All mining starts with the blockchain. This is an online decentralized ledger that records transactions throughout a network. A group of approved transactions is called a “block.” These blocks are tied together to create a “chain,” hence, the term “blockchain.”

In the Bitcoin network, a miner’s goal is to add individual blocks to the blockchain by solving sophisticated mathematical problems. This requires enormous computational and electrical power. While many miners compete to add each block, the miner who solves the problem will actually add the block—along with its approved transactions—to the blockchain. This miner receives a reward of 6.25 bitcoins (as of November 2020)

The risks of trading cryptocurrencies are mainly related to its volatility. They are high-risk and speculative, and it is important that you understand the risks before you start trading. They are volatile: unexpected changes in market sentiment can lead to sharp and sudden moves in price.

1.  Bitcoin has lower inflation risk: All world currencies are controlled by their respective governments. This is what at times leads to fluctuation in the value of the currencies since governments keep printing more money. When a currency loses value, its purchasing power goes down and leads to paying more money to acquire the products. In the end, it is like a tax on what people have already acquired, which may not be enough at the same time. With Bitcoin, the system is infinite and therefore no need to worry of the money getting finished. By the year 2050, it is estimated that there will be in circulation one Bitcoin to cater for 500 people globally.

2. Bitcoin investors believe that the currency has a lower falling risk, compared to other currencies. This is because Bitcoin is a global currency that does not depend on government policy that can fail and cause hyperinflation or complete collapse of the currency.

3.  Bitcoin transactions are simple, easy, and cheap. Since the buyers cannot claim their money back after purchase, it gives the sellers an opportunity to ship the product or service to the buyer without any worry of recovery.

4.  Bitcoin is portable: With the current major currencies, it is difficult to carry around large amounts of money. Cash amounting to millions is risky to carry for several reasons, which is why Bitcoin investors prefer it to other currencies. With Bitcoin, you can easily carry around a million dollars worth of Bitcoin in a memory card. 5.  It cannot be traced. This is another advantage of Bitcoin. Once the seller gets the money, it cannot go back to the buyer by any means. This is important because no government can trace the source of your funds.