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What is Bitcoin? How much is it worth and how can I invest in it?

·3-min read
 (Getty Images)
(Getty Images)

Despite not existing in the physical sense of the word, Bitcoin has contributed to a drastic change in the way we use our money.

Bitcoin can be used to buy anything from luxury hotel rooms to pizza, but what people really want to know is how they can get rich by investing in the cryptocurrency.

So, what is it bitcoin, how much is it valued at and is it worth investing in?

What is bitcoin?

Bitcoin is a cryptocurrency - a digital form of currency that can be used to buy or sell items online.

It was created by an anonymous figure who goes by the name of Satoshi Nakamoto.

It works differently to normal online payments because there's no middleman, meaning there are no banks involved in the transaction. People use Bitcoin because it allows them to make purchases online anonymously, which is why bitcoin has been attributed to the dealings of illegal drugs and other illicit items.

Bitcoin also makes international payments much easier because it's not subject to a single country's regulations.

 (PA)
(PA)

How much is it worth?

Bitcoin was first created in 2009, when a new era of blockchain technologies and digital currencies were ushered in.

Since its inception, its value has changed dramatically, with it performing with volatility on the markets.

According to today’s valuation, Bitcoin is currently worth £19,585.24 ($30,256.11).

The cryptocurrency has suffered a volatile few months on the stock market, but it reached its zenith on November 10 2021, when coins achieved a rate of $68,000 (£55,765.29).

The coin started 2022 nearly twice as valuable as it had been in January 2021, but before the month had ended, it lost nearly all of the previous year’s gains, dropping to the £33,000 range by the end of the month.

How do I buy bitcoin?

You can buy bitcoins with different currencies directly from online marketplaces called "bitcoin exchanges."

People can also send bitcoins to each other using different apps in the same way you would normally conduct digital transactions.

These bitcoins are then stored in a "digital wallet," a virtual bank account that can be accessed by the cloud or a user's computer.

There have been multiple security issues with these "digital wallets," though, with reports of cloud servers being hacked and online crooks fleeing with users' money.

Is it worth investing in?

It’s always a risky business investing in cryptocurrencies, and there is a chance that you could lose all of your money. It is also more risky to invest in cryptocurrencies than to invest in the traditional stock market.

The coin’s value is based purely on speculation, which is different to company stocks, which sees the valuation shift according to the company’s valuation and how the business is performing.

Cryptocurrencies are also not regulated by the general UK watchdog, the Financial Conduct Authority.

The general advice given by experts when it comes to Bitcoin is to never invest more than you can afford to lose, use your own hardware wallet and don't buy all your Bitcoins in one transaction.

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