What is Bitcoin?

When someone thinks about cryptocurrencies, Bitcoin is the first one to strike our mind. In this article, we have put together all the basics of Bitcoin like what is bitcoin, how does bitcoin work, who is the creator, why bitcoin and much more.

What is Bitcoin?

Bitcoin is a cryptocurrency, which uses peer-to-peer technology for instantaneous payments between people or businesses. Bitcoin can be used as a currency as well as a type of investment. BTC came into existence in 2009. The currency hit its all-time high of $18,000 per BTC. At the time of writing, the BTC price is $11,596.69 and a marketcap of $214,246,885,478. 

Bitcoin is virtual money which means it’s like an online version of cash. Bitcoin is used to buy products and services, but not many shops and countries accept the cryptocurrencies yet. Bitcoin is the largest cryptocurrency in the world with the highest market cap and also in terms of name recognition and desirability for those who require more exposure to the cryptocurrency market. 

Who created Bitcoin?

Satoshi Nakamoto is the name behind the creation of Bitcoin. But, it is a pseudonym where no one knows who is Nakamoto. Satoshi introduced his first proposal to the world in November 2008 when he presented a whitepaper describing ‘Bitcoin: A Peer-to-Peer Electronic Cash System’. 

A few months later, Satoshi launched the software. On January 3, 2009, he mined the first-ever Bitcoin block. After inventing the Bitcoin project, Satoshi Nakamoto disappeared in 2011, without revealing much about who they were. After he left, many people claimed to be Satoshi Nakamoto, but none of them had any conclusive evidence.

Also, there have been some messages coming from Satoshi’s accounts after he left, but many of them questioned the authenticity of these messages. Also, many of them have made guesses about how many Bitcoins were mined by Satoshi in the earlier days when very few people knew about BTC.

In the end, most of the Bitcoiners agree that Satoshi’s identity will not matter much. It is because the protocol stands on its own, regardless of who or what Satoshi Nakamoto is.

Why Bitcoin?

• The best part about Bitcoin is that it is decentralized which means the transactions can be made without the need of any central authority. 
• In case processing international payments or deals, it can be done without messing around with exchange rates and extra charges. 
• The payments are made easily and at low cost because BTC is not tied to any country or is subjected to any regulation. 
• There are no credit card fees, so small businesses are likely to adopt Bitcoins. Individuals think of Bitcoin as an investment whose value will go up in the future.  
• As Bitcoin works on Blockchain Technology, it offers immense transparency, wherein the users can see what is happening with their money. 
• Anyone can accept Bitcoins instantly, without investing money and energy into its details like creating a merchant account or buying credit card processing hardware.

How does Bitcoin work?

Bitcoin works as a decentralized peer-to-peer digital currency. Decentralized means Bitcoin is not controlled by any central authority. Instead, it works on the majority-rules principle, which means a transaction will not be valid until at least 50% of the machines on the network will verify it. 

Peer-to-peer means that you can directly send Bitcoins to other users on the network without the need for any middlemen. Suppose you want to buy pizza with Bitcoin, you will see whose is accepting Bitcoin in exchange for pizza to make the payment. 

By digital currency, we mean that Bitcoin does not exist physically. It means there are no metal Bitcoins which a person can hold in hand like the fiat currencies. Instead, the cryptocurrencies are created electronically. 

Example

Bitcoin works similar to many other cryptocurrencies in the world. You can use it in exchange for goods and services with the vendors who accept it as payment. Bitcoins are stored in digital wallets.

Suppose you wish to buy something with your BTC, you will go to your Bitcoin wallet and choose to send a certain amount of Bitcoins to the vendor. When making a Bitcoin transaction, you have to use a ‘private key’ to confirm the exchange of currencies between you and the vendor. Doing so will provide good security to the transaction. 

After the transaction is completed, it is consolidated with other completed transactions into the block and assigned a unique signature called a ‘hash’. A hash is formed using all the transaction data present in one particular block which is further broken down into a readable and easily-distinguishable code. Once a block has a hash, it is further transmitted to the network for verification and if it is valid it will be added to the blockchain for everyone to be visible.

Future of Bitcoin

Bitcoin is a perfect example of the advancement in technology. It is the first digital currency which can be used all over the world without any involvement of the government or any third-party. This cryptocurrency has a bright future and will continue to attract people all over the world. 

There are a few countries where the flow of currency is subject to stringent government control. But, with BTC people can transfer money to various parts of the world without any restrictions. The main advantage of Bitcoin is its anonymity which attracts the majority of people to invest in it. It is clear that Bitcoin is gaining good exposure and usage around the world. Bitcoin and Blockchain Technology have good potential which will shine in the future.

Conclusion

Over the last 11 years, Bitcoin has truly disrupted the world’s economy and financial system by offering a digital payment system that is much ahead of time. The unique thing about BTC is that you own your bank account which means you need not store your money in any third party financial institution or payment processors. It is just the beginning, the Bitcoin revolution has a long way to go.