Tuesday, 18 June 2024

Bitcoin (BTC) – The Original & Most Well-Known Crypto

18 Jun 2024
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Bitcoin (BTC) - The original and most well-known cryptocurrency.

Bitcoin (BTC) is a cryptocurrency. It acts as money and payment method outside anyone’s control.

It removes the need for third-parties like banks in transactions. Blockchain miners verify transactions and receive Bitcoin rewards.

Key Takeaways

  • Bitcoin is the world’s largest cryptocurrency by market cap.
  • The Bitcoin blockchain is a distributed ledger maintained automatically.
  • Fiat currency can purchase Bitcoin on crypto exchanges.
  • Bitcoin’s price fluctuated significantly, peaking around $69,000 in 2021.
  • Many merchants and retailers accept Bitcoin for payments.

What is Bitcoin (BTC)?

Definition and Origins

In 2009, an anonymous developer or group, Satoshi Nakamoto, introduced Bitcoin to the world.1 It has become the most renowned cryptocurrency. Its fame inspired many other cryptocurrencies.1

Decentralized Digital Currency

Bitcoin (BTC) is a cryptocurrency designed as a decentralized digital currency. It acts as money and payment method without central control.1 This removes the need for third-party involvement in financial transactions.1

With its decentralized nature and privacy focus, Bitcoin appeals to those seeking alternatives to traditional fiat currencies and centralized financial systems.

How Bitcoin Works

Bitcoin’s core functionality relies on blockchain technology.1 A blockchain is a distributed database.1 Data is stored across many computers.

This decentralized nature enables Bitcoin’s functionality.1

The Bitcoin Blockchain

Bitcoin uses the SHA-256 hashing algorithm.1 Transaction data is encrypted into 256-bit numbers.1 Each number contains transaction info.

Mining and Proof of Work

Adding new Bitcoin transactions is mining.2 Miners solve complex math problems.2 Successful miners earn new bitcoins.1

Bitcoin block rewards halve every 4 years.1 In May 2020, rewards reduced to 6.25.1 Bitcoin’s network generates 600 quintillion hashes/second.1

ASICs can generate over 400 trillion hashes.1 CleanSpark ordered 100,000 ASICs in April 2024.1 New ASICs cost around $10,000.1

Buying and Using Bitcoin

If you don’t want to mine bitcoin, you can buy it using a cryptocurrency exchange.1 Most people can’t purchase an entire BTC due to its high price. However, you can buy portions of one BTC on these exchanges in fiat currency like U.S. dollars.

Cryptocurrency Exchanges

As bitcoin grew popular, investors and speculators became interested in it.1 Between 2009 and 2017, cryptocurrency exchanges emerged, facilitating bitcoin sales and purchases. Prices began rising, and demand slowly grew until 2017 when its price broke $1,000.1

Bitcoin as Payment

Bitcoin is accepted as payment for goods and services at many merchants, retailers, and stores.1

Bitcoin Investment and Trading

Investors and speculators became interested as bitcoin’s popularity grew.1 Cryptocurrency exchanges facilitating sales and purchases emerged between 2009 and 2017. Prices rose, and demand grew until 2017 when its price exceeded $1,000.1

Bitcoin’s supply is capped at 21 million coins.3 Currently, over 19 million Bitcoin coins circulate. Miners earn 6.25 BTC for each new block.3 Bitcoin was valued under $150 per coin previously, but as of June 8, 1 BTC equals around $30,200.3

By 2140, all Bitcoins will have entered circulation.3 Bitcoin’s price fluctuated significantly in 2020, ranging from $5,165 to $28,990.3 The Grayscale Bitcoin Trust requires a $50,000 minimum investment.3

Launched in 2009, Bitcoin (BTC) remains the most valuable cryptocurrency.4 Online equity trades related to Bitcoin have $0 fees.4 NerdWallet ratings for Bitcoin brokers and robo-advisors range from 4.3 to 5.0.4

To mine Bitcoin, high-speed computers independently confirm each transaction, rewarding miners in Bitcoin.4 The smallest Bitcoin unit is a Satoshi, equivalent to one hundred millionth of one Bitcoin.4 Bitcoin hit new highs in March 2024, starting slightly under $17,000 per coin.4

Bitcoin can be stored in hot (online) or cold (offline portable device) wallets.4 Approximately 32,000 Bitcoin ATMs operate in the U.S.4 Bitcoin mining became competitive, requiring specialized computers, leading many to join mining pools.4

buying bitcoin

Bitcoin’s History and Milestones

Bitcoin’s journey has been incredible. It has overcome significant challenges. It has achieved remarkable milestones.

From its humble beginnings, Bitcoin has evolved. It has become a global phenomenon.

Early Beginnings

In October 2008, an anonymous developer announced Bitcoin. It was “a new electronic cash system.”5

This led to the Bitcoin whitepaper. It outlined how Bitcoin operates today.

On January 3, 2009, the bitcoin network began. Satoshi Nakamoto mined the genesis block.6

Mainstream Adoption

Between 2009 and 2017, cryptocurrency exchanges emerged. They facilitated bitcoin trading.

Prices rose, and demand grew steadily. In 2017, bitcoin’s price broke $1,000.6

In 2010, the first retail bitcoin transaction occurred. 10,000 bitcoins were exchanged for two pizzas.6

Organizations like WikiLeaks started accepting bitcoin donations. Bitcoin was featured on The Good Wife.6

Regulatory Actions

In 2013, FinCEN established regulatory guidelines. It classified American bitcoin miners as money services businesses.6

Bitcoin’s Future and Challenges

As Bitcoin evolves and gains adoption, it faces promising opportunities and challenges.7 Mining power concentration is concerning, with seven pools controlling over 85% of the network’s hash rate.7 Over 84% of miners belonged to just three pools, raising decentralization and security concerns.7

Bitcoin’s limited transaction capacity is challenging.7 It can handle a maximum of seven transactions per second, paling in comparison to traditional payment systems.7 This scalability issue becomes more pronounced as Bitcoin’s popularity grows.7

Despite challenges, Bitcoin attracts interest and investment.8 The cryptocurrency grew to billions in economic value within two years of its 2009 launch.8 However, Bitcoin’s practical success lacks rigorous theoretical foundation, posing distributed systems consensus challenges.8

Bitcoin’s fourth halving event in April 2024 reduced block rewards.7 Halving events historically influence Bitcoin’s price, generally driving prices upward afterward.7 These events will continue occurring roughly every four years until around 2140.7

Bitcoin faces challenges from its past association with criminal activities like the Silk Road black market.8 Instances of theft, collapsed exchanges, botnets mining Bitcoin, and ransomware attacks eroded public trust and created regulatory hurdles.8

Addressing bitcoin future, bitcoin challenges, and bitcoin regulation is crucial for realizing Bitcoin’s potential and maintaining its position as the most widely adopted cryptocurrency.8

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Conclusion

Bitcoin (BTC) has significantly impacted finance and technology since 20091. As the largest cryptocurrency, Bitcoin pioneered a decentralized digital currency1. Its blockchain technology and proof-of-work system revolutionized transaction processing9.

Bitcoin’s Impact and Outlook

Bitcoin’s development and adoption have been remarkable1. Block reward halvings evolve the network’s security and incentives1. The network generates around 600 quintillion hashes per second1.

ASIC miners can produce over 400 trillion hashes per second1. This computational power ensures network integrity and security1. It makes Bitcoin an attractive decentralized digital currency option1.

Bitcoin’s future looks promising1. Its acceptance as a payment method is growing1. It has potential as an investment asset1.

Continued technological advancements support Bitcoin’s role1. As regulation and adoption evolve, Bitcoin’s financial impact will deepen1.

FAQ

What is Bitcoin (BTC)?

Bitcoin (BTC) is a cryptocurrency. It’s designed to act as money and payment outside control. This removes need for third-party in financial transactions.

Who created Bitcoin?

Bitcoin was introduced publicly in 2009. It was created by an anonymous developer or group using Satoshi Nakamoto. It has become the most well-known cryptocurrency, inspiring others.

How does the Bitcoin blockchain work?

A blockchain is a distributed ledger, shared database chained cryptographically. “Distributed” means stored on many computers, not centralized server. Bitcoin uses SHA-256 algorithm to encrypt (hash) block data.Transaction data in a block is encrypted into 64-digit hexadecimal number. This number contains all transaction data and information linked before.

How can I acquire Bitcoin?

If not mining bitcoin, you can buy it on cryptocurrency exchanges. Most can’t purchase whole BTC due to price, but portions using fiat currency like U.S. dollars.

Where can I use Bitcoin?

Bitcoin is accepted as payment by many merchants, retailers and stores.

How did Bitcoin gain mainstream popularity?

Investors and speculators became interested as popularity grew. Between 2009-2017, cryptocurrency exchanges emerged facilitating buying and selling. Prices rose, demand grew until 2017 when price broke