Cryptocurrency is getting a lot of coverage in the news lately, but many people don’t understand its purpose or how it works. You have likely seen an advertisement for Coinbase, an app where you earn crypto by learning about it. Or maybe your friends have talked about the earning potential of Bitcoin, LiteCoin, Ethereum, DogeCoin, or any other digital currency.
Like many, you might wonder if you’re missing out. Bitcoin, and other cryptos, aren’t a get-rich-quick scheme and can be looked at in more simple terms as a safer, more secure currency like the US Dollar or the Japanese Yen. Bitcoin is a very comprehensive technology. Read ahead to learn some bitcoin facts.
Introduction into Bitcoin
Satoshi Nakamoto created Bitcoin in 2009 as an alternative to central currencies that are linked to a national government. Nakamoto created many fundamental texts, through their release of white pages, both before and after releasing Bitcoin.
Nakamoto is an alias; no one is aware of their true identity, although the internet has made many predictions about who they are.
Nakamoto saw great potential for cryptocurrency in the future, but it is hard to say if they really would have predicted the growth of Bitcoin in current times. As analyzed by Scanteam, total cryptocurrency usage has grown by over 30 million people, 32% of its total users, from June 2020 to January 2021.
Alex Lysak is an expert who believes that crypto technology will become more increasingly implemented in our daily lives as it’s accepted by major companies.
The Origins of Bitcoin and Blockchain
Nakamoto’s original intention for Bitcoin, the most popular crypto, was to see customers make transactions without any intermediary service enabling the process. Many believe that the origins of crypto and blockchain start with Nakamoto; however, the roots of crypto stem from David Chaum.
Chaum, an American cryptographer, created two cryptography systems—one in 1983 and another in 1995—which made purchases confidential. eCash, which was released in 1983, was the first system of its kind.
In 1991, Stuart Haber and W. Scott Stornetta first hypothesized a system similar to blockchain. Later in 2000, Stefan Konst expanded on their ideas and released his theory based on the functionality and application of blockchain.
Finally, in 2008, Satoshi Nakamoto released their first white paper, the first public record of a functional blockchain model. The following year, Nakamoto released Bitcoin.
How does Bitcoin work?
Bitcoin is a digital currency, which can be used for investing and purchasing goods. This cryptocurrency is secure due to blockchain technology, which makes buying details anonymous. Bitcoin can be obtained by either making a direct currency transfer from an institution or by successfully mining it using a computer program.
What is Bitcoin mining?
Everyone who is mining Bitcoin is competing amongst each other to create “blocks.” These “blocks” that make up the blockchain, the anonymous linking of data, are made by powerful computers called “mining rigs.” The difficulty of creating a specific number of “blocks” corresponds to the value of Bitcoin.
The “blocks” are created independent of personal knowledge; all you have to do is set up a “mining rig” to run the software. That software then calculates answers to mathematical hashing puzzles, a.k.a. the fundamental building blocks of the blockchain, which then earns you Bitcoin.
It is estimated that by 2140, Bitcoin will reach its currency cap of 21 million bitcoins mined. More than 6/7ths of the 21 million bitcoin cap was mined within the first 10 years of Bitcoin’s public release. An excellent way to determine the growing value of Bitcoin is to look at the value of the housing market in an area with limited land, like Hong Kong.
What can I do with Bitcoin?
Bitcoin is a great currency to use or receive when transferring goods. Because it’s so secure and the blockchain technology is untraceable, it is one of the most widely recommended cryptocurrencies to use. You can even make private purchases using Bitcoin.
Many people like to purchase and save cryptocurrencies due to their high growth rate. Cryptocurrencies, including Bitcoin, have a great return potential. Investments in Bitcoin aren’t taxed as heavily as stock or bond purchases. When you make investment decisions such as purchasing Bitcoin, you should be looking at how much you are buying and whether this is a long or short-term decision.
As mentioned earlier, digital currencies have a natural cap because it isn’t linked directly to a tangible good, such as gold. This means that when all of the Bitcoins are mined, the supply will cap at a specific value. The price will begin to stabilize fully, rising consistently due to scarcity.
Currently, cryptocurrencies are the wild west of the investment market. While Bitcoin is a safer crypto to invest in, prices are currently volatile.
Many different types of businesses are looking into accepting or utilizing cryptocurrency in some sort of way. Bitcoin, being the most popular cryptocurrency, is a crypto that companies are prioritizing. On top of this, many digital marketers, application designers, and software engineers are developing creative ways to use Bitcoin in their projects and initiatives.
What type of companies accept Bitcoin?
A growing number of companies are accepting Bitcoin as a form of crypto payment globally.
Popular brands accepting Bitcoin include: Microsoft, PayPal, NordVPN, ExpressVPN, NameCheap, WeWork, Virgin Mobile, Dish, and Twitch.
Furthermore, if you use an e-wallet, such as Apple Pay or Google Pay, you can use Bitcoin to pay for goods on additional websites.
Global Applications of Bitcoin
More developed countries are beginning to embrace Bitcoin as a form of investment and a way to purchase goods. More interestingly, many emerging middle-income countries expect Bitcoin and cryptocurrencies to stabilize their currency by not tying or attaching it to a larger country. Low-income countries similarly use cryptocurrencies and also send family members remittances using Bitcoin.
How do I use Bitcoin?
You can make Bitcoin transactions with a Bitcoin wallet. Bitcoin wallets are forms of crypto wallets, or e-wallets, created strictly to ensure the safe, private storage of Bitcoin.
Bitcoin wallets have both a public and private key. Public keys are payment addresses seen by retailers and whoever else you may transfer Bitcoin to. Private keys can only be seen by the user and correspond to your login information, which is protected by the blockchain.
Blockchain is a decentralized record of all purchases made using a specific cryptocurrency. Crypto-miners develop the security of the blockchain and allow for transactions to be made without requiring a central authority.
To take a deeper look at how the blockchain works, you should see how a transaction gets verified through a blockchain technological system:
First, a person has to make a transaction request.
The transaction request is sent to person-to-person (P2P) networks called “nodes.” The nodes will verify and validate the transaction by using algorithms to determine an individual’s purchasing capability.
A purchase may be verified based on an initial condition like a contract or record or directly by the amount of bitcoin you have available.
After your transaction is verified, it is combined with other transactions to make a block.
The block is then added to other blocks of data, creating a blockchain.
There is no doubt that Bitcoin and cryptocurrency are the way of the future. It’s a way to bring individuals from all over the world together through a digital and secure economy, which helps people from all sorts of socioeconomic situations.
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