Catalogue - Key Takeaways Show
Introduction to Bitcoin (BTC)
Bitcoin is a cryptocurrency that can be transferred peer to peer without the need of any intermediary like a bank, broker or any other centralised agency. According to the original author of the Bitcoin whitepaper, Satoshi Nakamoto, the creation of a decentralised electronic cash system was to eliminate the problem of ‘Double Spending’.
What makes Bitcoin (BTC) special?
Bitcoin is a digital currency that operates differently from traditional fiat currencies. It is decentralized, meaning there is no central bank in control of it. Instead, the Bitcoin financial system is powered by a network of thousands of computers located across the globe. Anyone can join this network by downloading the open-source software. It enables users to send and receive digital money in the form of bitcoins (BTC). What sets Bitcoin apart is its censorship-resistant nature, the inability to spend funds more than once, and the convenience of making transactions from anywhere, at any time.
Did you Know? In the early days of Bitcoin users would receive 5 BTC just for solving a Captcha on the internet.
When was Bitcoin conceptualized and how?
While the economic system was grappling with the aftermath of the ‘Great Depression’ in 2008, Satoshi Nakamoto wrote the Bitcoin whitepaper outlining the economics and use of Bitcoin. On January 12, 2009, Satoshi transferred 10 BTC to computer scientist Hal Finney. This was the first transaction on the Bitcoin blockchain.
Security model of Bitcoin
Unlike other forms of currencies, Bitcoin works on a far complicated network infrastructure. One of the critical characteristics of BTC as a currency is its limited supply. There will only ever be 21 million Bitcoins in existence, making it a scarce digital asset. This scarcity is due to the way Bitcoin was designed, with a finite supply built into its code. Second, the network uses the SHA-256 hashing algorithm that is responsible for BTC mining operations and creation of Bitcoin addresses.
Additionally, Bitcoin uses the ‘Byzantine Fault Tolerance Model’ to keep bad actors at bay. To attack the Bitcoin blockchain, a hacker would have to create a block covertly and gain more than 51% control of the other miners on the chain. This is because the blockchain technology relies on a decentralised network of miners to validate transactions and secure the network. As a result, any attempt to manipulate the system would require a significant computing power and resources to overcome the network’s consensus mechanism. Additionally, each block has its own hash and timestamp for reference purpose, any tampering with these details will immediately alarm the validators on the network.
Token Economics of Bitcoin
The distribution of Bitcoin occurs through a process called mining. Miners use powerful computer hardware to solve complex mathematical problems, and in exchange, they receive newly created bitcoins as a reward also called ‘Block Reward’. The cryptocurrency is designed to be secure, transparent and fast. Today, the store of value that Bitcoin holds is due to several factors like ease of borderless payments, secure network, 24/7 access and most important – its decentralised nature.
Did you know: The value of Bitcoin in early 2010 was 4 cents.
Adoption of Bitcoin
As BTC has grown in popularity for its immense store of value, unit of account and exchange, a few countries have accepted Bitcoin as legal tender parallel to their fiat currency system. El Salvador is the first country to accept Bitcoin as legal tender. In addition, many European countries have accepted crypto with open arms by easing tax liabilities on crypto gains.
Fun Fact: On October 29, 2013, Ontario, Canada opened the first Bitcoin ATM. The ATM recorded 348 transactions worth $100,000 in the first week of its opening.
Price History of Bitcoin
Early development phase (2009-2010): Bitcoin was created in 2009 and initially had little to no value. The first known transaction involving Bitcoin took place on January 12, 2009, when Satoshi Nakamoto sent 10 Bitcoins to Hal Finney. In May 2010, the first real-world transaction involving Bitcoin took place when Laszlo Hanyecz paid 10,000 Bitcoins for two pizzas.
Growth phase (2011-2013): Bitcoin’s value began to grow in 2011, as more people started to use it and its infrastructure began to develop. In June 2011, the price of Bitcoin reached $31, but it then dropped to $2 by November of that year. In 2013, the price of Bitcoin began to rise again, reaching $266 in April and then peaking at over $1,000 in December.
Maturation phase (2014-2017): In 2014, the value of Bitcoin stabilized and its use as a currency began to be taken more seriously. The price fluctuated between $200 and $600 throughout most of 2014 and 2015 but began to rise again in 2016. In December 2017, Bitcoin reached an all-time high of nearly $20,000.
Volatility phase (2018-2019): After reaching its peak in 2017, the price of Bitcoin began to fall sharply in early 2018, reaching a low of around $3,000 by December of that year. The market continued to be volatile in 2019, with the price fluctuating between $3,000 and $14,000.
Institutional adoption phase (2020-2021): In 2020, institutional investors began to show interest in Bitcoin as a store of value and a hedge against inflation. This led to a surge in the price of Bitcoin, which reached a new all-time high of over $69,000 in November 2021.
Price retesting phase (2022-2023): As we know 2022 was not a great year for cryptocurrency given the fact that many firms went down and the federal government increasing the interest rate by 50 points throughout the year. The asset tumbled down to $30,000 and slipped even further. As of now, according to Coinmarketcap Bitcoin is trading at $27,479 and is making significant strides towards breaking the $23,000 mark by 2023.
Potential (2023 and Forward): By 2023, BTC has gained universal acceptance as a valuable and adaptable digital asset, with its decentralised nature enabling financial empowerment, cross-border transactions, and novel applications in a variety of industries.
How to invest in Bitcoin?
There are many ways to get started with Bitcoin. An individual may purchase an ASIC – An application-specific integrated circuit and start mining BTC. This would be ideal for those who understand computer programming and have access to electricity with high power. Also, it is important to note that these machines are expensive.
Another way to invest in Bitcoin is to join a Bitcoin cloud mining platform, deposit a minimum of $100 and let the platform mine BTC for you. If you choose to opt for BTC cloud mining, the make sure to create your Bitcoin address and fund your wallet with some Bitcoin. (Note: you can fund BTC worth $100)
The easiest way to invest in Bitcoin is to open an account on Bitflex, verify your KYC and deposit USDT. Next, click on Spot and choose BTC – USDT and place a limit or a market order to buy BTC.
About Bitflex
Bitflex is a cryptocurrency exchange platform that offers traders a secure, easy-to-use, and convenient way to buy, sell and trade cryptocurrencies. Our platform has been designed with investors of all levels in mind, whether they are just starting out or experienced traders. We offer various features and tools to help users make the best trading decisions possible, including advanced charting and analytics, real-time market data, and various customisable trading interfaces. At Bitflex, we are dedicated to empowering our users and helping them reach their financial goals.
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