Bitcoin or BTC is a digital token, an alternate to traditional currency, that has been around for over a decade now. It allows person to person direct transactions without the need for mediator set up, like a bank.
For example, if person A wants to send money to person B, person A needs to first send the money from his BANK ACCOUNT to person B’s BANK ACCOUNT. If it is a cross border transaction, the amount sent by person A may change in local currency of person B which means the value would change. Bank would apply transaction charges, FX charges etc. For the receiver, it would take certain amount time and effort.
For digital currency like BTC, it is decentralized and controlled by a network of users around the world. There is no involvement of a bank or any institution. Hence the amount transferred would directly reach to the receiver.
In this article, we will talk about the basics of BTC and how it works. We shall also read how to buy Bitcoin and use it.
What is Bitcoin
Bitcoin was first created in 2009 by an anonymous person named Satoshi Nakamoto. The price of one BTC was significate then and it was tough for people to digest the concept of transferring money without money! However, over the years, as people got the idea behind it and its advantages, the value of BTC has grown significantly, making it a hot topic in the financial arena.
In recent years, BTC rallied like any other viral news or videos on internet. Everyone wanted to invest in the coin and mint extra money in short time. The exact date when BTC went viral is difficult to pinpoint. However, it gained popularity gradually from 2014 an went like viral in 2016 onwards.
Initially BTC was primarily used by a small group of tech enthusiasts. However, it started to gain attention in 2011, when the value of a single BTC reached around $30 from below a cent in 2009.
In 2013, the value of the BTC rose dramatically, reaching a high of around $260 in April. This sparked a lot of media coverage and attracted a lot of new investors both businessmen and general public who wanted to invest in the currency. This is that time lot of people started to use them as well as a payment for goods and services.
In 2017, a value of Bitcoin reached an all-time high of around $20,000 making it truly viral. The significant growth triggered even more media coverage and scrutiny. Many even considered it as a “bubble”; and the following year, in 2018, the value of BTC price crashed along with dream of millions of young and tech investors.
However, even though the value of BTC dropped, it didn’t mean the end of it. BTC continues to be a popular and widely recognized form of digital currency around the world. And so on, in 2022, BTC came back hard again and hit an all-time high of $64,000.
Who Started Bitcoin?
Bitcoin was created by an individual or group of individuals using the pseudonym Satoshi Nakamoto. They released a white paper in 2008 detailing the concept of a decentralized digital currency and released the first version of the BTC in 2009. The identity of the creator(s) remains a mystery to this day.
When Was Bitcoin Created?
The crypto giant was first introduced in 2009. The initial version of the coin was released on 3rd January, 2009. And the first Bitcoin transaction took place on 12th January 2009.
How Does Bitcoin Work?
Bitcoin works on a decentralized network that allows peer-to-peer transactions. All transactions are recorded on a public ledger called the blockchain. Interestingly the chain (read blockchain) is maintained by a network of users called miners. And anyone with a sufficiently configured computer can be a miner.
These miners use their computer power, specifically GPU power, to authenticate the transactions and process them. As a reward of their effort, they are rewarded with a bit of the transaction value in BTC.
Why Bitcoin Became Popular | Why Bitcoin Is Popular?
- Decentralization: Bitcoin is a decentralized digital currency. It means that it is not controlled by any government or institution. So, investors could easily divert their funds without Government notice, saving millions of dollars in Tax. Cross country payment got more easier for the adopters.
- Anonymity: BTC transactions are recorded on a public ledger called the blockchain, but the identities of the individuals involved in the transactions are not disclosed. This offered the users highest level of privacy of any amount of funds movements or making high value transactions, even illegal one or for restricted good or services.
- Limited supply: Only 21 million BTC will ever be created, making it very limited in supply. (Current circulation is over 18 million). For this limited supply and increasing demand, the investors and early adopters got hold of their golden bird and consider BTC as one of their favorite crypto coins.
- Media Coverage: As the value of BTC rose dramatically and more people including celebrity and billionaires began to take notice, it started to receive more media coverage. This coverage helped to raise awareness of BTC and attract more people to the concept. This, in turn, helped to drive its value even higher.
- Potential for High Return on Investment: Bitcoin gave more returns than any other stocks or financial instrument in similar period of time. Though it is more fluctuate in nature, one just can not imagine something rallying from less than a cent to $64,000 dollar within 10-12 year. However, this is what happened with Bitcoin. And it makes more people convinced that the same return can happen again.
- Increased acceptance: As the usage of BTC increased, more and more merchants, businesses, and organizations began to accept it as a form of payment. Governments from various countries introduced rules including acceptance as a payment method that made the trading and investing in the BTC legal. This increased acceptance also helped to drive its popularity and usage.
How Does Bitcoin Work?
The main technology behind Bitcoin is called blockchain. Blockchain is a ledger that records all transactions without individuals’ identity. It is maintained by a network or group of internet users called ‘miners.’ Miners mainly use their computing power to verify and process transactions on the blockchain. These miners are rewarded with newly minted Bitcoins for their efforts.
It can be a bit tricky to understand, but once you get the hang of it, it can be a useful tool for conducting transactions and managing your money.
How To Buy Bitcoin And Use?
Easiest way to buy Bitcoin is through a cryptocurrency exchange. An exchange is a platform that allows users to buy and sell digital currencies and assets such as NFTs. Coinbase, Binance, Kraken etc are some of the very popular exchanges.
Once you have bought BTC or any other crypto coins, you can store it in a digital wallet. From there, you can send it to other people (to their wallet address) or use it to buy goods and services.
Just to note, apart from the mobile and web-based digital wallet, BTC can also be stored in secured hard wallet disconnected from internet.
Who Owns Bitcoin?
Unlike traditional currencies, there is no central authority that controls the supply of BTC. Instead, it is decentralized and controlled by a network of users around the world. Anyone can own and trade BTC, as long as they have access to the internet and a digital wallet.
How Many Satoshis In A Bitcoin?
- 100 million Satoshis
One Bitcoin is equal to 100 million Satoshis.
What Is Bitcoin Mining?
Bitcoin mining is the process of verifying and process transactions on the network. The process requires high computer power, efficient GPU and high usage of electricity. People who work on this mining process (which is pretty automatic once set up), are called miners. These miners earn a small portion of newly minted Bitcoins for their efforts with each transaction authentication.
What Does Mining Bitcoin Mean?
Mining Bitcoin means using powerful computer hardware to verify and complete transactions on the BTC network to earn newly minted Bitcoins as a commission/reward.
How To Mine Bitcoin?
You need highly configured computer hardware with powerful graphics card, constant power supply, reliable fast internet, cooling systems and specialized software to mine BTC. You also need to join a mining pool which is nothing but a group of miners who work together to mine Bitcoin.
Bitcoin mining is not a laborious job. It is a one time set up job. Once you set up the mining rig (an organized setup of computers dedicated to mining), your job is just to maintain them, look after any issues in software or hardware, take care of the heating system etc.
The initial investment can be high depending on the power you wish to bring in to your set up. More power means more minting of Bitcoins.
Bitcoin mining is a rewarding job. However due to high cost of graphics card and electricity vs BTC price fluctuation one needs to do proper market research, BTC price forecast etc. before starting mining professionally.
How To Invest In Bitcoin?
There are many ways you can invest in Bitcoin.
- Direct Investment: Open an account with any reliable cryptocurrency Exchange such as Binance. You can buy Bitcoin and other digital currency/assents from there directly and store it in your (online/offline) wallet. Once the value of the coin rises, you can sell them off or hold for longer time.
- You can invest in companies that works with Bitcoin such as mining companies, crypto gateway companies etc.
- Buy services from companies that buys crypto on your behalf.
- Buy ETF related to crypto or BTC
- Many companies offer interest on deposited Bitcoin like you get with the money in bank. You can also get some earning with this kind of investment. This return is over and above the normal appreciation you may get with the currency with time.
Where To Buy Bitcoin?
You can buy Bitcoin and other crypto assets on any cryptocurrency exchange such as Binance, Coinbase or Kraken.
How To Store Bitcoin?
Once bought, you can store it in a digital such as a mobile or web-based wallet or a hard wallet.
How To Use Bitcoin?
Bitcoin can be used to purchase goods or services across globe. May countries around the world now legally accepts BTC. There are Bitcoin ATMs also available in may parts of the world.
So, one can withdraw money in local currency from a Bitcoin ATM, you can pay merchant with BTC, purchase your favorite product or offering online.
From your wallet, you need to just send required amount of BTC to recipients’ address, or you can scan the address like UPI payments.
Bitcoin Price History
- 2009: Bitcoins were created and traded first in 2009. The initial value was less than one cent.
- 2010: The price of a single BTC did not appreciate much and remained less than one cent throughout.
- 2011: Price started to rise and reached high of around $30 by the end of year.
- 2012: BTC remained relatively stable, fluctuating between $4 and $14. People started to know it.
- 2013: Single BTC reached an all-time high of around $260. However sooner it crashed down to around $50 by the year end.
- 2014: Price continued to drop to around $200 as the year ended.
- 2015: BTC stayed stable to some sort. Stayed mostly between $200 and $300.
- 2016: Found some growth as people started showing interests in the coin. Price ranged between $400 and $750.
- 2017: Price rose dramatically as FOMO dragged retail and wholesale investors towards Bitcoin. The price, due to surge in demand, reached an all-time high of around $20,000.
- 2018: However, the bubble eventually busted and people got scared. Panic selling took the price of BTC down to $3,000.
- 2019: With the huge shock and sell off, BTC started gradually started to rice and reached up to $13,000.
- 2020: Price stayed in the range of $10,000. Some investors silently started accumulating instead of selling.
- 2021: Price had an outstanding rally, taking it to an all-time high of around $64,000.
- 2022: Price came down again and ranged between $35,000 to $13,000 and ended the year near $18,000
Why Bitcoin Price is falling?
To know why is Bitcoin Dropping, we need to know the background. If we look at the Bitcoin price history closely, we notice that there has been a huge rally and sharp fall. Not once, there are multiple instances of this sudden high and severely low.
Since the currency is not backed by any strong fundamental or any central controller body, it is hugely influenced by a variety of factors, such as market demand, government regulations, FOMO, tech enthusiasm, global events, fake news etc. This makes the any cryptocurrency dangerous and less trustable.
Due to these reasons, more people are turning their stance away from it and investing their funds in Gold, Bonds and other stable financial instruments. And with this process, selling off the existing BTC collection and less interests towards fresh investments, price of Bitcoin is falling down.
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