Bitcoin plunges 12% in 24 hours. Understand what Bitcoin is and how it works.
Elon Musk, the richest person in the world, said on Wednesday on Twitter that Tesla had suspended taking Bitcoin payments for its vehicles.
Later in the evening, an already down day for Bitcoin turned into a rout - Bitcoin price fell 12% in 24 hours and dropped to its lowest point in almost 3 weeks.
As talk of the currency has gone global, lots of investors dive into the crypto world without understanding what cryptocurrency actually is.
With all this talk you're probably wondering: What is Bitcoin and how does it work?
Here's everything you need to know.
Understanding Bitcoin
Bitcoin, also known as the world’s largest cryptocurrency by market capitalization - is a type of money that is completely virtual. It was created in January 2009 by the mysterious Satoshi Nakamoto, whose identity is still unknown till today.
It's like an online version of cash. Bitcoins don’t have any physical versions. And they would be worthless without the private codes printed inside them.
You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have even banned it altogether.
However, some companies are beginning to buy into its growing influence. In October last year, for example, the online payment service, $PayPal(PYPL.US$, announced that it would be allowing its customers to buy and sell Bitcoin.
How does Bitcoin work?
Each Bitcoin is in nature a computer file which is stored in a 'digital wallet' app. People can send Bitcoins (or in fractions) to your digital wallet, and you can send them to other people.
Every single transaction is recorded in a public list called the blockchain.
This makes it possible to trace the history of Bitcoins. It helps to stop people from spending coins they do not own, making copies or undo-ing transactions.
A brief 1-year history of Bitcoin
Bitcoin was worth nothing when it was first activated in 2009.
But in April 2021, it reached a price of almost $65,000, its record at the time. In 2021 alone, Bitcoin has recorded a year-to-date return of 76.61%.
Now many may wonder what exactly happened. Here’s a quicktake for you.
What is so special about Bitcoin?
1. Alternative to fiat money or gold
Bitcoin is different from fiat money as it’s not backed by any government or central bank. However, Bitcoin can be exchanged for traditional currencies. Indeed, one of the primary reasons for the growth of Bitcoin is that they can act as an alternative to national fiat money and commodities.
2. Anonymous transactions
People can also spend their Bitcoins fairly anonymously.
Although all transactions are recorded, nobody would know which 'account number' was yours unless you told them.
3. Invest in Bitcoin
In March 2014, the IRS stated that all virtual currencies, including Bitcoins, would be taxed as property, instead of currency.
How to interpret the tax policy?
If you are a Bitcoin investor, your gains/losses from Bitcoins held as capital will be realized as capital gains/losses, while Bitcoins held as inventory will incur ordinary gains or losses.
Source: BBC, CoinDesk, Bitpanda, Trading View, Investopedia, Emoney Fellows
$S&P 500 Index(.SPX.US$ $Dow Jones Industrial Average(.DJI.US$ $Nasdaq Composite Index(.IXIC.US$ $Bitcoin(BTC.CC$ $Bitcoin Cash(BCH.CC$ $Block(SQ.US$ $Coinbase(COIN.US$ $Riot Platforms(RIOT.US$ $Canaan(CAN.US$ $Marathon Digital(MARA.US$ $SOS Ltd(SOS.US$ $MicroStrategy(MSTR.US$ $Silvergate Capital Corp(SI.US$ $Grayscale Bitcoin Trust(GBTC.US$ $Osprey Bitcoin Trust(OBTC.US$
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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NECKMINUTE 007 : Appreciate the time ya took to write that man mad respect!!
Jer_Soul : Nice article
8888888ABC : That’s funny a community trust item
AndrewL : Nice information!
DiamondHandsApe : good information
iNkwiziTs2 : it's the future money while fiat is losing its dollar value. great work summarise em'.
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M wk : Simple fact, can we buy Macao's casino chips and place bets in Las Vegas casino?
Nadman M wk: lol. thats an interesting question. even though it can't, it is an awesome idea
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