What Is Bitcoin Exchange? With every digital currency should be a digital marketplace, right? Or, so that seems as though it would make sense. That assumption brings us to the Bitcoin Exchange. We know that Bitcoin is a digital currency that has the hype of a “new wave,” type of investment that is showing a great return on investment, although Bitcoin has been around since 2008. If, each consumer and investor out there would have purchased Bitcoins for the .08 cents a coin; its original value when it was released in 2009 each could have a return on investment of nearly 600 percent today. That would make some of those investors millionaires. Years ago, 10,000 coins could buy two large pizzas; and, today 10K coins makes you close to a millionaire. So, what is Bitcoin Exchange?
Let’s start with Bitcoin. Bitcoin is a digital currency, or one that exists in the virtual world, i.e., Internet, and was created in 2009. There is a great deal of interest as of its creator as once the coin was released, its creator that went by an alias vanished. Still, in all, the mysterious Satoshi Nakamoto, the creator of Bitcoin, has left a legend. The market capital today of Bitcoin is 7 billion dollars, making the man and many others quite wealthy.
With Bitcoins, there is no real “dollar or coin” to hold. It is kept in a public ledger in the cloud, along with all Bitcoin transactions. As for the “printing” or distributing of the money, coins must be mined, solving complex mathematical equations for the coins to be released. There is a certain amount of adrenaline associated with Bitcoin and for a good reason. A great deal of computer power is necessary to mine Bitcoins, the identities of Bitcoin users are kept anonymous, just as their transactions and no banks or governments are involved. Its popular with a bit of danger involved; but, then there is a danger with any high-risk investment.
With the cryptocurrency, the use of public and private keys are used to keep balances. “Keys” are sequences of numbers and letters that link through a mathematical encryption algorithm that is the creation of the coins. There is no “real” information provided as a public key which is much like an account number serves as the address and recorded in the ledger and linked to transactions. The private key is one that is something like a master key and not permissible to anyone but authorized Bitcoin transmissions.
If your head is running in circles, Bitcoin Exchange is something like banks; only Bitcoin is not FDIC insured, so there are no banks or governments involved in the currency. Bitcoin Exchange is simply Bitcoin currency exchanges that allow one to deposit amounts of “money” in the currencies that are exchange supported. Simply put, a Bitcoin Exchange is a platform is where you can purchase Bitcoin in the currency of your region to place into your e-wallet, and use the balance to trade within the “exchange” and withdraw money. Having an e-wallet with Bitcoins also allows you to shop at many merchandisers like Dell Computers.
Bitcoin exchange is not like a transaction where one would take a dollar or two out of their pocket to exchange for goods or services. However, the concept is much the same. But, we are dealing in a virtual world where the money may be digital; but, the merchandisers and other Bitcoin investors are real.
When a Bitcoin exchange transpires, it is done by placing a “buy” or “sell” order. The transaction is validated in different steps; which are quite simple to the ordinary man. When a transaction is made, an exchange system software matches both parties with one another. “Buy” orders, which are also referred to as “bids” are offers to purchase Bitcoins, exchanging another currency at a maximum price per bitcoin set by the individual making the “buy” order, or bid. “Sell” orders, also called, “asks” are simply offers to sell the Bitcoins at a minimum price per bitcoin. For instance, there may be a bidder out there that is offering to buy Bitcoins for 10 percent over the minimum price per bitcoin of a seller. There is a buyer, an exchange can be made, and either the bid order, the sell order, or both, can be removed from the “order book.” The “buy and sell” system all happens through a Bitcoin Exchange.
Bitcoin Exchange is not just having an e-wallet filled with Bitcoins, or the currency to exchange for the purchase of Bitcoins. There are also fees involved. Fees are simply the charge for the transaction fee.
You may be wondering if you can send Bitcoin from one exchange to another. Yes, you can. When sending Bitcoin from one exchange to another, it is called arbitrage. When sending Bitcoin from one exchange to another, it is necessary to know your Bitcoin deposit address and go to your target exchange for the transaction.
When there is a Bitcoin “transaction”, it is the transfer of value between Bitcoin wallets and the transaction is included in the blockchain. Each wallet keeps a secret piece of data called a private key or seed, which is to sign transactions, and a mathematical proof that the Bitcoins are those of the owner of the wallet.
Is it time to get on a Bitcoin Exchange, and open an e-wallet to purchase a few coins? The investment is one that is offering a return on investment. Yes, it is high risk, and you could be up one day on your investment, and down the next. However, it is a digital currency that is predicted to continue to steadily rise in value, making it an investment that is considered good. However, before you decide for yourself, it is necessary to do your research.
The most popular one is Coinbase. Which is FDC insured but only the cash that is kept there.