With the growth of internet and technology advancements, people are shifting to online platforms for better accessibility, cost-effectiveness and to improve efficiency of industry, and finance sector is among those.
Cryptocurrency is a digital or virtual currency that allows people to make payments directly to one another through an electronic system. It uses cryptography to secure transactions and exists on a decentralised network using blockchain technology. Despite the increased level of interest in cryptocurrencies, there is scepticism about whether they could replace the traditional payment methods.
The first and most popular cryptocurrency is Bitcoin, trading at $99, 696 as on December 7.
Since Bitcoin’s inception, tons of questions have crossed people’s minds—why Bitcoin was created, what its purpose is, how it works and many more. Below sections will answer all of them.
Bitcoin
Bitcoin is the first cryptocurrency launched in 2009, that allows peer-to-peer value exchange using blockchain technology. It functions without any dependence on states, centralised banks or intermediaries.
Bitcoin enables borderless transactions to its users. It is open to all and operates on an open-source network, combining technological innovations with economic and philosophical purview, which attracts widespread participation across the globe.
Bitcoin Creation
Bitcoin appears as a response to the 2008 financial crisis, which highlighted instability and uncompetitiveness of the centralised banking system. Satoshi Nakamoto, the anonymous creator of Bitcoin envisioned replacing banks with a peer-to-peer payment system.
The Bitcoin blockchain, launched on January 3, 2009, introduced a decentralised ledger for secure transactions. Bitcoin’s main purpose was to decentralise finance and reduce dependence on a centralised banking system.
Satoshi Nakamoto
Satoshi Nakamoto is the pseudonym who penned the original Bitcoin whitepaper in 2008 and developed Bitcoin’s first software. The real identity has never been confirmed, whether it is a single identity or a group of creators, making it one of the biggest mysteries in the tech world.
Recently HBO’s Money Electric: The Bitcoin Mystery suggested that cryptographer Peter Todd might be Satoshi Nakamoto because of his involvement in Bitcoin’s early development. However, Todd has denied these claims, calling them baseless. This adds to Bitcoin’s endless conspiracy regarding the hidden identity of the creator and its potential ties with governments.
Bitcoin Whitepaper
A whitepaper in the cryptocurrency market refers to a comprehensive foundational document that summarises basic principles, technology and purpose of a specified blockchain project. It serves as a blueprint that defines goals and technical framework of a project. It helps stakeholders understand the project’s utility and vision. Bitcoin’s whitepaper, authored by the mysterious Satoshi Nakamoto in 2008, describes protocols and lays the groundwork for decentralised digital currencies.
Bitcoin’s whitepaper introduced blockchain technology as a decentralised alternative to traditional banking. It revolutionised the finance sector by enabling secure and immutable transactions without any intermediary. The document is considered as a base in the cryptocurrency market, inspiring a trillion-dollar crypto economy, smart contracts, affordable global transactions and decentralised crowdfunding.
This paper works as a guideline for crypto projects in the world. It indicates decentralisation and transparency in the global financial ecosystem. While Bitcoin leads the crypto market with loyal investors and unmatched market capitalisation, its energy-intensive proof-of-work technique poses sustainability challenges. Transitioning to proof-of-stake can
Bitcoin Blockchain
Bitcoin blockchain is a distributed and decentralised digital public ledger that records and maintains history of every Bitcoin transaction. The decentralised system updates the ledger in real-time, promoting trust among investors.
Bitcoin Working
Bitcoin operates on a peer-to-peer network, a native cryptocurrency (BTC) and the Bitcoin blockchain. Blockchain technology provides transactions that are transparent, immutable, and verified across a distributed ledger.
Users of Bitcoin blockchain can directly connect to the network and can make safe transactions without any intermediary like a bank or non-banking financial institution (NBFC).
Bitcoin- Real Money or Scam
Bitcoin has often been a topic of debate, whether it is real money or a scam due to its functioning like a digital currency, which is used for transactions in the entire world. BTC is regarded as real money because it meets the criteria of money: store of value, medium of exchange, and unit of account. Many businesses and individuals nowadays accept Bitcoin, an alternative to fiat currencies. However, some people claim that Bitcoin is a scam because it lacks physical form, government backing and price stability.
The price of BTC is solely driven by market speculations and hence, it remains volatile. Bitcoin’s growing recognition shows that it is not a mere illusion.
Bitcoin Mining
Bitcoin mining is the process of verifying and adding transactions to the Bitcoin blockchain while simultaneously creating new Bitcoin. Bitcoin miners use advanced computers to solve complex mathematical problems, competing to be the first one to validate a block of transactions. Successful BTC miners are rewarded with newly minted Bitcoin. According to the last Bitcoin halving event on April 20, mining rewards were reduced from 6.25 BTC per block to 3.125 BTC per block.
The mining process ensures the network’s security. However, it requires advanced computational power and consumes more electricity, which raises concerns over environmental impact. Bitcoin’s supply is limited to 21 million. After all the Bitcoins are mined, miners’ incentives will shift solely to transaction fees for network validation and security.
Bitcoin- Buy and Sell
A quick guide on how to buy and sell bitcoin
- Choose an Exchange: Select a verified crypto exchange by comparing fees, features, and supported regions.
- Verify Identity: Complete KYC process to access its trading platform.
- Add Funds: Deposit money to your account.
- Buy Bitcoin: Place a market or limit order to purchase Bitcoin at your preferred price.
- Sell Bitcoin: Place a sell order and the platform will match you with a buyer.
Bitcoin ATM
A Bitcoin ATM is a kiosk that enables a user to buy Bitcoin and other cryptocurrencies by using cash or card. Unlike regular ATMs, this machine connects directly to the cryptocurrency network, wherein it facilitates a safe and simple transaction and sends cryptocurrencies to the user’s digital wallet.
Bitcoin ATMs offer ease of use and high security. But, they charge high fees, often between 4% and 20% of the transaction amount along with transaction limits and availability issues.
Therefore, it can be said that Bitcoin has transformed the financial sector by introducing decentralised, transparent, and borderless transactions. As the first cryptocurrency, Bitcoin laid the foundation for a trillion-dollar crypto market and inspired various innovations.
Despite the challenges such as high volatility, high energy consumption, and regulatory hurdles, Bitcoin continues to gain global acceptance as it is a medium of exchange and also stores value.
Bitcoin is playing a vital role in shaping overall market dynamics and influencing the investors.
