Bitcoin, founded in January 2009, is a digital currency which follows the ideas set out by the enigmatic and pseudonymous ‘Satoshi Nakamoto’ in a white paper. The identity of the person or individuals who invented the technology is still a mystery.
What is Bitcoin?
Bitcoin provides the promise of lower transaction costs than conventional online payment systems and it is regulated by a decentralized authority, unlike government-issued currencies. A form of money that is entirely virtual is Bitcoin, sometime also referred as cryptocurrency, virtual currency or digital currency. It’s like a version of cash online. People can send bitcoins to your digital wallet or you can send them to other individuals.
There are no actual Bitcoins, just balances maintained on a public ledger with open access for all. A huge amount of computational power verifies all bitcoin transactions. Bitcoins are not distributed, neither funded as a product by any banks or governments, nor the individual bitcoins are valuable. Bitcoin is very popular and has prompted the launch of hundreds of other cryptocurrencies, collectively referred to as Altcoins, despite not being a legal tender. The abbreviation for Bitcoin is typically “BTC.”
- Bitcoin, by market capitalization, is the world’s largest cryptocurrency.
- Through the use of a decentralized ledger system, known as a blockchain, bitcoin is developed, distributed, exchanged, and stored in contrast to fiat currency.
- The history of Bitcoin as a value store has been turbulent; in 2017, the cryptocurrency skyrocketed to about $20,000 per coin, but less than years later, it sold for less than half of that.
July 28, 2010: A Bitcoin cost for investors was just 6% each in the early days. That $100 investment is worth $72,902,650 now (brace yourself).
Dec. 8, 2014: As it looked, the rally was over. In late 2014, Bitcoin slumped to $350. It was be a good time to make a purchase. An investment of $100 in that time will have a value of $12,498 today.
Dec. 10, 2017: By this point, Bitcoin-mania was fully underway, with prices exploding to $13,160. The $100 has worth of $332 today.
Dec. 17, 2019: Things were climbing again; a bitcoin was worth $6,584.03, but there was no idea what the coming year would offer to the most optimistic traders. Your investment of $100 right before the pandemic is now worth $664.
Dec. 5, 2020: Even an experienced astronaut will be blacked out by the g-force from the bitcoin climb in 2020. The cryptocurrency was worth $19,045.02 by the start of December. The 100 dollars will be worth 230 dollars today. In a short period of time, you double your money, but somehow it’s still not satisfying.
Feb. 5, 2021: Let’s presume you jumped last Friday into Bitcoin, and were fortunate enough to buy $37,462.59 at the low. Strong schedule! The $100 is worth $117 today-a fairly impressive return on a currency which is so costly these days that percentage jumps are harder and harder to come by in no time.
How does Bitcoin work?
Every Bitcoin is essentially a data file which is stored on a smartphone or computer in a ‘digital wallet’ app. People can send Bitcoins to your digital wallet (or part of one), and you can send Bitcoins to other individuals. In a public list called the blockchain, every single transaction is registered. This allows the past of Bitcoins to be tracked to avoid individuals from investing coins that they do not own, making copies or undoing transactions.
Proof of Work
Bitcoin is a proof-of-work cryptocurrency that is also built on the Hashcash PoW, like Finney’s RPoW. However double-spend security in Bitcoin is offered by a decentralized P2P protocol for monitoring coin transactions, rather than the trusted computing feature e used by RPoW for hardware.
Figures for this cryptocurrency have continued to grow steadily after its launch in late 2009. At first glance, price increases in 2017 and 2020 have not significantly affected the number of Bitcoins currently in existence.
High-powered computers that solve complex computational math problems perform Bitcoin mining; these issues are so complicated that they cannot be solved by hand and are complicated enough to tax even extraordinarily powerful computers.
Bitcoin miners validate the transactions
As a reward for completing ‘blocks’ of checked transactions that are applied to the blockchain, Bitcoin miners earn Bitcoin.
Stored in the Bitcoin wallet
A bitcoin wallet is a computer, physical medium, software or service that stores crypto-currency transactions with public and/or private keys. A bitcoin wallet also more frequently includes the functionality of encrypting and/or signing information in addition to this simple feature of storing the keys.
The blockchain functions as a pseudonymous transaction record, i.e. its contents are accessible to everyone, but it is difficult to identify the network’s transacting parties. This is because each transacting party inside the network is allocated encrypted addresses by the blockchain. That said, by looking at block explorers, even those who do not participate as a node or miner in the network can view these transactions taking place live.
- If the incentive for mining Bitcoin transactions is cut in half, a Bitcoin halving event
- This occurrence also decreases the inflation rate of Bitcoin and the rate with which new Bitcoins enter circulation by half
- Both previous halvings were associated with extreme cycles of boom and bust that ended with higher prices than before the event.
Bitcoin news is the world’s leading 24/7 news feed covering anything relevant to bitcoin, including the world economy and exchange rate.
Where to buy Bitcoin?
The first move is to download a bitcoin wallet to purchase bitcoin, which is where your bitcoins are kept for future spending or trading. You can buy bitcoins on exchanges that you can then return to your wallet with conventional payment methods such as a credit card, bank transfer (ACH) or debit cards.
A form of money that is entirely virtual is Bitcoin, sometimes referred to as a cryptocurrency, a virtual currency or a digital currency. It’s like a version of cash online. People can send Bitcoins to your digital wallet (or part of one), and you can send Bitcoins to other individuals.