BITCOIN price has dropped again after violent volatility in recent times.
Cryptocurrencies hit record highs in early 2021 before dropping in May following regulatory crackdowns in countries like China and India and starting 2022 on a downtrend.
Interest in cryptocurrencies has grown as more mainstream institutions join.
For example, PayPal will now allow users to buy and sell Bitcoin.
Tesla boss Elon Musk also helped drive the price of Bitcoin last year when he said it could be used to buy the brand’s electric cars.
However, the value dropped when Musk later returned and said his electric car company would not accept the digital currency due to environmental concerns about how it was mined.
China has also banned banks from providing services related to cryptocurrency trading and warned investors against speculative cryptocurrency trading.
Investing in any cryptocurrency is risky and you should never put in money you can’t afford to lose.
Last year, the FCA warned that Britons risk losing their savings if the price of Bitcoin plummets.
It’s important to never invest in something you don’t understand.
What is Bitcoin?
Bitcoin is a virtual currency created in 2009 by an unknown computer using an alias Satoshi Nakamoto.
Unlike physical currencies such as pounds, dollars or euros, which take the form of banknotes and coins, Bitcoin is not printed or minted.
Instead, the Bitcoin token is a digital-only form of payment and is generated with computer code.
Why is Bitcoin price falling?
Bitcoin’s value is determined by how much people are willing to exchange, and its price has fluctuated wildly since its launch.
It’s currently worth around $43,049 – down more than 7% over the past 24 hours, according to CoinMarketCap.
That’s a long way down from last year when the coin hit a record high of over $67,000, backed by El Salvador puts Bitcoin in legal tender and regulatory approval for a Bitcoin Futures ETF in the US.
Since then, it has regularly dropped – eventually falling to its current price.
There is no obvious reason for Bitcoin’s most recent drop, underscoring how volatile and unpredictable the cryptocurrency can be.
Some analysts think the crypto market is moving in the direction of equities, with the stock market falling in the US this week due to concerns that the Federal Reserve will withdraw monetary economic support. and increase interest rates.
How does Bitcoin work?
To process Bitcoin transactions, a procedure known as “mining” must take place, which involves a computer solving a difficult math problem with a 64-digit solution.
For each problem solved, one Bitcoin block is processed. In addition, miners are rewarded with new Bitcoins.
To compensate for the increasing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady production of new Bitcoins every day.
There are currently around 18.9 million Bitcoin tokens in circulation.
To receive Bitcoin, a user must have a Bitcoin address – a string of 27-34 letters and numbers – which acts as a kind of virtual mailbox.
These addresses are in turn stored in a Bitcoin wallet, which is used to manage savings.
Much of the “mining” of Bitcoin is done in China, where energy costs are cheaper than in places like the UK or the US.
How has the value of Bitcoin changed in recent years?
The value of Bitcoin has fluctuated since it was launched in 2009.
- 2009-2011: One Bitcoin is about one US Dollar
- 2013: Bitcoin surges to $1,242
- 2014: Bitcoin drops to $530
- 2017: Bitcoin surges to $13,800 by year-end
- 2018: Price drops to around $6,000 before halving to around $3,000
- 2020: Starts at $5,000 before ending the year around $28,000
- January 2021: Bitcoin around $36,000
- February: Bitcoin around $50,000
- March: Bitcoin around $60,000
- April: Bitcoin Soars Above $62,000
- May: Bitcoin drops to $39,790
- June: Bitcoin at a low value of $32,800
- July: Bitcoin drops below $32,000 then rises to $38,132.
- August-September: Bitcoin started August at $41,756 and has since grown to $45,858 as of September 8
Is Bitcoin safe?
Anyone thinking of investing in Bitcoin or any other cryptocurrency should be very careful.
Their value is extremely unpredictable, with the potential to plummet rapidly as they go up.
As with all cryptocurrencies, this means that if you choose to invest, you could lose money if the value drops.
For example, on January 9, 2018, Bitcoin and other major currencies dropped by £120 billion after major custodian platform CoinmarketCap decided to remove trading prices from South Korea.
Cryptocurrencies themselves are only regulated in the UK for anti-money laundering and counter-terrorism financing.
If you decide to invest, your money will not be covered by the Financial Services Compensation Scheme (FSCS) which protects your savings of up to £85,000 if a company goes bust.
You also won’t be able to go to the Financial Ombudsman Service if something goes wrong.
Companies offering cryptocurrency must now be registered with the Financial Conduct Authority (FCA) and anyone investing in crypto must check before investing.
In October 2020, the FCA banned Britons from buying a type of “harmful” crypto-related investment in the UK known as exchange-traded notes.
Exchange-traded notes are investment products that track the price of cryptocurrencies in the same way that others track the price of gold or other investments.
Investors in these products make or lose money based on the current or future price of the cryptocurrency.
But people can still continue to buy cryptocurrencies directly and invest or use them as currency.
How can I buy Bitcoin and how can I spend it?
Some markets are known as “Bitcoin exchanges” that allow people to buy or sell Bitcoins in different currencies.
People can also send Bitcoins to each other using their mobile apps or computers the same way people send digital cash.
You can also buy Bitcoin through an online exchange or a Bitcoin ATM.
If you’ve invested in Bitcoin, you can set up a virtual wallet to store, track and spend your digital currency – but very few businesses accept Bitcoin as a form of payment.
You can use Where to spend Bitcoin in the UK site to find merchants that accept the currency.
https://www.thesun.ie/money/661856/why-is-bitcoin-down-today/ Why is Bitcoin Dropping Today? – Irish Sun