What exactly is a Bitcoin?
Bitcoin (BTC) is a cryptocurrency that was created in 2009 by a person under the alias Satoshi Nakamoto. Till today, no one has ever found the true identity of this mysterious person. Although there have been many theories behind their unproven identity.
Through blockchain technology, people can trade bitcoin. Blockchain technology does not require a mediator, which allows it to be transparent and traceable. Since the data is available to all individuals, changing or manipulating a transaction is impossible as it would consequently affect the entire network and be detected immediately.
Bitcoin was created with an intangible computer language, in which it was limited to just 21 million coins. Each coin is created through the process of mining, which is when a computer or a node uses electricity to calculate and validate a transaction that happens on the blockchain. Whoever is able to solve the complex mathematical equations and validation process first will then receive a reward.
Satoshi Nakamoto had instructed that the reward from mining Bitcoin will be reduced by half, which is known as the Halving Process, every 210,000 blocks. Being that a new block is created every 10 minutes, 210,000 blocks would take about 4 years to be successfully created. In the initial period, the mining rewards were 50 BTC for the first group of miners. After completing 210,000 blocks, the reward would be reduced to 25 BTC. At the moment, the halving process just occurred in 2020, which reduced the reward to only 6.25 BTC, further affecting the coin’s value.
Bitcoin became an example for further development in the world of digital currencies. Some infamous currencies that followed bitcoin include ETH (Ethereum), BCH (Bitcoin Cash), BSV (Bitcoin SV), and many other currencies. Even recently, Bitcoin has maintained its status of having the largest market cap in the cryptocurrency market. However, Bitcoin still has a very high level of volatility, therefore, becoming a very popular form of investment for investors.
Prominent Points of Bitcoin
1. Transactions Without a Mediator
Having blockchain technology integrated into Bitcoin made it possible to make financial transactions without the need of a mediator, such as a bank. Despite being miles apart, anyone can make Bitcoin transactions with each other.
2. Ease of Access
Anyone is able to access Bitcoin and other cryptocurrencies without having to contact a bank or any physical location. All that is required is a smartphone or computer with internet access. Despite the ease of access, it is highly recommended that an individual should consider safety measures for their assets.
3. Lowered Fees
Making transactions with fiat currency across borders would usually involve high transaction fees, but when performing overseas transactions with Bitcoin, you wouldn’t have to pay any additional fees other than the gas fees which remains a constant value regardless of location.
4. Transparency and Traceability
As mentioned earlier, Bitcoin was created with blockchain technology, therefore making it transparent and anyone can trace transactions.
Interesting Technology behind Bitcoin
Bitcoin was created with blockchain technology, which is implemented in the world of decentralized finance where anyone can trace any transaction. The blockchain technology could also be implemented in other operations as well, such as voting and data collection, which requires transparency.
Although bitcoin is the origin which leads to the development of blockchain technology and other cryptocurrencies. Bitcoin itself is facing issues regarding scaling to meet the market demands.
Furthermore, Bitcoin’s network still takes long periods of time to complete a transaction when compared to regular fiat transactions or other cryptocurrencies’ networks. If an individual wishes to make a transaction faster with Bitcoin, they would be required to pay a higher fee to prioritize the transaction in a pool of many other transactions that need validation.
An upcoming solution to this problem is the implementation of the “Lightning Network,” which extends from the blockchain to prevent the pooling of transactions.