize. That is why exchanges have been and will be the most effective way to profit quickly and without a technical base. The whole fortune was made on the bitcoins by the first enthusiasts who acquired digital assets when their cost was low. Now we have use a lot of efforts and investments in order to get at least a share of this success, which is why bitcoin is often compared to a financial pyramid or the soap bubble, but there is reason to challenge these arguments.
 
Experienced players who have good intuition, benefit from exchanges, but because of the high volatility of their rate their wealth is not immune from depreciation. They say that inflation does not threaten bitcoin, but in fact its value is not confirmed by anything, unlike traditional money, where the state is the guarantor of the cost. Everything is based on the popularity of the cryptocurrency and its possible prospects. The information that is covered by the media is also important here. How does the bitcoin market work? The answer to this question has not been received completely and we are going to watch the situation on this field and inform our readers when the news appears.



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