Bitcoin is an electronic form of money or digital money that uses cryptography or the science of decoding and encoding to verify its transactions. It is a cryptocurrency developed back in 2009, making it the first digital currency to be introduced in the financial world. The educators of bitcoin explain it as digital, decentralized, and limited money.
Bitcoin is digital because it is built on a computer code that determines its operations. It is decentralized because it records all its transactions on a distributed ledger that works on a network of computers. It is limited money because its supply is only limited, which means there are only 21 million bitcoins that can ever be mined.
What is Bitcoin’s Blockchain, and how are bitcoins mined?
Bitcoin is a store of value as well as a medium of exchange. Every time a bitcoin user buys or sends bitcoin, each bitcoin transaction is recorded in a shared public ledger known as the blockchain. Blockchain is a public database that uses cryptography, making it impossible to erase or alter any of the bitcoin transactions. Bitcoin transactions aren’t dependent on trust, unlike fiat currencies, and instead, these transactions are validated via proof-of-work done by the significant contributors known as Miners.
Miners are the individuals that use computing power to calculate the cryptographic key and solve the mathematical puzzles to verify the bitcoin transactions and add blocks into a chain of blocks. The entire process of verifying transactions and adding blocks into blockchain is known as mining. Like gold is mined, Bitcoin is also mined and not printed like fiat currencies. The main reason bitcoin has attracted the general public’s attention is that it is a decentralized currency. Decentralized currency means a private form of money that doesn’t involve any government or banks. You can trade digital currencies by finding the best cryptocurrency trading software check it out here.
Overview of Bitcoin
Bitcoin is an entirely independent currency from central authorities, and this is the primary form of bitcoin. In October 2008, the whitepaper of bitcoin was published by an individual named Satoshi Nakamoto. Before bitcoin, many developers tried to create various forms of digital cash or electronic money. Still, no one was able to develop the currency that resolves the issue of the double-spending problem. The double-spending problem is where the users spend the same digital money twice.
The double-spending problem was solved when Nakamoto developed bitcoin currency that records transactions in a time-stamped permanent ledger known as the blockchain. Blockchain makes each bitcoin transaction easily traceable. The most exciting thing about bitcoin is that it is built on blockchain technology. Blockchain is record-keeping technology that is decentralized in nature which doesn’t provide any single entity the complete control. It is believed that blockchain will transform business and financial institutions worldwide and result in enhanced transparency, secure transactions, and more interactions.
Legitimacy of Bitcoin
The primary issue with Bitcoin is its legitimacy. Research has been done published after the invention of bitcoin, which states that the market was highly manipulated when the Mt. Gox exchange was shutdown. This influenced bitcoin’s price a lot because people lost trust in Bitcoin at that time. Fake news, events, and the shutdown of exchanges or any platform are the main factors that inflate the price of bitcoin. Also, there’s the involvement of bitcoin with shady operators and cybercriminals. Bitcoin is highly used as a medium of exchange in Silk Road or Dark Web, and even there was a shut down in Silk Road in 2013.
Why should you invest in Bitcoin?
As compared to other currencies and assets, bitcoin is relatively new in the market, but it quite a little time; it has proved to provide maximum returns to users on their investments. More broadly, the supply of bitcoin is limited, which makes it an excellent store of value and is a better option to make investments for the long-term.
In 2020, when bitcoin’s value skyrocketed, institutional investors were highly attracted to making investments in bitcoin and other digital assets. There’s a growth in the price of bitcoin because of increased user adoption. You can invest in bitcoin by purchasing it from a crypto exchange or can buy bitcoin from any of the investment platforms that deal in cryptocurrencies. It is crucial to choose a suitable crypto exchange and avoid purchasing any unregulated crypto exchanges.