How Bitcoin Works Under The Hood

Have you ever wonder how Bitcoin really works?

You may have heard of crypto mining. Perhaps you’ve made a few transactions. Or you might want research in detail before trading BTC.

From the surface, Bitcoin can be as simple as trading with real currency:

1. You sell/buy Bitcoins with a crypto-wallet

2. You wait for the transaction to complete

3.The end

But Bitcoin has more processes than what you usually see. These systems are responsible for its many benefits — anonymous trading, low fees, no regulation.

Learning how it works will give you an edge when trading in the crypto market.

How Bitcoin Works Under The Hood

We can learn how Bitcoin works up to a certain point, but we can’t know everything. It’s a decentralized currency, which means nobody can regulate it. Otherwise, it would lose its purpose and benefit.

Here’s what we do know.

Unlike banks, Bitcoin uses its computer network to verify every transaction. In a blockchain, “Bitcoin miners” solve math equations to verify a transaction a buyer makes.

There are millions of computers solving thousands of problems per second — and they upgrade as mining becomes more demanding. While you wait for your transaction to complete, these computers are checking it to see if numbers match.

On average, a secure Bitcoin transfer requires six or more computers to verify it. If a device can’t solve the math puzzle, it delegates to another one until it does.

Security increases with bigger transactions. It takes longer to validate $10,000 than $100. Once completed, the network accepts the transfer, which is permanent.

Bitcoin Technology: What Causes The Price Changes?

Bitcoin is the most stable coin in a volatile crypto-market. The more people trade with it, the more miners we need to verify transactions.

And the more people are mining Bitcoin, the harder it becomes. Miners get a reward for validating, but it halves every 210,000 blocks mined.

Since Bitcoin isn’t regulated, it should be easier to predict — but it isn’t. It seems investors could manipulate it, even if it’s decentralized.

There’s a reason why most altcoins haven’t become the next Bitcoin. And why governments don’t like crypto in general: transparency.

When the market is small, it’s easier to create false activity. A group of investors could coordinate a big transaction — perhaps by chance — and misrepresent the value.

How Will Bitcoin Work In The Future?

The Bitcoin Network is the invisible process that moves the crypto-market. It’s more powerful than the latest super-computers in the world.

It works because of blockchain. Each block helps to verify the next one, keeping it anonymous, yet identifiable.

If the Bitcoin features maintain, it will become expanding until miners reach the 21 million cap. The question is, what will happen later?

Will we see a new global currency? Or will it stay limited? It depends on the community agreement. If we allow this crypto-coin, how will it affect other currencies?

The applications of Bitcoin must be valuable enough to justify the lack of regulation.

Today, world-class brands accept Bitcoin as a primary method. Many more will come as soon as its prices stabilize. If it becomes a large-scale movement, it will be different from what we know today.

What you Hardly Knew about Cryptocurrency Wallets

Are you new to cryptocurrency transactions? Perhaps you are not sure of where to store your keys. Well, you can hardly be successful in the cryptocurrency world without having a reliable cryptocurrency wallet. Understandably, not everyone knows what these wallets are.

But well, let us start from the basics. These cryptocurrency wallets will always be essential in storing both public and private keys. They also come in handy in interacting with different blockchains so that clients can send and receive digital currency. Besides, it will be much easier to keep track of your cryptocurrency balance.

Types of cryptocurrency wallets

Naturally, these wallets feature different ways of storing, monitoring, and accessing your digital currency. For this reason, you will be sure of getting a variety of them. We take a look at the five most dominant wallets you will find.

Paper wallets are quite common these days. Besides being relatively straightforward to use, they will assure you of high-level security. When talking of paper wallets, it could refer to a physical copy of your private and public keys or that software that generates your pairs of keys.

You could also go for mobile wallets. Often, these wallets run as apps on your smartphone. They are not only functional but also relatively convenient. You will use them wherever you are, including retail stores.

Further, we have desktop wallets that can be installed on your PC or laptop. Usually, they tend to feature more space than mobile wallets. But besides that, they will assure you of the highest level of security. While at it, you can only access them on a single computer.

We also have online wallets that you can access from any computing device, regardless of your location. Despite being relatively more convenient, they are mostly controlled by third parties. As such, they could be vulnerable to attacks.

Lastly, we have a hardware wallet. Despite making transactions online, they will often be stored offline. This way, you will be sure of getting enough security at all times.

I bet you have heard of the most stable coin released by Maker, DAI. Well, perhaps you are asking yourself what DAI wallet is ideal for you. The following wallets are the most reliable for your DAI or any other cryptocurrency that you have.

Top wallets

Trezor: This wallet prides itself on the ability to store over 500 coins. It comes with enhanced security, with the two-factor authentification device being predominant. Besides being easy to set up, you will be sure of enhanced convenience.

Ledger Nano S: It is a hardware wallet that allows users to make multiple transactions in a single click. Besides, it guarantees you of convenience as you manage your assets.

Coinbase: This cryptocurrency wallet will come in handy in holding multiple currencies. It supports Ethereum, Bitcoin, and Litecoin. Further, you will find it relatively more comfortable to use.

Having the right cryptocurrency will often be essential in improving the efficiency of your transactions. Usually, you will want to focus on the security and reliability that they offer. Explore the different options to confirm which one would meet your preferences.

Price Prediction: How Will Bitcoin Evolve?

We’ve all felt it.

“If only you invested early, you’d made much more money today!”

Some would say times were uncertain. The economy wasn’t that good. The news was pointing in the opposite direction.

The question is, what would you have done if you knew this scenario would happen?

Today, February 7th, Bitcoin is worth $9,880.

People aren’t losing money because of bad timing. They lose because they don’t engage. In the long run, staying out of the market costs more money than having bad luck.

Whether there’s a crash upcoming or a boom, smart investors always find a way to make profits. Here, we’ll analyze what got Bitcoin to this price, what will likely happen in the future, and what to do in each case.

How Bitcoin Is Changing In 2020

After long inactivity, Bitcoin started to surge in early January. It hasn’t fallen since then, and the positive trend doesn’t seem to change anytime soon.

As Bitcoin becomes popular, more people start investing for the first time. Especially in February.

But beginner investors use to fall into a psychological trap. Once the market creates a trend, they assume it will go as it has been recently.

As a result, they invest more when the stock is going up, which is ironic. The best time to buy is at the lowest mark.

That doesn’t seem to be a problem this year. The market floor of Bitcoin has slowly progressed from $3,500 to $6,500. We still experience spikes from time to time, like in early 2019, but the value doesn’t bounce back as fast as it used to do.

Based on this pattern, the most expected case is a price increase. It may fluctuate around $10,000. But once it crosses this ceiling, it can quickly surge beyond $15,000 before the second half of 2020.

How Investors Should Anticipate To The Market

As a first measure, we should keep the capital diversified. Never buy or sell all your bitcoin. Keep investing in Bitcoin and have a cash-reserve to buy, no matter what the market does.

Furthermore, try finding a backup plan. You can sell bitcoin shirts for a certain price, even if Bitcoin goes to zero. Remember, there are various ways to get some money from any market. And various ways to create a backup plan. Some things are fragile, other antifragile.

If you bought it at least six months ago, you’re in luck. While many people are buying Bitcoin, today is the best moment to sell.

You can buy Bitcoin today too, but the outcome is much harder to predict. Here’s what to expect based on what we’ve seen in the last decade.

It appears the current ceiling is $10K, which never changed. The floor, however, has constantly been upping. As the minimal value goes up, so will the maximum.

Right now, both extremes are too close to each other. Naturally, this ceiling will change. In particular, experts expect Bitcoin to be worth $15,000 before July, and over $20,000 before 2021.

How To Back Up Any Prediction

Of course, others may not agree with this trend. Nobody can predict the markets always, which is why you should make decisions independently.

Here’s what you can do to verify this trend or find a more accurate one.

Study financial patterns. Look at the Bitcoin price history to find what reaction is likely to repeat.

Research financial news with caution. Sadly, 99% of the headlines are noise. Publishers design them to encourage you to buy Bitcoin and be an active investor. You have a better success chance if you stay in the game passively, ignoring most of them.

Take expert advice. If there’s someone who should listen, take the legendary investors. W. Buffet, J.Bogle, C.Icahn, R.Dalio, B.Graham, or C.Munger. You’ll learn far more from smart investors who’ve seen it all.

Is Bitcoin legal?

You searched for Bitcoin be legal? This important question, whether Bitcoin is legal or not, can be answered easily. Yes, Bitcoin is legal. However, there are a few things you should keep in mind when using the crypto-currency Bitcoin. In this article we will discuss the main aspects of the topic.

Bitcoin and the taxes

But now on the subject of Bitcoin being legal, what about the payment of taxes? In some countries and in some cities in Switzerland, the tax can already be paid via Bitcoin today. Unfortunately, this is not the case in other word, where taxes still have to be paid in national currency. If you privately buy cryptocurrency directly and leave it for at least a year, the profits from an exchange rate are tax-free.

Of course, if you receive your payments via Bitcoin, you must indicate this “money” to the tax office. If you do not do that, your Bitcoin stock is considered a black money in the legal sense and that is of course punishable.

It is not easy to buy and sell bitcoin commercially. You need a license and a corresponding license for such a service. In the majority of the world, a Bitcoin transaction is considered a financial transaction and is subject to its rules and laws. There is a big difference between paying for a service or a deal with Bitcoin or actively trading that currency. You are not allowed to operate any type of trading venue without a corresponding banking license.

Is Bitcoin trading legal?

On the subject of Bitcoin being legal in the field of trading the situation is clear. If you buy and sell Bitcoin and Co. for yourself, you are not liable to prosecution. However, you have to specify your winnings accordingly, as in normal trading. However, you should always pay attention to the subject of trading, without experience, the total loss may threaten. Also the promises of the various trading bots should be evaluated with caution. In the crypto-world, some dubious figures are floating around. Unfortunately, one hears daily about so-called scam and fraud systems. Once your Bitcoin is gone, you usually will not get the money back. So always check very carefully who you work with and where to load your Bitcoin.

In which countries Bitcoin was legalized?

It is not so simple to solve the question of the legal status of cryptocurrencies. Against the backdrop of the general insanity of people on Bitcoins, the position of the official bodies of most states of the world regarding the legal status of cryptocurrencies is not so clear. In the meantime, each state chooses its own path. Let’s talk more about which countries Bitcoin is allowed in.

Some recognize it as a financial asset, others as a commodity or a means of payment, somewhere, everyone can work with it, but somewhere only individuals. Perhaps such a variety of opinions and approaches, over time, will allow us to develop a coordinated international position on the functioning of the cryptocurrency market.

In one form or another, digital currencies are legalized in the following countries:

  • United States of America;
  • Japan;
  • Great Britain;
  • Canada;
  • Estonia;
  • Australia;
  • Denmark;
  • Finland;
  • Netherlands;
  • Sweden;
  • South Korea.

As you can see, these are mainly countries with a developed economic and legal system that are trying to find additional opportunities in the new trends, and do not follow the path of prohibitions.

The bulk of the state now takes a wait and see attitude. In them, transactions in cryptocurrency do not have a legal status, and are not and are not prohibited. Most likely, government agencies are studying the experience of pioneers and trying to calculate the potential depth of the influence of coins on national economies and the financial sector. Among others, among such countries you can specify:

  • Russia
  • Germany
  • Czech Republic
  • Ukraine
  • Singapore
  • Switzerland
  • Turkey
  • Spain
  • Israel
  • New Zealand and others.

Some states from this list de facto recognized Bitcoin as an asset, but did not legitimize it. Fiscal authorities tax miners, companies and exchanges working in this direction, but the amount of fees and the mechanism for collecting them are different everywhere. Market regulation remains outside the sphere of influence of state structures.

Basically, you have no reason to fear the simple handling of Bitcoin. Just make sure that you do nothing that you would not normally do with money. Remember, no one gives you money and certainly no Bitcoin.

Is Bitcoin About To Crash This 2020?

Will the bitcoin crash? When will it happen? How risky will it be for traders? Should you sell or keep buying?

If you have made these questions, you are on the right path. To get better results, questioning everything is key. In trading, especially with bitcoin, uncertainty is everywhere.

When we look at the long-term value, however, things change. Regardless of the current events, the market shows more consistent results as more time passes.

People don’t lose money because of bitcoin crashes. They do because they don’t give enough time to learn from it and create a strategy.

Is Bitcoin about to crash in 2020?

When it comes to predictions, the market comes down to pattern recognition and mass psychology. Remember, the main cause of any economic change depends on the people behind the broad market.

Although trading requires logical thinking, the market is quite emotional. It’s the reason the Bitcoin crashed in 2018 and why it could happen again. Knowing that cryptocurrencies are volatile, the risk increases.

Then, should you stay away from Bitcoin?

Everything involves risk. The more uncertainty there is, the bigger the reward. As long as you follow the right strategy, you can make money trading Bitcoin.

Bitcoin may crash any time this year. The cause could be security, competition, or mining efficiency. However, that should not stop new traders from joining the market.

Most world-class figures have great projections for Bitcoin. Some conservative minds estimate it to be worth around 20 thousand by the end of the year. Others like John McAffee believe it will reach the million-dollar mark.

It’s not a secret. As technology improves, Bitcoin will become more reliable, and other dealers will start perceiving it that way. Experts expect most cryptocurrencies will grow in the long term.

You could feel hope, greed, fear, or regret. The key is to keep a balance between confidence and skepticism. The question is, what are you going to do about it?

How to create your own projection

If there’s something certain in trading, it’s research. As Ray Dalio would say, you need to think for yourself about what is true.

When analyzing the reasons for failure, 80% of traders who lost money were following someone else’s strategy. Although you should study the best practices, you cannot give control to others expecting to win.

If you are an independent thinker, you have already won half of the battle. Next, make a decision based on risk and reward. How much can you lose? What’s the potential upside?

When traders minimized risk and reward, they could decide based on logic. Remember, market emotions create a distorted value of bitcoin.

Lastly, use your knowledge to find patterns. If bitcoin is going to crash in 2020, you could find part of the answer in its past performance. Why did bitcoin fall in January 2018? How did it get back up? When did it start?

Of course, the past doesn’t predict the future. But we can study it to make better questions and improve our buy-and-sell strategy.

After all, trading is about working on the things we control and adapt to the events. That’s how long-term traders succeed in their careers.