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What Is Bitcoin?

Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. Bitcoinโ€™s creator, Satoshi Nakamoto, originally described the need for โ€œan electronic payment system based on cryptographic proof instead of trust.โ€ Each and every Bitcoin transaction thatโ€™s ever been made exists on a public ledger accessible to everyone, making transactions hard to reverse and difficult to fake. Thatโ€™s by design: Core to their decentralized nature, Bitcoins arenโ€™t backed by the government or any issuing institution, and thereโ€™s nothing to guarantee their value besides the proof baked in the heart of the system. โ€œThe reason why itโ€™s worth money is simply because we, as people, decided it has valueโ€”same as gold,โ€ says Anton Mozgovoy, co-founder & CEO of digital financial service company Holyheld.

Should I buy bitcoin?

โ€œTo the extent it is used I fear itโ€™s often for illicit finance. Itโ€™s an extremely inefficient way of conducting transactions, and the amount of energy thatโ€™s consumed in processing those transactions is staggering,โ€ the former Fed chairwoman said. Yellenโ€™s comments have been cited as a reason for bitcoinโ€™s recent losses. However, Yellenโ€™s assessment of bitcoin as a inefficient medium of exchange is an important point and one that has already been raised in the past by bitcoin bulls. Using a volatile asset in exchange for goods and services makes little sense if the asset can tumble 10% in a day, or surge 80% over the course of a two months as bitcoin has done in 2021, critics argue. To put a finer point on it, over the past 12 months bitcoin has registered 8 corrections, defined as a decline from a recent peak of at least 10% but not more than 20%, and two bear markets, which are defined as falls of 20% or more, according to Dow Jones Market Data.

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