I always had an interest in Bitcoin. When I think of Bitcoin, I wonder about various things like, what actually is bitcoin, why certain things are expensive, how do I mine it, and can it be hacked? In this article, I will learn about Bitcoin in depth and I will leave ideas that I learned.
About Bitcoin
Bitcoin is a digital or virtual currency that works on a decentralized network. It was first introduced in 2008 by an anonymous person or group of people. Bitcoin is often recognized as cryptocurrency because it uses cryptography to secure, control, and verify. Bitcoin exists entirely in digital form. It is intangible and it is totally electronic. Unlike original currencies, which are controlled by banks and governments, Bitcoin works on a decentralized network of computers all around the world. This network is called blockchain.
From this information, you would have got an idea about Bitcoin. Now, I will talk more about the factors that make Bitcoin a Bitcoin.
Blockchain
Blockchain technology serves as the decentralized wallet in cryptocurrencies like Bitcoin. It records all transactions in a secure and transparent way. When a user starts a transaction with Bitcoin, it shows on the network of nodes, where it undergoes validation through a mechanism. After validation, the transaction goes with others into a block and added to the blockchain, which makes it irreversible. Overall, the blockchain method provides the basis for cryptocurrencies, enabling secure, transparent, and decentralized transactions without the need for intersections like banks.
Limited supply
Bitcoin is limited to 21 million coins. This amount is programmed into its protocol, with new bitcoins being created through a process called mining. The limited supply of Bitcoin is designed to mitigate the probability of getting inflation and to preserve its value over time. This scarcity has contributed to Bitcoin as a store of value and a fence against original currencies, as demand for Bitcoin continues to grow while its supply remains fixed.
Mining
Mining is a process to create a new bitcoin. Miners use computers to solve mathematical puzzles that validate and secure transactions. By solving, miners rewarded with newly created Bitcoins and transaction fees.
Volatility
Bitcoin’s value can be highly volatile, factors will affect market demand, investor sentiment, and macroeconomic trends. Unlike traditional currency, Bitcoin has a relatively small market size and speculative nature can make crazy price movements. This directly relates to an opportunity that traders can earn massive profits, which also has a potential of great loss.
Usage
It can be used for a variety of purposes, which can be online purchase, investment, and as a store of value. As a digital currency, Bitcoin offers great advantages such as fast and low cost transactions, without the need for intersections like banks. Bitcoin’s adoption for everyday transactions is still relatively limited due to scalability and usability challenges. Bitcoin continues to gain traction as an alternative form of money and a method for financial innovation, specifically in areas with limited access to traditional banking services.
These are some factors that makeup Bitcoin and from this research I’ve got an idea of how I should go deeper into it. I have a strong feeling that Bitcoin is a future bright method that many people will be involved in. Knowing and understanding about Bitcoin will be the key to earn a profit. Knowing this is the future, so why not study Bitcoin?