What is Bitcoin and why is the price rising?
The value of Bitcoin is currently rising, but it is also prone to volatility and risk.
This Cryptocurrency The value started to rise rapidly at the beginning of the year, but then experienced a dramatic drop last month.
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Today, the value of Bitcoin is close to US$57,000, or the equivalent of £40,268.06.
Its value increased by more than $1,000 from around $55,455 in just one week.
The currency reached a record high $ 62,000 Or at the beginning of last month the British pound was exchanged for 42,000 pounds.
But it records The biggest one-day drop in two months A few weeks later, on April 18, the price fell below $54,000.
According to data from CoinMarketCap, it fell further to a low of $42,535 at the end of April.
But this just shows that its volatile nature means you You should be aware of all the risks involved.
Since your cash may rise or fall, you need to be prepared to lose any money invested.
Although currencies may rise further, investing in cryptocurrencies or stocks is not a guaranteed way to make money.
For example, when the coronavirus crisis hit for the first time, the price of Bitcoin plummeted to Last March it was £3,300.
What is Bitcoin?
Bitcoin Is an Virtual currency Was created in 2009 by an unknown computer expert using an alias Satoshi Nakamoto.
Unlike physical currencies such as British pounds, U.S. dollars, or euros that appear in the form of banknotes and coins, Bitcoin will not be printed or minted.
Instead, Bitcoin tokens are a digital form of payment only, created by computer code.
If you have invested in Bitcoin, you can set up a virtual wallet to store, track, and spend your digital currency.
You can also buy Bitcoin through online exchanges or Bitcoin ATMs-but not all businesses accept Bitcoin as a payment method.
you can use it Where to spend Bitcoin UK Find a merchant who accepts the currency on the website.
How does Bitcoin work?
To process bitcoin transactions, a process called “mining” must be performed, which involves a computer using a 64-bit solution to solve a difficult mathematical problem.
For each problem solved, a Bitcoin block will be processed. In addition, the miner also received a new Bitcoin reward.
In order to compensate for the increasingly powerful functions of computer chips, the difficulty of the puzzle has been adjusted to ensure that new bitcoins are continuously generated every day.
There are currently approximately 21 million Bitcoin tokens.
To receive bitcoins, users must have a bitcoin address—a string of 27-34 letters and numbers—that serves as a kind of virtual mailbox.
These addresses are stored in the Bitcoin wallet and used to manage savings.
Most of the work of Bitcoin “mining” is carried out in China, where energy costs are cheaper than those in the United Kingdom or the United States.
5 major risks of crypto investment
The Financial Conduct Authority (FCA), which sets rules for the banking industry, has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Certain investments that promote high returns based on encrypted assets may not be regulated beyond anti-money laundering requirements.
- Price fluctuations: The large fluctuations in the price of cryptocurrency assets, coupled with the inherent difficulties of reliably evaluating cryptocurrency assets, put consumers at a high risk of loss.
- Product complexity: The complexity of certain products and services related to encrypted assets can make it difficult for consumers to understand the risks. There is no guarantee that encrypted assets can be converted back to cash. Converting crypto assets back to cash depends on existing demand and supply in the market.
- Charges: Consumers should consider the impact of fees and charges on their investment, which may be greater than the impact of regulated investment products.
- Marketing materials: The company may have exaggerated the return on the product or underestimated the risks involved.
Is Bitcoin safe?
Anyone who wants to invest in Bitcoin or any other cryptocurrency should be very careful.
Their value is incredibly unpredictable, and their capabilities will drop sharply as they rise rapidly.
Like all cryptocurrencies, this means that if you choose to invest in Bitcoin, you may suffer losses when the value of Bitcoin drops.
For example, on January 9, 2018, Bitcoin and other major currencies plummet by 120 billion pounds After the main monitoring platform CoinmarketCap decided not to consider South Korean transaction prices.
Cryptocurrency itself is only regulated by anti-money laundering and anti-terrorist financing in the UK.
If you decide to invest, then your money will not be protected by the Financial Services Compensation Scheme (FSCS), which can protect your savings up to £85,000 if the company goes bankrupt.
If something goes wrong, you will usually not be able to use the free Financial Ombudsman Service (FOS).
But companies that provide crypto assets must now be registered with the Financial Conduct Authority (FCA), and anyone investing in cryptocurrencies should Pre-investment inspection.
In the January warning, the FCA said If Bitcoin prices plummet, Britons may lose money.
FCA said: “If consumers invest in these types of products, they should be prepared to lose all their money.”
At the same time, in October 2020, FCA Britons are prohibited from buying “harmful” types of cryptocurrency-related investments in the UK Known as exchange-traded notes.
Exchange-traded bonds are an investment product that tracks the price of cryptocurrency at the same price as others track gold or other investments.
Investors in these products make or lose money based on the current or future prices of cryptocurrencies.
But people can still continue to buy cryptocurrency directly and invest or use it as currency.
How do I buy Bitcoin and why does the price increase?
Several markets called “Bitcoin Exchanges” allow people to buy and sell Bitcoin in different currencies.
People can also use mobile apps or their computers to send bitcoins to each other, just like people send cash digitally.
Like all other currencies, the value of Bitcoin depends on how many Bitcoins people are willing to exchange.
Since its launch, the value of Bitcoin has fluctuated wildly.
How Bitcoin has risen in recent years and months
Since its launch, the value of Bitcoin against the U.S. dollar has been fluctuating
- 2009-2011: One Bitcoin equals approximately one U.S. dollar
- 2013: Bitcoin rises to $1,242
- 2014: Bitcoin fell to $530
- 2017: Bitcoin rose to $13,800 by the end of the year
- 2018: The price drops to approximately US$6,000 and then halves to approximately US$3,000
- 2020: Starting at US$5,000, and US$28,000 before the end of the year
- January 2021: Bitcoin approximately $36,000
- February: about $50,000 in Bitcoin
- March: Bitcoin is about $60,000
- April: Bitcoin soars above $62,000
- May: Bitcoin gradually rises and is currently close to $57,000
Last year, the currency was around US$23,000 and rose to around US$36,000 in January.
Then in February, the cryptocurrency surged to a new high of $50,000.
In March, the currency climbed further to 61,742 U.S. dollars, soared above 62,000 U.S. dollars in early April, and then plummeted again to around 42,000 U.S. dollars.
This month, the cryptocurrency once again rose to nearly 57,000 USD, currently at56,917.09.
After large companies such as Tesla, Mastercard and Bank of New York Mellon began to support Bitcoin, the price of Bitcoin hit a record high.
Tesla boss Elon Musk stated that his car company has purchased $1.5 billion in Bitcoin and that his business will accept them as payment for cars.
Mastercard also stated that Start to allow payments in Bitcoin.
But since then, Bitcoin has suffered a series of blows.
There is news that Turkey has fallen by 3% Prohibition of encrypted payments.
Drop is power failure In the Xinjiang region of China.
According to CoinMarketCap, the region provides the impetus for many Bitcoin mining.
Since then it has recovered, but when Elon Musk appeared on Saturday Night Live in the United States on May 8, Bitcoin and other cryptocurrency markets are expected gain profit.
Musk called himself “Dogecoin” with the cryptocurrency Dogecoin, but during the appearance of his SNL, its value plummeted by nearly 30% instead of the expected growth.
People considering investing in Bitcoin or stocks and stocks have Warn about “risk” tips about sharing on TikTok.
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price Dogecoin has surged recently But this is unpredictable, so once again remind you to pay attention to these dangers.