The emergence of a new cryptocurrency in blockchain technology has not been able to displace Bitcoin. It’s the first digital currency that excels in the first place.
Although most of these cryptocurrencies offer better features than Bitcoin. In practice, Bitcoin usage is still the largest among other cryptos.
The daily average Bitcoin trading volume can reach 30 billion dollars. Making this crypto asset very attractive among forex traders to try to take advantage of the fluctuations in price changes that occur.
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What is Bitcoin?
Bitcoin is a digital currency that uses blockchain technology with cryptography as a way of peer to peer payments via the internet. Bitcoin is a decentralized currency in which transactions do not require a third party as an intermediary, like conventional banks.
All Bitcoin transactions are recorded in the blockchain ledger where to complete the transaction requires miners who are on the blockchain network using complex algorithmic calculations.
A name behind the idea of the digital currency Bitcoin is someone with the pseudonym Satoshi Nakamoto, who became a hot topic in 2009. If you look at the name it seems like he is Japanese. But until now it is not known for sure his whereabouts. So he remains a mysterious figure even though Bitcoin has currently had a major impact on the financial market industry.
Bitcoin is a decentralized currency, which means that this status shows that no specific authority has over Bitcoin, in contrast to a fiat currency where the central bank has the authority to print new money to match the broker.
The process of issuing Bitcoin through mining is carried out by miners using high-specification computers that are scattered throughout the Bitcoin blockchain network.
How Bitcoin Works
To understand how Bitcoin works, the basic thing that you need to understand is the three basic things in applying Bitcoin as a payment method. The three basic things are:
- Decentralized network.
- Demand and supply.
Bitcoin uses these three basic concepts in its application to become a payment system.
A decentralized network is a modern network that is not centralized. How to make it easier to understand what we imagine when we use a browser to using a search engine. In a centralized network, all data is stored on the same computer. So that if the server is down or experiencing problems, users cannot access the data on the network.
Whereas in a decentralized network all data is stored on many scattered computers. So that if one server experiences a problem, the user can still access data on other computers.
Illustration of centralized and decentralized as shown in the image below:
Cryptography has many people using this method when they make a secret message to their friend or whoever it is. And to be able to read the secret message their friends must have the secret code key. So that not everyone can find out the contents of the message if they cannot translate the secret code.
This method is also applied in the Bitcoin blockchain technology, even though someone has a Bitcoin address but they do not have Bitcoin access to that address. This is because they do not have private keys as secrets that are only held by the owner of the Bitcoin wallet.
Demand and supply
Following economic law, the higher the demand, the higher the price, and the higher the supply price will fall, this concept is applied in the Bitcoin blockchain system, wherein the scenario the scarcity Bitcoin hence the price of an item will increase. Therefore Bitcoin was created limited and after all, Bitcoin has been mined, no new Bitcoins will be created.
With this theory, it is hoped that the higher the value of Bitcoin is being mined. Bitcoin was created totaling 21 million coins only, and by the time the press was circulating on the market total reach 18,533,581 BTC.
By understanding the three basic concepts of how Bitcoin works. Then you will know how to make transactions because Bitcoin is the cryptocurrency used for online payment systems.
When you send a certain amount of Bitcoin to friends or colleagues both in the local country and abroad. Hence your transactions are broadcast throughout the spreading network. If one of the miners can solve a mathematical formula using a complex algorithm. The miner will receive a certain amount of Bitcoin. And your transaction which has been confirmed by the network will be available at the Bitcoin address you are referring to.
Why should to buy Bitcoin?
Bitcoin is a digital asset, even though it is called a coin, but this is not the real form, Bit is a term in the computer world which is later merged into Bitcoin.
Is Bitcoin safe? Yes, as far as internet technology and infrastructure can work well and smoothly. I think Bitcoin is safe for the long term. As long as you have access to a private wallet where you have access to a Bitcoin wallet.
Therefore it is advisable not to give your private key to anyone because this is like your PIN.
Here I write a few reasons why you should buy Bitcoin:
Bitcoin has a limited amount
If in a fiat currency the central bank controls the circulation of money, where the institution has the authority to print new money to match needs. But Bitcoin has a limited amount of only 21 million BTC. So for example, Coinmarketcap has reached a circulating supply of 21 million BTC, so there will be no additional new tokens.
n accordance with the concepts of demand and supply described earlier, the more Bitcoin is scarce with increasing demand, the price will go up. If for example 21 million BTC is being fought over by billions of people around the world, then the price will arise.
This concept is different from fiat currency, which by printing new money will be vulnerable to inflation. Why? Because the greater the money supply, while the availability of goods and services is stagnant, the price will increase, so that the value of the currency decreases.
There will be a scarcity of Bitcoin
As it is known that Bitcoin only amounts to 21 million BTC. So that someday there will be scarcity, this of course can push the value to increase. It may be similar to gold which has a limited amount. But in fact, there are still discovering new gold mines. So that we cannot know for sure how much total gold is on earth.
Bitcoin is more transparent than the flat currency
There may be objections in the government that say Bitcoin is worthless, Bitcoin is not accepted everywhere. Because this can be a challenge for a fiat currency where Bitcoin is more transparent with public access using Bitcoin explorer to view transaction data.
This is very different from flat money which is controlled by a government authority in that it is usually the central bank. We never know and can audit how much new money is printed each day.
Bitcoin cannot be censored
Maybe in some countries, it is banned from using Bitcoin, such as in China, Taiwan, or Russia, but because Bitcoin uses a decentralized network it cannot be censored by the government, the proof is that even though China bans Bitcoin, there are still many who transact using Bitcoin in these countries.
Bitcoin transactions are low fees
If you send money overseas via bank transfer, you will usually be charged a fairly large fee. It not to mention that when the funds are received at the destination bank. There is still a withdrawal fee that the bank may charge to the customer.
While Bitcoin offers much lower transfer fees compared to wire transfers, it is only around $ 4 or less at any value.
Cryptocurrency regulation is developing positively
Unlike in the early days of Bitcoin which was rejected by many countries. Because it was considered vulnerable to terrorist financing or other illegal activities.
Currently in several countries have developed regulations on cryptocurrency. Let say Malaysia, America, UK, this is a positive signal for the development of crypto trading.
Risk factor to buy Bitcoin
Although some of the reasons above encourage you to buy Bitcoin, this does not mean Bitcoin is without risk. some of the reasons that underlie the risk factors for buying Bitcoin include:
- Technological obsolescence. There are currently reports of the development of quantum computers, which makes it easy to shift blockchain technology because the private key is currently secure but with quantum computers, it would be risky.
- Bitcoin is not the best for a transfer value. Bitcoin transfers in some exchangers may differ in fees so that one exchanger is cheaper than another. Besides, people rarely use Bitcoin to pay for a cup of coffee.
- The government crackdown may affect BTC. It is possible that if the government is anti Bitcoin it will crackdown on the country so that users in that country sell Bitcoin to save themselves.
Where to Buy Bitcoin?
Where to buy Bitcoin the first is to find a credible exchanger that has a good reputation with responsive customer contact support.
As Bitcoin is the main cryptocurrency, most exchangers accept buying and selling Bitcoin. Below are just a few examples of exchangers where you can buy Bitcoin:
The examples above are just a small part of the exchangers that you can buy Bitcoin with, and there are many other exchangers that you might want to try.
Is Bitcoin good for investment?
The debate about Bitcoin as an investment asset is still frequent among the investor community and financial analysts.
Some analysts argue that the fluctuating value of Bitcoin is a risk faced by investors. The value of Bitcoin often fluctuates with high volatility, this keeps the risk of volatility, especially for short-term traders.
Since the launch the value of Bitcoin has risen and fallen drastically, putting Bitcoin into a risky asset.
But if you look at the history of price changes since the beginning when the value of Bitcoin was still low, then if you previously invested 100 $, now you have got millions of dollars.
It is from this increase in value that some people have managed to get rich because of Bitcoin, even though the euphoria ended with an event called the bubble phenomena after the price went up and then fell very deeply.
Bitcoin investors still expect this condition to happen again in the future, so there are still many who are optimistic that Bitcoin investment will provide high gains in the future.
Some argue, citing from thetimes.cou.uk that Bitcoin might disappear without a trace, becoming something that is a scam like some of the previous payment systems such as LibertyReserve that once existed among online business people.
So how to deal with this condition? You must adhere to the golden rule of investing in risky assets, just spent money that affords to lose, forget Bitcoin if you buy on debt.
Even though you have offline income, it’s better to keep your family’s financial portfolio healthy. Uncontrolled excessive ambition can ruin your entire finances.
When you should buy Bitcoin?
Especially for short-term traders, it will be an important question to determine when is the right time to buy Bitcoin. By determining the right time to buy Bitcoin, it is hoped that the price will quickly move up. The simplest theory is to buy when the price has fallen, and sell when the price is already high.
However, this theory is only for those who have high patience. Because waiting for the price to actually fall takes a long time. It is not even certain whether the price will actually fall. Short-term traders do not use this theory entirely. As there are several other theories for determining when to buy Bitcoin.
To overcome this problem some traders try to use averaging down. It starts when the price has fallen and is expected to be oversold. But it turns out that the price continues to fall, so it tries to open averaging buy when the price falls again.
Will this strategy work? Yes, maybe if the price goes up again it will come out with a profit. But if the price continues to fall, it will lose.
Buy Bitcoin on weekend
This is a classic theory, on weekends demand is predicted to decline so that prices will fall, wherein this theory the highest price is formed on Friday and Saturday.
So the weekend is a good time to buy as prices are considered low. Does this theory work? It is also uncertain, market participants are made up of many institutions, have their own, and not all goals for Bitcoin trading.
Avoid buying Bitcoin on date 5 and 9 during the month
In theory, this assumes that on that date the worker gets wages, thus can buy Bitcoin and cause the price to be higher, thus buying Bitcoin before the worker’s wage date is considered safer.
However, this theory is just a perception, not all workers will buy Bitcoin when they receive work wages, even many for urgent life needs.
Buying Bitcoin during global instability
This theory puts forward the analysis approach of market players. When global conditions are not yet stable. Investors will look for alternative assets that are safer than saving flat money which is vulnerable to inflation.
Apart from gold, the emergence of Bitcoin some think this is a form of digital gold because it has a limited amount.
Buying Bitcoin on the support and resistance level
In this theory, it puts forward technical analysis by looking at historical price data in the past to draw support and resistance lines.
The theory is simple if the price is at the support level it will rise again. And if the price is at the resistance level the price will go down.
Advantage and disadvantage of Bitcoin
Apart from the debate about Bitcoin as an investment asset. It also has its advantages and disadvantages. Curious? let’s continue.
- In terms of Bitcoin security by using cryptography, safe from counterfeiting, cryptographic rules applied to bitcoin make its owners avoid these risks.
- Bitcoin can act as a cross-border currency. Bitcoin no national borders do not waver due to political conditions in government and is not affected by anything. Users can transfer Bitcoin to other people across continents even quickly.
- Bitcoin is made in a limited number, only 21 million coins so it is resistant to inflation, in contrast to fiat money which is vulnerable to inflation.
- Bitcoin can also act as savings, saving bitcoin, free registration fees, no monthly fees. This is different from saving money in a bank which is subject to some administration fees.
- Bitcoin’s value is unstable, so it is a speculative asset. And in the real world, not many companies offer the purchase and sale of products with bitcoin as a means of payment.
- Although the security of Bitcoin is high. In practice it is still vulnerable to theft, hackers are always trying to find loopholes to steal Bitcoin. If you store Bitcoin on the hard disk, if it is damaged then you lose all data to access your wallet. Lose your private key, lose your Bitcoin.
- Vulnerable to be used for money laundering, or illegal transactions. Because there is no regulatory authority, everyone is free to transfer funds to other people.
Bitcoin price analysis 5 November 2020
Bitcoin has not been replaced until now, is in the first place, today there has been a daily transaction of $ 466,723,106,343. And it seems that prices tend to be bullish, starting in early October last month. The price is currently $ 14,443.63, having risen 4.94% since its opening price.
Global conditions that are still unstable seem to be one of the reasons why Bitcoin tends to be in an uptrend. Besides, after the halving process several months ago, which decreased the miner’s reward. Bitcoin was scarce with increasing demand making the value of Bitcoin increase again.
The effect of the election also seems to have affected the increasing Bitcoin trading volume. After several vote counts reported that Jow Biden was ahead of Donald Trump.
The image above is BTCUSD on the daily timeframe, we can see the last candlestick in the form of a bullish candle with a long body indicating a strong uptrend.
There the RSI has shown the 81 levels but it seems that the bullish trend is still too strong so there is no sign of a weakening trend.
Will Bitcoin again touch its highest levels in 19891? Some analysts are optimistic that the value of Bitcoin can repeat its history. However, it was still a mystery, it was only a conjecture, and the facts later determined.
At the time of the high price of Bitcoin, it has been able to print new rich people because they buy Bitcoin when the price is lowest and sell it when the price reaches its peak.
Seeing the current growth of Bitcoin is very impressive, even though some countries ban Bitcoin, but more and more people are curious about Bitcoin.
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