Bitcoin has become popular digital currency throughout the world. Most of you have question in your mind, What is Bitcoin? How to Mine Bitcoin? Bitcoin Price? Bitcoin a good investment? and so on
Bitcoin is a Virtual/Digital currency. Bitcoin acts as a money, it is not control by any person, group or entity. It has been designed as a form of payments which eliminates the third party intervention in the financial transactions. We can purchased Bitcoin on varies exchanges.
Group of developers who were using the name Satoshi Nakamoto introduced Bitcoin in 2009 to the public.
Since then Bitcoin has gain the massive popularity around the world. Many competitors try to replace Bitcoin as a effective payment method and used as a security tokens in emerging financial technology.
Key Points
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Invented by Satoshi Nakamoto in 2009. Bitcoin holds largest market capitalization in Cryptocurrency.
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With the help of blockchain which is decentralized ledger system, Bitcoin can be created, traded, distributed and stored, unlike Fiat Currency.
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Proof-of-work (PoW) consensus secure Bitcoin and it’s ledgers which is a mining process that introduce a new Bitcoin
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Various Cryptocurrency exchanges is used to purchase Bitcoin.
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Bitcoin has seen several up-downs and bust cycles within short period of time
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It is the first decentralized cryptocurrency which has gained massive popularity and success which inspires other cryptocurrency
What is Bitcoin
In August 2008, Bitcoin.org domain were registered. The identity of person who register the domain was not publically available as the domain was WhoIsGuard protected.
In October 2008, group/person used the Satoshi Nakamoto name to announced That “I have been working on new peer to peer electronic cash system with no trusted third party”
First bitcoin block (block 0) was mined on 3-Jan-2009. This is called as “Genesis Block”
After every 2,10,000 blocks, Bitcoin rewards are half. For example, if 50 new bitcoins are rewarded in 2009 On 11-May 2020, it brings the reward for each block to 6.25 bitcoins
One Bitcoin divisible to eight decimal places and the smallest unit referred as satoshi. If miner accept the change then Bitcoin could divisible even more decimal places.
One Bitcoin divisible to eight decimal places and the smallest unit referred as satoshi. If miner accept the change then Bitcoin could divisible even more decimal places.
Digital currency bitcoin is not that hard to understand. If you own Bitcoin , you can send smaller portion of your cryptocurrency wallet as a payment to goods and services.
Quick Facts
On 8-Jan-2009, Bitcoin software first version announced and On 9-Jan-2009, Block 1 was mined
What is Blockchain Technology
Satoshi Nakamoto developed the peer to peer cash system protocols. This protocol become the foundation of blockchain which is also known as distributed ledgers. Blockchain works like ledger or a global spreadsheet. It runs over the network means computers provided around the world, it does not have any central database where data gets stored. Data is publically available as it is run over network not run by single organisation.
Blockchain uses public and private key to maintain virtual security. Nowadays we transfer money from one person to another person securely, this transaction is possible using blockchain technology. Person don’t need to go to bank to transfer money to another person account.
Many financial industries uses blockchain technology to provide secure transactions. Blockchain is very vast technology, not only financial industry uses it but also it is helpful in other industry as well.
Blockchain Bitcoin Technology
Cryptocurrency/Bitcoin is a part of blockchain and the network which required to power it. A blockchain is a shared database that stores data known as distributed . Encryption methods are used to secure the data within the blockchain.
Whenever transaction happens on blockchain, information copied from one block to another with new encrypted data. Each transactions present over the network are validated by validators (miners). After verifying each transactions, new block is opened and bitcoin gets created. This Bitcoin is given to the miners (who verified the encrypted data) as rewards. Miners are free to use it, Sell it or hold it.
SHA-256 hashing algorithm use by Bitcoin to encrypt the data which is store in the blocks on the blockchain. Stored data encrypted into 256 bit hexadecimal number. The number contain all the transaction data as well as other information.
Fact
Blockchain is nothing but data linked between the blocks. Within the network all the transactions are placed in the queue (one after another) to be validated by validators (miners). All the miners present over the Bitcoin blockchain network try to verify same transaction parallelly. Miners use mining software and hardware to solve this nonce. All miners try to solve four byte number that is present in block header.
Miners keep on regenerating the block headers repeatedly until it matches the target number specified by blockchain. Once the block header solved, new block is created in order to verify and encrypt more transactions.
How to mine Bitcoin?
Bitcoins are mined using hardware and software, several hardware & software are available in market ro mine Bitcoin. When Bitcoin introduced, miners used to mine Bitcoin using personal computers. As many miners join the network it become difficult to solve the hash. We can still use personal computer if it has newer hardware but it will minuscule the chance of Solving the hash.
It is difficult to solve the hash because we are competing with network of miners and per second it generates 220 quintillion hashes.
Application Specific Integrated Circuits (ASICs) is the machine that is specifically build to mine bitcoins and it has capacity to generate 255 trillion hashes per second. Whereas computer with newest/latest technology hardware can generate only 100 million hashes per second.
If you also want to become successful Bitcoin miner then at start you can use your personal computer which has software that are compatible for Bitcoin mining and join a mining pool.
Mining pool is the group of miners that combine their Mining/computational power in order to compete with large ASICs mining firms or who owns ASICs machine.
Quick Facts
You can join mining pool and increase your reward chances but at some point rewards get decreased as they are shared.
If you are financially strong then I will recommend you to purchase Application Specific Integrated Circuits (ASICs) machine rather than mining on personal computer. ASICs machine also increased rewards which are not shared
ASICs machine cost you around $20,000. If this price is high for you then you can also buy second hand machine as miners sold there machine to upgrade the system.
In addition to machine cost you also need consider monthly electricity cost also cooling cost considering you have purchased one or more ASICs.
There are varies mining software available in the market that you can choose also can join pools. CGminer and BFGminer are the two well known and popular softwares.
Before joining any miner pool you have to read the review about the pool and also find out how they are going to pay out the rewards.
How to buy Bitcoins?
If you don’t want to mine Bitcoin then you can also buy it using cryptocurrency exchange. As Bitcoin price is high, most of the people are not able to purchase entire bitcoin but you can buy portion of the BTC over cryptocurrency exchange in fiat currency like U.S. dollars.
Example – we can buy Bitcoin on coinbase application, there are many such applications are available to purchase BTC,we can create and fund the account using debit card, credit card and bank account
How to used Bitcoin?
Bitcoin is the peer to peer payment method. Bitcoin popularity increasing day by day and competition is also increasing from different blockchain and cryptocurrency.
Payment
In order to use bitcoin, you need to install cryptocurrency wallet. These wallet has private key for your bitcoins. This private key is required for every transactions we are attempting for bitcoin. For goods and services, merchandise, retailer and stores Bitcoin is accepted as payment.
Store that accept cryptocurrency will generally displays a sign that says “Bitcoin accepted here”. Such transactions are handle using hardware terminal, Touchscreen app and Wallet address through QR codes. An Online store/businesses has seperate payment options for for Bitcoin like credit card, paypal etc.
Quick Facts
EI Salvador is world’s first country who accepted Bitcoin officially as legal tender in June 2021.
Investment in Bitcoin
As Bitcoin gaining more popularities, Investors and Speculators also showing more interest in bitcoin. Cryptocurrency exchange emerged Bitcoin sale and purchases, since then Bitcoin price starts to increase and slowly grew until 2017.
When price hit $1000, many people believed in bitcoin and started to hold BTC for long period. Cryptocurrency is also used by traders for short term trades.
In 2022, bitcoin price went down. In March 2022, bitcoin price hit $45,454 which fell down to $15,731 in November 2022. The bitcoin market crashed due to supply chain impacted since covid also war between Russia and Ukraine.
Few other factors also raised concerns about crypto world as cryptocurrency was not stable around the world.
What are the risk of investing in bitcoins?
Speculative investors Shown interest in bitcoin due to its appreciation in recent years. In 31-Dec-2019, bitcoin price was $7, 167.52 and in the next year it got appreciated more than 300% to $28,984.98 This rise of bitcoin continued till first half of 2021 trading at record price $68,990 in November 2021. In next few months bitcoin price falls to $40,000.
As mentioned earlier, in 2022 bitcoin price started to drop and this continued till entire year.
Quick Facts
In November 2021, bitcoin reached it’s all time high price $68,990.
Many people purchased the Bitcoin as a future investment rather than considering it as a medium of exchange. Lack of guaranteed increase in value and it’s digital nature can be consider as inherit risk. For example, many alerts has been issued by Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC) and Consumer Financial Protection Bureau (CFPB) about investment in Bitcoin.
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Regularity Risk
Question has been raised about liquidity, longevity and universalities of Bitcoin due to lack of uniform regulation.
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Security Risk
Many individual miner still not acquired bitcoin tokens through mining operations. Over popular online market cryptocurrency exchange miner buy and sell bitcoin and other digital currency. Bitcoin is totally digital/virtual currency — are at risk from malware, hackers and some operational glitches.
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Insurance Risk
Securities Investor Protection Corporation (SIPC) or Federal Deposit Insurance Corporation (FDIC) does not provide insurance for digital Bitcoin and cryptocurrency. Third party insurance provided by some exchange provider. In 2019, SFOX announced that they will provide FDIC insurance for bitcoin but not for entire transactions. Insurance will be only apply for portion of the transactions involving cash.
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Fraud Risk
There are still opportunity for fraud activity even if security measures are inherited within blockchain. In 2013, SEC has brought legal action for all kind of fraud happening in bitcoin.
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Market Risk
Bitcoin value has seen biggest price swings in really short period of time. Price fluctuate due to up-down observe in investment. Bitcoin is also very sensitive to any newsworthy events apart from buying and selling more bitcoins on exchange.
According to the CFPB, in 2013 bitcoin price fell by 63% in a single day where in 2014 it fell by 80%, which was biggest one day bitcoin price drop recorded in.
Regulating Bitcoin
Regulating Bitcoin is difficult like any other new technology. Current biden administration wants to apply some regulation around bitcoin but at the same time care should be taken, not to throttle economically beneficial and growing industry.
Biden has stated that he will support the bitcoin development and also try to prevent the illegal use and fraud happening around bitcoin. U. S. government actively focused on regulating cryptocurrency and it’s criminal usage such as Individual cryptocurrency wallet, sanctioning cryptocurrency exchange and recovering payment made to criminals via crypto
USA also in a talk to develop Central Bank Digital Currency (CBDC) to direct this sanctions.
As cryptocurrency and Bitcoin gaining everybody’s attraction it is important to apply regulation around it, which can see many changes over time.
How much time does it take to mine one Bitcoin?
Average 10 minutes are required for mining network to validate one block and to create the reward. Per block 6.25 Bitcoins are assigned as a reward. That means 100 seconds are needed to mine 1 Bitcoin.
Is Bitcoin Good Investment?
It is totally depends on you financial profile, Risk Tolerance, investing portfolio and investing goals. Bitcoin is filled with volatile prices and it is a short investing.
You should always take advice from your financial professional whether is is good for you circumstances or not. Without taking financial professional guidance you should not jump for it.
How does Bitcoin makes Money?
Miner makes money by validating blocks over Bitcoin network and being rewarded. We can exchange Bitcoin to fiat currency using cryptocurrency exchange and also we can make purchases from retails and merchants that accept bitcoins.
Investers and miners can make good amount of money by buying and selling bitcoins.
How much does 1 Bitcoin worth in U.S. dollars?
As of 15-March-2023, 1 Bitcoin is equal to $24,813.10 U.S. dollar.
How Many Bitcoins are Left?
1,92,14,106.25 is the total number count of bitcoins available to buy. As of 15-march-2023, 17,85,893.8 bitcoins are left for mining.
The Bottom Line
Bitcoin was invented as a form of payment outside the legal tenders. It was the first cryptocurrency introduced in 2009. Bitcoin become more and more popular as days passed which result into creation of other cryptocurrencies like Etherum, Dogecoin, Tether etc. All other cryptocurrency which are competitors of bitcoin also gain popularity in short period of time.
Investing in bitcoin is really straight forward but process that used to generate Bitcoin is complex. Miner, Speculators and investors can buy and sell Bitcoin on cryptocurrency exchange, Bitcoin has few Risk which we discussed above, we need to consider those Risk while investing in bitcoins also take proper guidance from your financial advisor before investing in bitcoin.
Investing in Initial Coin Offering (ICO) is highly risky factor. This article or writer does not recommend you to invest in bitcoin or other cryptocurrencies. Each and every person has different opinion about digital currency. Some people thinks it is not good to invest in bitcoin and some people thinks it is good for the investment purpose. Always think about our financial capability before investing in any cryptocurrencies available in market nowadays make sure you meet professional advisor who can guide you in your financial decisions.
This article is only published to provide knowledge about past, present and future of bitcoin.
