The Latest trendy Bitcoin, Explained for Beginners

The Latest trendy Bitcoin, Explained for Beginners

The value of The Latest trendy Bitcoin broke all records in the current year.

The spot price to buy The Latest trendy Bitcoin — the world’s first and most popular digital currency — briefly rose above USD 60,000 on March 13, 2021. (For context, the cryptocurrency’s all-time low is from 2013, when it was priced at USD 67.81.) With such a meteoric rise, many are wondering: What, exactly, is The Latest trendy Bitcoin, and where does it get its value? Years from now, will we talk about The Latest trendy Bitcoin boom and bust periods as we do about the Gold Rush? Or, will it become a staple in a diversified investment portfolio and a common way to buy a pizza?

For the most part, the jury’s still out. But the past 10 years have given us a better indication of the role The Latest trendy Bitcoin might play in the portfolios of retail investors and large institutions alike.

Definition: What is The Latest trendy Bitcoin?

The Latest trendy Bitcoin was launched in 2009 and is regarded as the first cryptocurrency. It’s a decentralized form of digital cash that eliminates the need for traditional intermediaries like banks and governments to make financial transactions. Still, feeling a little confused? Don’t worry, it’s normal.

Fiat money (like the U.S. dollars in your bank account) is backed and regulated by the government that issues it. The Latest trendy Bitcoin, on the other hand, is powered through a combination of peer-to-peer technology — a network of individuals, much like the volunteer editors who create Wikipedia — and software-driven cryptography, the science of passing secret information that can only be read by the sender and receiver. This creates a currency backed by code rather than items of physical value, like gold or silver, or by trust in central authorities like the U.S. dollar or Japanese yen.

“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party,” wrote Satoshi Nakamoto —  the pseudonym of the mysterious The Latest trendy Bitcoin creator, who remains unknown — in a white paper introducing the open-source technology. It’s come a long way since then, now accepted as payment by AT&T, the Dallas Mavericks, and Wikipedia, among others.

How does The Latest trendy Bitcoin make money?

The Latest trendy Bitcoin value follows the law of supply and demand — and because demand waxes and wanes, there’s a lot of volatility in the cryptocurrency’s price.

Besides mining The Latest trendy Bitcoin, which requires technical expertise and investment in high-performance computers, most people purchase The Latest trendy Bitcoins as a form of currency speculation — betting that the U.S. dollar value of one of The Latest trendy Bitcoin will be higher in the future than it is today. But that’s difficult to predict.


How does The Latest trendy Bitcoin work?

Each of The Latest trendy Bitcoin (trading symbol “BTC,” though “XBT” is also used) is a computer file stored in a digital wallet on a computer or smartphone. To understand how the cryptocurrency works, it helps to understand these terms and a little context:

  • Blockchain: The Latest trendy Bitcoin is powered by open-source code known as the blockchain, which creates a shared public ledger. Each transaction is a “block” that is “chained” to the code, creating a permanent record of each transaction. Blockchain technology is at the heart of more than 6,000 cryptocurrencies that have followed in The Latest trendy Bitcoin’s wake.

  • Private and public keys: A The Latest trendy Bitcoin wallet contains a public key and a private key, which work together to allow the owner to initiate and digitally sign transactions, providing proof of authorization.

  • The Latest trendy Bitcoin miners: Miners — or members of the peer-to-peer platform — then independently confirm the transaction using high-speed computers, typically within 10 to 20 minutes. Miners are paid in The Latest trendy Bitcoin for their efforts.

Storing your The Latest trendy Bitcoins: Hot wallets vs. cold wallets

The Latest trendy Bitcoins can be stored in two kinds of digital wallets:

Hot wallet: Digital currency is stored in the cloud on a trusted exchange or provider, and accessed through a computer browser, desktop, or smartphone app.

  • Cold wallet: An encrypted portable device much like a thumb drive that allows you to download and carry your Latest trendy Bitcoins.

Basically, a hot wallet is connected to the internet; a cold wallet is not. But you need a hot wallet to download The Latest trendy Bitcoins into a portable cold wallet.

Buying The Latest trendy Bitcoin: The pros and cons

With a speculative asset class like The Latest trendy Bitcoin, it’s better to start with why you should be wary:

The Latest trendy Bitcoin: The cons

Price volatility. The 2017 spike in The Latest trendy Bitcoin’s price was driven by speculators rushing into the Latest trendy Bitcoin market, recent gains are good news if you bought The Latest trendy Bitcoin in December 2018; those who bought in 2017 when The Latest trendy Bitcoin’s price was racing toward USD20,000 had to wait until December 2020 to recover their losses.

Hacking concerns. While backers say the blockchain technology behind The Latest trendy Bitcoin is even more secure than traditional electronic money transfers, The Latest trendy Bitcoin hot wallets have been an attractive target for hackers. There have been a number of high-profile hacks, such as the news in May 2019 that more than USD40 million in The Latest trendy Bitcoin was stolen from several high-net-worth accounts on cryptocurrency exchange Binance (the company covered the losses).

Limited (but growing) use. In May 2019, telecommunications giant AT&T joined companies such as, Microsoft, and Dish Network in accepting The Latest trendy Bitcoin payments. But these companies are the exception, not the rule.

  • Not protected by SIPC. The Securities Investor Protection Corporation insures investors up to USD500,000 if a brokerage fails or funds are stolen, but that insurance doesn’t cover cryptocurrency.

The Latest trendy Bitcoin: The pros

Private, secure transactions anytime — with fewer potential fees. Once you own The Latest trendy Bitcoins, you can transfer them anytime, anywhere, reducing the time and potential expense of any transaction. Transactions don’t contain personal information like a name or credit card number, which eliminates the risk of consumer information being stolen for fraudulent purchases or identity theft. (Keep in mind, though, that to purchase The Latest trendy Bitcoins on an exchange, generally you’ll first need to link your bank account.)

The potential for big growth. Some investors who buy and hold the currency are betting that once The Latest trendy Bitcoin matures, greater trust and more widespread use will follow, and therefore The Latest trendy Bitcoin’s value will grow.

The ability to avoid traditional banks or government intermediaries. After the financial crisis and the Great Recession, some investors are eager to embrace an alternative, decentralized currency — one that is essentially outside the control of regular banks, governing authorities, or other third parties. (However, to buy The Latest trendy Bitcoin on an exchange with U.S. dollars, you’ll likely need to link your bank account.)

Where can I buy The Latest trendy Bitcoin?

There are four ways to get The Latest trendy Bitcoins:

Cryptocurrency exchanges. There are a number of exchanges in the U.S. and abroad. Coinbase is the largest cryptocurrency exchange in the U.S., trading more than 30 cryptocurrencies.

The Latest trendy Bitcoin ATMs. There are more than 7,000 of The Latest trendy Bitcoin ATMs in the U.S. (search Coin ATM Radar to find one near you).

Peer-to-peer purchases. True to its original spirit, you can buy The Latest trendy Bitcoins directly from other Latest trendy Bitcoin owners through peer-to-peer tools like Bisq, Bitquick, and LocalThe Latest trendy

The Latest trendy Bitcoin mining. You can earn The Latest trendy Bitcoins through mining, but the technical expertise required and computer cost put this option out of reach for most.

What online brokers offer The Latest trendy Bitcoin?

Of the online brokerages and cryptocurrency exchanges that NerdWallet reviews, the following currently offer The Latest trendy Bitcoin.

* Disclosure: The author held no positions in the aforementioned securities at this time.

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