What is Bitcoin (BTC)?
If you’re just venturing into cryptocurrency, it’s likely that the first coin you knew about was Bitcoin.
The whole cryptocurrency industry started with the emergence of Bitcoin which really took off in 2014.
It is still known as the first decentralized digital currency. The coin was created in 2009 by an unknown person or group of people using the pseudonym "Satoshi Nakamoto".
Satoshi Nakomoto seems to have vanished off the internet in 2010 and the only communications we had with him/them were through emails and forums.
In essence, the establishment of Bitcoin is to ensure that it would be a currency that could not be controlled by any government or financial institution."
- Bitcoin is a decentralized digital currency that uses cryptography for security.
- You need one hundred million satoshis to make one Bitcoin.
- There is a limited number of Bitcoin in circulation which is capped at 21 million.
- The use of Bitcoin is still relatively small compared to traditional fiat currencies, but it is growing in popularity and acceptance.
How does The World’s First Blockchain work?
The process of having a transaction validated on Bitcoin’s blockchain is called proof-of-work.
This means Bitcoin’s network is maintained by miners. These miners use their computing power to validate transactions and add them to the blockchain.
Why does BTC have value?
Bitcoin’s useful qualities are that it is decentralized, secure and borderless. However, these aren’t the only reason the coin is worth so much.
Due to its scarcity, Bitcoin is often nicknamed ‘Digital Gold’, in reference to ‘classic’ physical gold. Just like gold, Bitcoin also has a finite supply of coins available; there will only ever be 21 million Bitcoin.
The scarcity factor and the difficulty of mining Bitcoins allows it to have value. If we rely on the basic concept of supply and demand, the price of Bitcoin would be expected to rise over time."
Will we run out of Bitcoin?
It is difficult to predict the future of Bitcoin or any other cryptocurrency. However, it is worth noting that the total supply of Bitcoin is limited to 21 million coins, and as of December 2022, more than 18 million of these coins have already been mined.
This means that there is a finite supply of Bitcoin that will eventually be exhausted, but it is unlikely to happen anytime soon as a lot of coins are still left to be mined.
What can you do or buy with Bitcoin (BTC)?
There are a number of things you can do with Bitcoin which includes the following:
Buy goods and services
Many businesses, both online and offline, accept Bitcoin as a form of payment. This includes everything from small independent retailers to large corporations, such as Microsoft and Expedia. It’s not widespread yet but we expect more businesses to accept Bitcoin in payment very soon into the future.
Trade and invest
BTC can be bought and sold on exchanges for fiat currencies or other cryptocurrencies. Many investors see Bitcoin as a valuable investment and trade it in the hopes of making a profit.
Send money globally
Because it is decentralized and has low transaction fees, BTC can be used to send money to anyone, anywhere in the world quickly and inexpensively.
Some people see BTC as a store of value, similar to gold, and hold on to it as an asset.
Bitcoin (BTC) vs Ethereum (ETH)
Bitcoin and Ethereum are both cryptocurrencies that rank first and second place in terms of market cap. However, they both have significant differences that make them unique in their own way.
Proof-of-Work (PoH) vs Proof-of-Stake (PoS)
Initially, both Bitcoin and Ethereum used Proof-of-Work as a consensus mechanism. However, after Ethereum’s Merge in 2022, Ethereum adopted a Proof-of-Stake mechanism.
The main difference would be in the way the transactions are validated.
Proof-of-Work requires extensive computational power to resolve cryptographic equations. This is how a transaction could be validated and added to a block.
In Proof-of-Stake, a validator would be selected randomly based on the amount of coins they have staked into a node.
The obvious difference is that Bitcoin requires extensive power to mine for new Bitcoin while Ethereum uses less energy to mine for Ether.
Both Ether and Bitcoin are digital cryptocurrencies. However, Bitcoin is primarily created as a way for people to send money over the internet. It serves as an alternative to fiat currency.
Ethereum’s blockchain on the other hand was developed to facilitate the development of dApps and smart contracts.
Digital gold vs digital silver
Oftentimes you may have heard that Bitcoin is called “Digital Gold”.
This is because Bitcoin was first established as a currency over the internet. At one point, gold was also used as currency which makes it somewhat similar to Bitcoin. Since Bitcoin’s supply is finite, it will become more and more valuable over time since burning also occurs to control inflation.
Ethereum is called “Digital Silver” because it is the second largest currency by market cap the same way silver always comes in second to gold. It also has a wide variety of applications in terms of blockchain developments which makes it similar to silver which has a plethora of uses.
Satoshi Nakomoto, The Mysterious Creator of Bitcoin
Satoshi is a rather mysterious entity.
In fact, we do not even know if Satoshi is a person or a group of people. However, for the sake of simplicity, we are going to assume that Satoshi is a group in this context.
Satoshi Nakamoto published a white paper in 2008 that described the technical details of a decentralized digital currency, which would later become known as Bitcoin.
In 2009, Nakamoto released the first version of the Bitcoin software, and in the following years, they continued to work on the project, writing code and contributing to the development of the network.
However, in 2011, Nakamoto disappeared from the public eye, and they have not been heard from since.
Currently, it is also said that Satoshi Nakomoto is the largest holder of Bitcoin with over one million Bitcoin stored in possession.
Their true identity remains a mystery, and many people have tried to uncover the true identity of Satoshi Nakamoto, but so far, no one has been able to do so.
A mystery indeed.
How to buy Bitcoin?
To buy Bitcoin, you need to do the following:
1. Choose a reputable Bitcoin exchange
There are many Bitcoin exchanges to choose from and it's definitely important to pick a reputable one.
Research the exchange and make sure it has a good track record and is regulated by a government authority. One way to do this is by going through Coinranking’s website to find the top exchanges on our list!
If you head to our Bitcoin page, you will also find recommended exchanges for Bitcoin which would make your search for an exchange a whole lot easier!
2. Create an account
Once you have chosen an exchange, you need to create an account by providing some personal information, such as your name, email address, and phone number. You may also need to verify your identity by providing a copy of your government-issued ID.
3. Deposit funds
Once your account is set up, you can deposit funds into it using a variety of methods, such as bank transfer, credit card, or debit card. The exact method of payment will depend on the exchange you are using.
4. Buy Bitcoin
Once you have funds in your account, you can use them to buy Bitcoin. Most exchanges will allow you to specify the amount of bitcoin you want to buy and the price you are willing to pay for it.
Once you have placed your order, the exchange will match you with a seller, and your Bitcoin will be transferred to your account.
Buying Bitcoin is relatively easy, but it's important to do your research and choose a reputable exchange to avoid potential scams or fraud. Make sure your tokens are stored in a crypto wallet for safekeeping.
How to send Bitcoin to someone?
To send Bitcoin to someone, you will need to have a digital wallet that supports the cryptocurrency. Once you have your wallet set up, you can send Bitcoin by following these steps:
- Open your digital wallet and find the "Send" or "Withdraw" option.
- Enter the recipient's Bitcoin address or scan their QR code.
- Enter the amount of Bitcoin you want to send.
- Review and confirm the details of the transaction.
- Send the transaction and wait for it to be processed by the network.
It is important to note that transactions with Bitcoin can take some time to be processed, and the amount of time it takes can vary depending on network congestion and other factors.
Also, make sure to double-check the recipient's address before sending the transaction to ensure that you are sending it to the correct person.
What influences Bitcoin’s price?
The price of Bitcoin is affected by a variety of factors, including the following:
Supply and demand
Like any other asset, the price of Bitcoin is determined by the balance between supply and demand. If more people are interested in buying Bitcoin, the price will go up, and if more people are selling, the price will go down. It’s basic economics.
The price of Bitcoin is also affected by market speculation. When people think the price of Bitcoin will go up, more is bought. This can drive the price up even further.
However, if people think the price will go down, they may sell their holdings, which can cause the price to drop. Market speculation could be triggered by news, twitter or reddit movements and other factors.
The regulatory environment in which Bitcoin operates can also affect its price. If governments impose strict regulations on the use of bitcoin, it could reduce demand for the cryptocurrency and cause its price to drop.
On the other hand, if governments introduce more favorable regulations, it could increase demand and drive the price up.
News and events
News and events can also impact the price of bitcoin. For example, if there is news of a major hack or theft of bitcoin, it could cause the price to drop.
On the other hand, if there is positive news, such as the adoption of bitcoin by a major retailer, it could cause the price to rise.
Fun facts about Bitcoin
The first Bitcoin transaction
The first transaction using Bitcoin occurred on January 12, 2009, when a programmer named Laszlo Hanyec bought two pizzas for 10,000 Bitcoin.
At the time, this was the equivalent of $41, but as of December 2022, those 10,000 Bitcoin would be worth over $700 million.This event is now known as "Bitcoin Pizza Day" and is celebrated by the Bitcoin community every May 22.
Smallest unit of Bitcoin
The smallest unit of a Bitcoin is called a satoshi, and it is named after the pseudonym of the person who created Bitcoin.
One satoshi is equal to 0.00000001 Bitcoins, and it is the smallest unit of Bitcoin that can be sent or receive.
Bitcoin in Silk Road
In 2013, the FBI had shut down the online marketplace, Silk Road, which was known for allowing users to buy and sell illegal drugs using Bitcoin.
The FBI seized 144,000 Bitcoins from the site, which were worth about $28.5 million at the time.
In 2017, the value of a single Bitcoin reached an all-time high of almost $70,000, but it has since fallen back to around $30,000.
Despite this volatility, many people see Bitcoin as a valuable investment and continue to buy and hold it as an asset.
Can you mine Bitcoin at home?
Yes, the average person can hypothetically mine Bitcoin but probably not at home. At least if we look at it from a practical aspect.
Technically, anyone can participate in the Bitcoin network and help to validate transactions and add them to the blockchain.
This process is known as mining, and it involves using specialized computer hardware to solve complex mathematical problems.
However, in order to mine Bitcoin, you will need to invest in specialized hardware, such as a computer with a powerful graphics card or an application-specific integrated circuit (ASIC).
You will also need to join a mining pool, which is a group of miners who combine their computing power and share the rewards.
Mining can be a challenging and competitive process, and it requires a significant amount of computing power to be successful.
As a result, it is not always profitable for individual miners, especially if they do not have access to cheap electricity or do not have a large enough mining pool.
Final thoughts on Bitcoin
Bitcoin is a digital currency that has gained popularity in recent years due to its decentralized nature and the potential for high returns on investment.
While it has many supporters and believers, it also has its share of skeptics.
Ultimately, the future of Bitcoin and other cryptocurrencies will depend on how they are adopted and used by people and businesses around the world.
Some people see great potential in cryptocurrencies, while others are more cautious and believe that they are a high-risk investment. It is up to you to do research and decide if Bitcoin is right for you.