What is Bitcoin?

Bitcoin is a virtual asset founded by Chung Motoshi and was officially launched in 2009. So far, Bitcoin is one of the most famous and widely used cryptocurrencies in the world today. And Bitcoin has 4 major features:

• decentralisation

  Mainly maintained and operated through peer-to-peer networks and computing capabilities without the need for third-party intervention, such as government agencies or banks. Freer circulation of currencies, improving trading efficiency

• Rare

  Limited supply of Bitcoin creates scarcity for it and does not depreciate due to inflation. Bitcoin has a maximum issuance of 21 million coins.

• Security (Anonymous+Openly Transparent)

  Bitcoin is based on blockchain technology, transaction records are publicly transparent and cannot be tampered with. While each transaction is recorded and published on the blockchain with a unique token, the name of the trader is never made public, completely anonymous, effectively protecting the trader.

• Globalization+Wide Application

  Over and over, different countries have legalized Bitcoin, gradually expanding it to the global mainstream. At the same time, Bitcoin is programmable, expanding the scope of application as long as Bitcoin's smart contracts are used.

In summary, these four features not only make Bitcoin a valuable virtual asset, but also increase its investment value.

Another analyst said,“Bitcoin” gains in value to “gold” during the interest-rate cycle! And is it really so? Everyone can look forward to it!

How does Bitcoin work?

Blockchain plays a crucial role for Bitcoin to work. Blockchain is a decentralized public ledger that records every Bitcoin transaction and cannot be tampered with, with all transaction histories documented in a single, public and transparent way on a shared blockchain.

In addition, the following elements and mechanisms are included:

• Precision Technology+High Fault Tolerance System

  1. Bitcoin adopts sophisticated cryptographic encryption technology that makes transaction records and ledgers difficult to tamper with.

  2. The system itself is highly fault-tolerant and will not be crippled by a single point failure.

• Limited supply

  1. Bitcoin has a total volume of up to 21 million coins, so it will not depreciate due to inflation. This limited and predictable issuance mechanism makes Bitcoin a hedge.

  2. Through “mining”, new Bitcoins are gradually released to the market. And for each block completed initially, 50 bitcoins can be generated. But to maintain its rarity, the “Bitcoin Half Off” mechanism was added: every 210,000 blocks (about 4 years), the reward is halved

• Mining and Consensus Mechanisms

  1. Mining is generated by validating transactions. The people in charge of carrying out the verification process are generally referred to as miners, and in the process they use computer power to solve a complex mathematical problem, the “Proof-of-Work”; upon completion of the verification, they will receive newly issued bitcoins as a reward.

  2. A proof-of-work consensus algorithm ensures network security and transaction reliability.

Overall, the process of Bitcoin mining and operation is:

It first collects Bitcoin transaction data from miners to be verified and integrated into a data block called a “block”. About every 10 minutes, a new block appears on the network

Miners perform “proof of workload”, that is, to solve every complex mathematical problem with computer power

Successfully solving the problem means successfully validating the transaction, and the miner receives a certain amount of newly generated Bitcoin as a reward

Cracked blocks will be added to the end of the entire Bitcoin blockchain

Bitcoin 4 Myths

Bitcoin is a bubble?

While Bitcoin price volatility can sometimes be large, some people use it to make speculative investments for hefty returns, or “bust” due to excessive leverage, this does not mean that Bitcoin is a bubble.

Foams have a characteristic: value cannot be sustained and there is not even any value, such as use value, exchange value, etc.

When assets are suddenly oversold by speculation, asset prices explode in the short term and do not match the fundamentals, leading to a “tailwind” of new participants. After further price increases, the market overheats, the bubble bursts at any time, and the price drops sharply, causing massive losses. And the famous example of the “bubble” is the “tulip mania” of the 17th century, when speculators drove the price of certain tulip bulbs crazy, which soared 26 times in just six months, and the bubble finally burst and never returned.

However, Bitcoin has gone through multiple price cycles over the past 12 years, each time recovering to a certain level or even a new high. In addition, Bitcoin has now been recognized and legalized in different countries, some places are more accepting of Bitcoin as legal currency, and regulatory regimes are increasing in scale and improvement.

Does Bitcoin have a real value?

While Bitcoin may not be supported by tangible assets like gold, in fact, since the Bretton Woods Agreement officially ended in 1973, the dollar is no longer pegged to the gold price and is almost no longer supported by fiat currency tangible assets.

While the total number of Bitcoin issues is limited to 21 million coins and is limited by open source, no one person can change it. This scarcity helps to counteract inflation and secures its value; on the contrary, when fiat currency is produced in large quantities, inflation occurs and devaluation occurs.

This feature makes Bitcoin a potential alternative or complementary asset to traditional financial assets.

Is it safe to invest in Bitcoin?

Bitcoin's security is mainly attributed to its “decentralized” properties, where every transaction that occurs on the Bitcoin network is completely transparent, making it extremely difficult to fake or create fake transactions:

• 1. Blockchain Technology

  BITCOIN USES A DECENTRALIZED AND ENCRYPTED BLOCKCHAIN SYSTEM WHERE EACH TRANSACTION IS RECORDED IN A BLOCK AND CONNECTED AS A CHAIN MAKING TRANSACTION DATA DIFFICULT TO MODIFY OR DELETE. This highly transparent and traceable feature makes suspicious trades undistorted, giving investors confidence when trading.

• 2. Consensus Mechanism

  THE CONSENSUS MECHANISM REQUIRES MINERS TO VERIFY TRANSACTIONS BY SOLVING RANDOM AND COMPLEX MATHEMATICAL PROBLEMS, MAKING TRANSACTIONS SAFER AND MAKING BITCOIN THE FIRST VIRTUAL CURRENCY TO SOLVE THE “DOUBLE PAYMENT” PROBLEM.

• 3. Cross-border and large compute capability

  A wealth of computing capacity ensures network security and supports network miners around the world,Festivals and 100 Countries/Regions, which means that there will be no problems with single point failures.

  Of course, investors still need to take care to protect the security of the accounts they use to trade. For example, if you use a private key, you cannot disclose it to others.

Is Bitcoin legal?

A JPEX event may cast a shadow over the trading of virtual assets such as Bitcoin and even consider virtual assets to be a scam or illegal. In fact, the legality of Bitcoin depends on the jurisdiction of different countries and territories.

Some regions have banned Bitcoin altogether, largely because the real identity in the Bitcoin network is anonymous and lacks central bank control, such as Nepal, Pakistan, Bolivia, and Ecuador; and Egypt's national legislature has ruled that Bitcoin violates religious law.

But in Hong Kong, trading virtual assets is legal. In order to protect investors, the government has set up a licensing system and regulatory requirements for virtual asset service providers (VASPs) that are strictly regulated. Therefore, investors who want to invest in virtual assets such as Bitcoin can choose a licensed, legal virtual asset trading platform that is more secure.

In addition, in most regions, especially Western countries, Bitcoin has become the fiat currency in some transactions. Meanwhile, the United States, the United Kingdom, Taiwan, and all EU member states accept Bitcoin as a valid form of currency in peer-to-peer transactions. THEIR BITCOIN REGULATIONS ALLOW TWO VOLUNTARY PARTICIPANTS TO USE VIRTUAL CRYPTOCURRENCIES IN A TRANSACTION, THAT IS, ONE PARTY WILLING TO USE BITCOIN TO PURCHASE PRODUCTS AND THE OTHER WILLING TO ACCEPT BITCOIN AS A PAYMENT METHOD.

What is bitcoin halving?

“Bitcoin Half Off” is closely related to “mining”, Bitcoin is the way to generate new bitcoins by “mining”. Miners will receive a certain amount of Bitcoin as a reward for each successful transaction verification and submission of blocks to the Bitcoin blockchain. And the “Bitcoin Half Off” here means that the reward for mining Bitcoin (the amount of new issuance of Bitcoin) is regularly halved.

The initial Bitcoin reward is 50 Bitcoins per block, while under the halving mechanism, every 0.21 million blocks added, the reward for miners getting Bitcoin is reduced by 50%. This halving occurs about once every 4 years.

The purpose of the halving is to control the total issuance volume of Bitcoin, maintain its scarcity and maintain its value.

As of 2024, the timetable for halving Bitcoin is:

The next halving is expected to occur in April 2028*, by which time the block height will reach 1.05 million blocks. The market expects a total of 21 million coins to be fully mined by 2140.

* Source: CoinGecko

The Impact of Halving Bitcoin

Bitcoin supply will become more scarce as events halve and slow down the pace of new bitcoin mining. Demand increases, but supply declines, while suppressing inflation, can also lead to supply shortages, pushing up the price of Bitcoin.

Each halving generates attention and discussion in the market, as it affects the supply and mining profits of new Bitcoin. Halving is often seen as one of the catalysts for the rise in Bitcoin prices.

Ways to get Bitcoin

To get Bitcoin, in addition to being able to rely on mining, you can:

1. ACCEPT GIVEAWAYS: A FRIEND OR OTHER PERSON CAN GIVE A BITCOIN TRANSFER GIFT DIRECTLY TO THE USER.

2. Trade Bitcoin as currency: An individual or business can receive each other's Bitcoin by providing goods or services.

3. Bitcoin Airlift: Some organizations or organizations will hold some Bitcoin airdrop events where a specified amount of Bitcoin is issued free of charge. Participants usually just sign up for an account or complete a simple task to get it.

4. Buy Bitcoin: Users can buy Bitcoin on cryptocurrency exchanges or other platforms. Trade to buy Bitcoin using fiat currencies (such as USD, RMB, etc.).

How to play Bitcoin?

Once you get spot Bitcoin, you will be able to trade directly on the cryptocurrency exchange. Spot buying and selling is one of the ways to invest in Bitcoin. In addition, you can participate in investing in Bitcoin through the following channels and according to your level of investment:

• Bitcoin ETF

  • Due to the high volatility of Bitcoin prices, the risk is also relatively high, and the threshold for inbound investment in Bitcoin is higher.

  • Bitcoin ETFCan be divided into Bitcoin Spot ETF and Bitcoin Futures ETF

  • BITCOIN SPOT ETF TRACKS “BITCOIN PRICE”; BITCOIN FUTURES ETF TRACKS “BITCOIN FUTURES CONTRACT PRICE”, INVESTING IN A BASKET OF SPOT AND FUTURES CONTRACTS TO HELP DISPERSE RISK

  • Relative Comparison for Beginners

• Bitcoin Related Concept Stocks

  In addition to investing in Bitcoin itself, you can also start from its concept, which is relatively easy to get started. Bitcoin-related concept stocks include the following 6 categories:

  1. Bitcoin Mining Company: A manufacturer of specialized equipment that provides computing power to the Bitcoin network, or a large mine operator, etc. The more you can help with mining, the higher the value you have.

  2. Bitcoin Exchange: A company that provides Bitcoin trading services. Its income is derived from transaction fees and custodial services. In other words, if more people use the exchange to buy and sell, or there is a positive impact on the value of their shares.

  3. Blockchain Technology Company: An enterprise that develops and applies blockchain technology to provide customers with blockchain-based solutions.

  4. Payment instruments/financial companies: Traditional financial payment companies with Bitcoin payments, provide customers with Bitcoin payments, investments, and more. The more the business develops, the better the investment potential may be.

  5. HARDWARE EQUIPMENT COMPANY: A COMPANY THAT PRODUCES AND SELLS BITCOIN MINING EQUIPMENT. The better the business, the higher the demand, and the opportunity to stimulate its value!

  6. FUND MANAGEMENT COMPANY: BITCOIN ETF ISSUER, FUND ASSET MANAGEMENT COMPANY.

• Bitcoin Related Derivatives

  You can invest in Bitcoin-related derivatives such as futures, options, etc., for hedging risks or speculations. But for beginners, the risks and rewards of investing in derivatives are relatively unpredictable.

How to Trade Bitcoin in Hong Kong

Futu Securities provides virtual asset trading services for Hong Kong certificated institutions to trade cryptocurrencies, cryptocurrency futures ETFs, futures ETFs and related securities in one place. Futu currently supports Bitcoin and Ethereum trading. More hot cryptocurrencies will continue to grow, please note.

In Futu, you only need 4 steps to trade cryptocurrencies:

• Step 1: Activate Crypto Trading

  After opening an account, activate the Crypto trading function, go to the [Accounts] page, click on [Cash Comprehensive Account], and open [Account Management] in [More], [Activate Trade Varieties] in [More], and select [Cryptocurrencies] in [Unactivated].

• Step 2: Assess the test

  Before starting a cryptocurrency account, a “virtual asset risk assessment, virtual asset holding limit assessment, virtual asset knowledge test”, and identity verification are required. After submitting the application, start up in about 5 minutes and a successful launch will receive a system message and message.

• Step 3: Deposit funds into a cryptocurrency account

  Before trading cryptocurrencies, make time to allocate funds to your cryptocurrency account. Go to the [Accounts] page, click on [Cash Integrated Account - Cryptocurrency], select [Funds Transfer] or [Deposit Funds], then select the settlement currency type and enter the amount to trade after your account.

• Step 4: Trade

  Go to [Market] - [Cryptocurrency], select [Bitcoin/Ethereum], click “Trade” in the lower left corner and you can start trading. （How to Trade Cryptocurrencies on Futubull) If you want to invest in a Bitcoin ETF: You can search for [Cryptocurrency ETF] in the search box to track different Bitcoin ETFs. You can also find out the size of each ETF's assets and basic information such as management fees, dividend policies, etc., on the ETF Funds page to guide your investment decisions.

Investing Bitcoin is a new way of investing in Bitcoin, a secure and reliable trading platform is extremely important! With the Futu Security License, you can expand your virtual currency investment journey while offering you 0 gold rewards!