However, using software has a danger. If the device is damaged or erased, or formatted for any reason, we will lose all the money. Let’s say that with Bitcoin, the money is in “the Bitcoin cloud” (the so-called Blockchain) and what the software keeps is a copy of the key to access it. If we use the software, it is convenient to make a backup copy of these keys.
Another option to keep track of our Bitcoin is to use a web wallet. In this way, a web page is in charge of saving our passwords, and we will access our accounts with a username and password. What these websites do is the function of a bank.
Coinbase is a good option for this, as it also allows you to buy and sell Bitcoins. The only bad thing is that if we use this method, we lose part of the grace of having Bitcoins, using a completely decentralized system without relying on trust in any entity. No one can confiscate our money without stealing our keys. On the other hand, if we have the money on a website, we must trust it.
Bitcoin, price swings
Now it may seem that Bitcoin is very expensive, more than 2000 euros to change. And that is not a good time to invest in it. But in the past, we have already seen similar moments, and the advice should be the same: be careful because it is a somewhat speculative good.
Bitcoin has suffered many bumps along the way. The first was the closure of the Silk Road, an illegal exchange market that the FBI closed in 2013. Transactions were made with Bitcoins, and the price plummeted.
I have been investing in bitcoins since 2015, and it has allowed me to increase my savings. It is a high-risk investment, unpredictable even for the most expert. Two years after entering this world of cryptocurrencies, I still see many doubts, speculations and fears; for this reason, I want to give you these ten things to know about bitcoins.
Is bitcoin backed?
No, but neither do the rest of the currencies; this is one of the most frequent concerns since it is said that the currencies are backed by the wealth of a country, formerly the value of a currency was backed in gold, but this no longer happens, in If the value of gold does not have a backing, this is given by its use, its scarcity, its usefulness and, as a refuge of value, these are the same reasons why Bitcoin has value, in addition to supply and demand.
Has bitcoin been hacked?
This is the biggest myth, Bitcoin as a currency has never been hacked, and neither has the blockchain protocol. The hacks related to this currency are linked to wallets and storage platforms, but there are many ways to store cryptocurrencies, not only in cloud wallets but also in local, physical paper wallets or advanced storage devices.
Is bitcoin anonymous?
This is not entirely true; it is complicated to be anonymous since, when you create a wallet, it remains in a public registry (Blockchain or chain of blocks), but if the FBI or Interpol is not searching you, nobody goes, namely your bitcoins.
Is bitcoin used for scams and black markets?
Yes, it has been used for illegal things because it is easy to use and relatively anonymous, but it cannot be generalized since the dollar and other currencies are also used in illegal businesses.
Is bitcoin a pyramid?
It is not a pyramid. While there are many scams around cryptocurrency, it is not a scam. However, fraudulent systems abound around it. When investing, you must control the money and detect early warning signs that it is a scam.
Suppose they offer you a fixed return (this is not possible due to its volatility) if they have an affiliate system, and you earn by referring people if you cannot get your investment out in a specific time. This is not bitcoin!
Can bitcoin make you a millionaire overnight?
It’s not that easy, NO overnight. If at the beginning of this year, you had invested 1,000 USD, today you would have more than 6,000 dollars, which corresponds to excellent profitability, but you would not be a millionaire. If you had bought it in 2009, you would be, but it is not overnight. Although it is an asset that has higher returns than any financial instrument, it requires time to see the results and carries risk since the volatility of this currency is high.
Is bitcoin prohibited?
This is an essential myth since a few months ago, the Financial Superintendence issued a bulletin saying that bitcoin is prohibited in Colombia, and few delved into the subject; actually when reading this bulletin, what we found is that it is prohibited for entities regulated by them, that is, banks and financial institutions, natural persons can buy, sell and poseer bitcoin. It should be noted that although it is legal and not prohibited, there is no regulation on the currency.