Bitcoin Price

What Is Bitcoin

Bitcoin is the first cryptocurrency that was launched in 2009 by a person or a group of people that went by the name of Satoshi Nakamoto. It was first described in the whitepaper known as "Bitcoin: A Peer-to-Peer Electronic Cash System" that detailed exactly how it would work. It is currently available in many crypto markets and has a high market cap.

Bitcoin is a cryptocurrency, and this means that miners need to solve cryptographic puzzles in order for it to be mined and created. 

Bitcoin is a currency that exclusively lives in its own digital and public ledger known as the blockchain, where anyone can view it, and anyone can access it.

The transactions on the network need to be verified, and this is done through the contribution of computing power. People or organizations are the miners, each of which keeps a full record of the blockchains onto their computers, and as such, it cannot really be compromised easily.

A transaction is the transfer of value between a bitcoin wallet to another bitcoin wallet, and each of them needs to be included in the blockchain.

However, behind the scenes, Bitcoin is also a public ledger known as the blockchain, which contains every transaction which has ever been processed and allows a user's computer to verify the validity of every single transaction.

The authenticity of these transactions is protected by digital signatures, which correspond to the sending addresses, which allow all users to have control over sending Bitcoin from their own addresses. Anyone has the ability to process the transactions through contributing their own computing power or specialized hardware where they can earn a reward for facilitating this service.

How Does BTC Work

Bitcoin is used for the transfer of one cryptocurrency token from one bitcoin wallet to another wallet. So if you wanted to, for example, send bitcoin to someone, the transaction would first need to be verified by the miners.

Once the transaction is verified, the person you send the cryptocurrency to will end up receiving it, and the miner will get rewarded with BTC in exchange for their contribution to confirm the transaction and keep the blockchain secure. There are thousands of transactions, and it takes 10 minutes for a new block to be confirmed and added to the blockchain.

Blocks are the files that get filled with data that are permanently recorded in the blockchain. They essentially record the most recent bitcoin transactions which have not yet entered any prior block, and you can think of all of this as an order book.

The main reason it is called a blockchain is due to the fact that it can also process parts or all of the records in the transaction that preceded it; as such, it is impossible to hack, and there are millions of blocks out there that create this constant state of flux.

The amount of new bitcoin which gets added with each mined block in circulation is known as the block reward, which is halved every 210,00 blocks. In 2009 it was 50, then in 2013, it halved to 25, then in 2018, it halved again to 12.5, and as of 2020, it halved yet again to 6.25. You get the idea.

Bitcoin wallets are digital programs or physical devices that store your public key, your private key, and your passcode. You can give your public key to everyone on the blockchain as that is the main way through which you will receive cryptocurrency; however, you need to keep your private key secure as that is the only way through which you can unlock your cryptocurrency, where you prove that you are the owner of the cryptocurrency which is received.

There are hot wallets which are wallets connected to the internet and cold wallets that aren't connected to the internet, and as BTC never leaves the blockchain, you are essentially just transferring it from one address on the blockchain to another address on the blockchain, where all of this needs to be processed by the miners and confirmed.

Bitcoin Founders

The cryptocurrency and whole concept were created by a person or a group of people that went by the name of "Satoshi Nakamoto," where he, she, or they mined the first genesis block on January 3rd of 2009. Embedded in the coin base of this block was the text "The Times 03/Jan/2009 Chancellor on the brink of second bailout for banks".

The unique part here was the fact that the first bitcoin transaction was received by cypherpunk Hal Finney, who had created the first reusable proof-of-work system or PRoW in 2004.

He downloaded the bitcoin software on the release date, and on January 12th of 2009, he actually received 10 BTC from Nakamoto directly. We might never know who the founder of the Bitcoin cryptocurrency actually is due to this level of anonymity, but it indirectly advertised the potential of the cryptocurrency.

Bitcoin Circulation

If you want to buy, sell or trade Bitcoin, you can do so on many exchanges out there, the most notable ones being OKEX, Huobi Global, Coinbase Pro, Bitfinex, and Kraken. Bitcoin miners validate the transactions on the bitcoin protocol and bitcoin network. The bitcoin network offers digital currency and allows for bitcoin payments which in turn leads to market capitalization.

Institutional investors have invested in the cryptocurrency and bitcoin blockchain, and as such, it is active in many crypto markets, where users can acquire it without mining bitcoins. In a sense, Bitcoin has the potential to power a global economy with its market cap showcasing this ability. It can also be seen as digital gold to some users and is available on many cryptocurrency exchanges. It is the first cryptocurrency for a reason.

Bitcoin Updates

Throughout its lifetime, Bitcoin has had quite a few changes in the form of updates. The first ones we need to discuss are the forks; you see, a hard fork is a radical change to a protocol that makes previously invalid transactions or blocks valid, and as such, requires each and every single user to upgrade. 

If users from A and B disagree with a specific validity of an incoming transaction, a hard fork can make the transaction valid to users A and B, but not for users in C. A hard fork is an upgrade that isn't backward compatible, which in turn means that each node needs to upgrade before the new blockchain with the hard fork can activate and reject blocks from the old blockchain.

This means, however, that the old blockchain can continue operation and can continue to accept transactions, even though it might not be compatible with the newer version of Bitcoin in question here.

When it comes to a soft fork, this is a change to the protocol where only the previously valid blocks or transactions are made invalid since the old nodes can actually recognize the new blocks as valid, and a soft fork is backward compatible. This fork requires only a majority of the miners to upgrade in order to enforce these new rules.

One of the most popular Bitcoin forks is Bitcoin Cash, which itself split after a period of time. 

Bitcoin will also be receiving one of its biggest upgrades in four years which has been approved by miners around the world known as Taproot, which can take effect in November of 2021. The upgrade will allow for much greater transaction privacy as well as efficiency, and it will unlock the potential for smart contracts on the Bitcoin network, which is a key feature implemented by blockchain technology.

Where Can You Buy Bitcoin

Check our step by step guide on how to buy bitcoin.

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