What is Bitcoin?
Bitcoin is a global, decentralized cryptocurrency. Conceptually, “cryptocurrency” dates back to the 1980s and ideas promulgated by prominent “cypherpunks.” By late 2008, during the height of the global nancial crisis, a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was authored under the nom de plume Satoshi Nakamoto. This paper was arguably the genesis for a Bitcoin network, which was created in January 2009. This date is also when the very rst bitcoins (the genesis block of 50) were issued and mined by Satoshi Nakamoto. Bitcoin (with a capital B) refers to the entire so ware protocol and payment network; bitcoin (with a small b) refers to the tokens that represent the denomination of value being exchanged.
Bitcoin transactions occur on a peer-to-peer basis without an intermediary, which make them decentralized. The technology behind the transactions is called blockchain. Every transaction is verified, recorded and distributed on a public ledger. Blockchain technology has considerable potential application outside of the virtual currency space.
Bitcoin can currently be bought or sold on an exchange and held as an investment. According to Coin Market, at least 124 crypto coin exchanges exist. However, at least 36 bitcoin exchanges no longer exist; so a notable percentage of crypto exchanges have shuttered.
Bitcoin has value, like other commodities, because of its utility and scarcity. Bitcoin can be exchanged for another currency or used to purchase products or services. An increasing number of merchants now accept bitcoin as payment.
The Bitcoin protocol was designed such that new bitcoins are created at a fixed rate. Bitcoin is mined using cryptology software, and at present, 12.5 new bitcoins are mined roughly every 10 minutes. That rate is estimated to remain constant until late November or early December 2019. Between that point and the middle of 2024, new bitcoins will be mined at a rate of 6.25 roughly every 10 minutes. Availability will be periodically halved until ~2140. Eventually, there will be 21 million bitcoins in circulation.
Blockchain technology allows for fractional transactions to accommodate payment for goods or services less than the value of a full bitcoin. For example, one U.S. dollar can be broken down into 100 pennies to pay for something that costs a fraction of a dollar.
Currently, bitcoin is divisible to the eighth decimal, and the smallest unit of currency is a “satoshi.” All bitcoin transactions are transmitted and recorded in satoshis. There are 100 million satoshis in one bitcoin.
Ultimately, bitcoin availability is nite, which is unique when compared to at currencies, which have no de ned limit on their introduction into circulation. In that regard, many draw a comparison between bitcoin and gold, which could be considered a reserve currency as well as a commodity. However, unlike gold, which might be held in a vault or elsewhere, the blockchain technology registers bitcoins to bitcoin addresses.
Bitcoin’s Use case
This is, by far, the most popular and well- known cryptocurrency. In 2013, Bitcoin went from $13 to $1,157 (an 8,800%
gain). Its historical rise was fueled by the economic crisis in Cyprus – the country’s banking system had been crippled by bad loans.
In order to save the banks, the government con scated as much as 47% of people’s wealth through so-called “bail-ins.” As a result, people scurried to move their money outside traditional currencies – and Bitcoin soared
Those who got in early became millionaires.
Bitcoin used to be considered an “underground currency,” but not anymore.
Today, more than 100,000 merchants accept Bitcoin as payment, including Overstock.com, Cisco, Wal- Mart, Starbucks, Amazon, and Microsoft.
In fact, in the world of digital money, Bitcoin is the equivalent of a reserve currency. As we move to a cashless society, Bitcoin is an obvious bene ciary.
1. Speed: When you deposit a check from another bank into your bank, the bank will hold it for several days. It works in the same way with international wire transfers.
Bitcoin transactions, however, are far faster.
2. Decentralized: This is basically my personal reason for owning it. No country, institution, or government can lay their hands on it without taking radical steps.
3. Privacy: This is a huge subject. Most online purchases today are made via credit cards, but in the 1920s and 1930s, when the rst precursors to credit cards appeared, the Internet hadn’t yet been conceived. Credit cards were never supposed to be used online, and they are insecure.
No Inflation: No government or any other company or person can inflate the price or make it too abundant. It’s an ideal inflation hedge.
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