Bitcoin (BTC) is probably one of the hottest topics for investors and traders in the last decade. Since its inception Bitcoin has been polarizing and enticing for many. There are those who see Bitcoin as the revolution of the financial system, those who see it as a lottery ticket to previously unknown riches and of course those who would like to bury Bitcoin sooner rather than later. Welcome to the age of Bitcoin and cryptocurrencies!
About this guide
In this guide you will learn everything about Bitcoin covering what Bitcoin is, how Bitcoin can be used and everything from Bitcoin history to the most frequently asked questions about Bitcoin.
What is Bitcoin?
Bitcoin is the first and to date most successful cryptocurrency in existence. It is a digital decentralized cryptocurrency without central governance and without the need of intermediaries like banks to process transactions. Bitcoin was created in 2019 by the mysterious programmer Satoshi Nakamoto, whose real identity is still not known with certainty. It is not even clear whether Satoshi Nakamoto is a single person or a group who worked under the name of Satoshi. Since its inception Bitcoin has seen phases of extreme growth and surged in popularity. Bitcoin can be used like digital cash to buy and sell products, services or other currencies with the main difference to FIAT being that Bitcoin is not regulated by centralized authorities and entirely peer-to-peer based in its nature.
Value and number of coins
At initial offering, one bitcoin was worth less than $0.003, today it is worth more than $3800. This phenomenal increase in value is proof of its impact on the global financial network and the enthusiasm with which the public has embraced digital currency. Bitcoin ATMs can be found in many countries allowing one to exchange bitcoin for cash. There are currently about twenty-one million bitcoins globally. However, only about 80% of this figure has already been mined with the remaining 20 percent expected to have been mined by the year 2140 which will make it even more valuable then than it is now.
There are two ways of acquiring bitcoin. One is by mining and the second is by purchasing it from another user. The latter is the easier and more convenient method. To understand the mining process, one has to understand what the bitcoin blockchain is and how it works. Since bitcoin is a decentralized and virtual currency, the only way for its transactions to be authenticated and accepted in the global bitcoin network is through a central and common ledger referred to as blockchain. The blockchain shows all previous transactions and every member of the bitcoin network has access to this information. Due to the nature of its encryption, a bitcoin transaction is not immediately added to the blockchain. Such a transaction that is awaiting entry is known as a block. The bitcoin network then works on solving the encryption keys for each block and whoever does so first is rewarded. This is the mining process.
In the early 2010s, bitcoin was mainly used as a currency for black markets like Silk Road. However, in recent years its use has expanded to everyday living with stores and corporations all over the world accepting it as a form of payment going far and beyond the realms from which it started to gain its popularity. Bitcoin was the first and is today the most famous cryptocurrency in the world. Since it peaked at $19783 at the end of 2017, the value of bitcoin has gone down by more than 65%, yet it still remains more than three times as valuable as it was 18 months ago. This is a bubble and burst scenario much like the value of gold which rose sharply then declined in the early 2010s. Since there is a finite number of bitcoins, then it is an inherently inflationary currency which is why you might want to hold on to your bitcoin or buy some more overtime. The first decade of bitcoin has been revolutionary, the second is bound to get even better.