How Much Do You Know About Bitcoin?

The Rise and Risk of Bitcoin: Understanding the Cryptocurrency

• Bitcoin, a purely digital currency, is surging in value due to a surge of investor enthusiasm and demand.
• Unlike other investments, bitcoin is not tied to physical assets or the US dollar, and its purpose is to allow two people to exchange value directly without a central party controlling the network.
• Bitcoin runs on a network of interlinked but independent computers that form a ledger of transactions between people across the world, known as the blockchain.
• The blockchain prevents counterfeiting and double-spending, making bitcoin a secure currency.
• Bitcoin is created through a process known as mining, where miners use powerful computers to solve complex math problems to process transactions and unlock new digital coins.
• Bitcoin's founding code was embedded with the condition that there would always be a finite number of coins available, and only 21 million maximum bitcoins can be mined.
• Bitcoin's scarcity is what gives it value, and its demand has grown due to more novice retail investors and larger institutional investors trading it.
• Bitcoin is becoming more mainstream due to its availability on apps like PayPal, Square, and Robinhood, and its resurgence is also closely tied to the state of global finance.
• The potential for big profits is driving a frenzy of momentum trading, but investing in bitcoin is risky due to the smallness of the market and the lack of insurance or backstops to it.
• Bitcoin's value is volatile, and its price will continue to see volatile swings until the market matures.
• Bitcoin bulls argue that the network is unhackable, but to take over the network, one would need to have their own network of computers running 24/7, which would cost billions of dollars.
• Bitcoin bears warn that the asset is too volatile for average investors and that it's a purely speculative bet that won't be able to scale.