what is bitcoin?
bitcoin is a cryptocurrency. it is a decentralized digital currency that is based on cryptography. as such, it can operate without the need for a central authority such as a central bank or a company. it is different from fiat or government-issued currencies, such as the US dollar or the euro, in which they are controlled by the country’s central bank. the decentralized nature allows it to operate on a peer-to-peer network where users can send funds to each other without going through intermediaries.
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Reading: Bitcoin price usd gecko
To learn more about bitcoin, read coingecko’s bitcoin book.
who created bitcoin?
The creator is an unknown individual or group calling themselves satoshi nakamoto with the idea of a peer-to-peer electronic cash system as written in a white paper. To this day, Satoshi Nakamoto’s true identity has not been verified, although there have been speculations and rumors as to who Satoshi might be.
when was bitcoin launched?
was released in January 2009 and the first genesis block was mined on January 9, 2009.
how does bitcoin work?
While the general public perceives bitcoin as some kind of physical currency, it is actually far from it. Under the hood, it is actually a distributed ledger that is stored in the form of a chain of blocks, hence the name blockchain.
In a centralized system such as those operated by a commercial bank, given a situation where Alice wants to transact with Bob, the bank is the only entity that has the ledger that describes how much balance Alice and Bob have. Since the bank maintains the ledger, they will check to see if Alice has enough funds to send Bob. Finally, when the transaction is successful, the bank will deduct Alice’s account and credit Bob’s account with the most recent amount.
Bitcoin, on the other hand, works in a decentralized way. Since there is no central figure such as a bank to verify transactions and maintain the ledger, a copy of the ledger is distributed among bitcoin nodes. a node is a piece of software that anyone can download and run to participate in the network. With that, everyone has a copy of how much balance Alice and Bob have, and there will be no disputes over the fund balance.
now, if alice were to make a transaction with bob using bitcoin. Alice will need to broadcast her transaction to the network that she intends to send $1 to Bob in the equivalent amount of bitcoin. how could the system determine that she has enough bitcoins to execute the transaction and also to make sure that she doesn’t spend twice the same amount?
This is where the mining takes place. A bitcoin miner will use their computer equipment to validate Alice’s transaction and add it to the ledger. To prevent a miner from adding arbitrary transactions, you will need to solve a complex puzzle. only if the miner can solve the puzzle (called proof of work), which happens randomly, then he or she can add the transactions to the ledger and the record is final.
Since operating these computing rigs costs money due to the capital expenditure to buy the rigs and the cost of electricity, miners are rewarded with a new supply of bitcoins which is part of their monetary system and a certain amount of fees paid by the person who wants it. to transact (in this case it’s alice).
This makes the bitcoin ledger resistant against trustless fraud. while resilient, there are still some risks associated with the system, such as the 51% attack, where miners control more than 51% of the total computing power, and there may also be security risks outside the control of the bitcoin protocol .
for more information about bitcoin (btc), you can:
- watch a video about the bitcoin defi ecosystem.
- watch a video about the bitcoin lightning network.
- read an article about the bitcoin defi ecosystem.
- compare the differences between bitcoin and litecoin.
- keep track of public companies that hold bitcoin.
how to keep your bitcoin safe?
When transacting currencies, you would normally do so on your personal computer. Since your personal computer is connected to the internet, it has the potential to be infected by malware or spyware that could compromise your funds.
Hardware wallets like trezor and ledger are strongly recommended to mitigate that risk. these are external devices that look like usb sticks. A hardware wallet secures your private key that stores your bitcoin on an external device outside of your personal computer. when you intend to transact, you will connect the hardware wallet to your personal computer, and all key signing to transact will be done on the hardware itself outside of your computer.
However, if you physically lose your hardware wallet without a passphrase backup, there is no other way to ever get your funds back. As such, when setting up your hardware wallet, always remember to save a copy of the passphrase and store it in a fire or flood safe place.
bitcoin halving or sometimes also known as halving, refers to the halving of the block reward for miners. this is part of their built-in monetary policy, in which after about 4 years the mining reward will be halved towards the limited limited supply of 21 million bitcoin. once 21 million bitcoins have been minted, there will no longer be a new rewarded supply for miners, and miners are expected to earn revenue through transaction fees.
To track the real time of when the halving will take place, you can bookmark coingecko’s bitcoin halving page.
This is considered a significant event for a couple of reasons. First of all, traders can speculate on the possible shortage of bitcoin giving way to high volatility. Second, since miner rewards will be reduced, we may see some miners leave the market because they couldn’t sustain the lower profitability. this, in turn, can cause the hash rate to drop and mining pools to consolidate. Because of this, the bitcoin network can be a bit unstable during the halving period.
is bitcoin a good investment?
We do not offer investment advice. the price of bitcoin started out as zero and came to the market price you see today. It seems that the market is placing value for the following reasons.
- digital gold: it is a viable digital store of value due to its digital scarcity
- payment: almost instant and low cost transaction with anyone on the internet
- speculation – this may be due to inefficiency in the market, but there are people who speculate that bitcoin may be the asset class of the future
That said, bitcoin comes with risk. To determine for yourself if it’s a good investment, it’s important to understand the risk and only invest the amount you’re comfortable losing.
there is a probability that the price of bitcoin will reach zero. this can happen if the project fails, a critical software bug is found, or there are newer, more innovative digital currencies that would take its place. If you remember, bitcoin was worth almost $20,000 on December 16, 2017, but on December 17, 2018, the price of bitcoin was at its lowest point around $3,200. bitcoin is a highly volatile asset class and requires a high risk appetite.
As much as bitcoin is digital gold, it has only been around for about 10 years. compared to gold, which has been a widely known store of value for hundreds of years.
can i short sell bitcoins?
Yes, as bitcoin has grown into more mainstream adoption, several derivative products are being launched that allow you to short sell bitcoin. If you are an institutional investor, CME and Bakkt offer regulated bitcoin futures products where you can go long or short bitcoin. Alternatively, there are many other cryptocurrency derivatives exchanges like Bitmex, Binance Futures, FTX, Deribit and more. These derivatives exchanges are not formally regulated and can provide up to 100x leverage. derivative contracts are high risk products, you may want to understand what you are doing before you enter into it.