Bitcoin is often considered a new investment instrument that has the potential to maximize profits. Bitcoin is the most popular cryptocurrency compared to more than 5 thousand other cryptocurrencies currently available. It is worth remembering that Bitcoin is a very high-risk investment. The price is very volatile. Investors and traders can become rich overnight and become poor overnight.
What Is Bitcoin?
Bitcoin is a form of digital currency whose distribution is not by and under government control but electronically. These Bitcoins can be sent anywhere and anytime and can also be stored in value and run through a series of computers that form a decentralized network. Bitcoin is open-source software that allows anyone to be part of a worldwide network of bitcoin servers.
This new digital currency is a type of cryptocurrency because it uses cryptography to keep it safe. Bitcoin does not have a physical form. Bitcoin is simply a balance stored in a public ledger that can be accessed by everyone transparently. This currency is used in transactions on the internet without using intermediaries such as bank services. The system used is peer-to-peer or P2P whose system works without storage and a single administrator.
Why Does Bitcoin Have Value?
Crypto assets are considered valuable. The main reason of this is because they can become medium of exchange used globally with a value that is approved by many. In addition, because it is a fairly new type of money, perceptions of the value of cryptocurrencies will continue to grow. Crypto assets like bitcoin can prove to be profitable long-term assets. When viewed from the history of the price, in 2016 Bitcoin had a price of US $ 400 while in 2021 it reached the US $ 50,000. This proves the ability of crypto assets as a means of storing wealth.
Blockchain technology which is the foundation of cryptocurrency is considered to provide many advantages when compared to conventional money. Crypto asset technology brings 3 advantages to its users which are transparency, decentralization, and borderless.
How Bitcoin Works
In the bitcoin working system, it uses a digital ledger whose function is as a record to ensure every transaction is carried out safely and the technology is called a blockchain. Due to blockchain technology, all transactions that have occurred and stored since bitcoin was first created can be seen by everyone who accesses it. Everyone who makes bitcoin transactions has a transaction record stored on a device that is secured by a cryptographic system. Bitcoin uses a mining process called proof of work and is protected by advanced cryptography to ensure no double spending and verify every transaction.
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What Is Blockchain?
Blockchain is a technology that is used as a storage system or digital data bank that is connected with cryptography. Its use is inseparable from Bitcoin and other Cryptocurrencies. Even so, many other sectors can take advantage of technological developments from this Blockchain. To make it easier to understand the meaning of Blockchain, let’s look at the naming side. The block means group and the chain which means chain.
The meaning of the naming of this technology reflects how blockchain works. Where the technology utilizes computer resources to create connected blocks (chain). The interconnected blocks are later used to execute a transaction. This technology is indeed quite interesting because it is not centralized. Blockchain can run on its own using computer algorithms without any particular system that regulates it.
History Of Bitcoin
Based on the book The Bitcoin Genesis, the history of Bitcoin dates back to November 2008. A person with the username Satoshi Nakamoto released a paper to the cryptography mailing list. This paper consists of nine pages and is entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. There is confusion about what Bitcoin is and how it should be used. After the beta period, the program was refined to make it easier to understand and use. In 2009, Bitcoin was released to the internet community with claims that it could be used to pay anonymously.
Based on the book Bitcoin, Blockchain, & Cryptocurrency: A Complete Guide, Satoshi sends Bitcoin to Hal Finney, a fellow cryptography enthusiast. The transaction was successful and the Bitcoin phenomenon became known to the public. Bitcoin did not have an exchange rate until late 2009. The Bitcoin system at that time was simply a record of transactions on the blockchain, an online forum where users communicate and manage transactions in open source code.
In early 2010, the first exchange opened which allowed structured Bitcoin trading. Users grew and in May 2010, Mount Gox was launched as a second exchange and became the dominant place to trade Bitcoin. Based on the publication in the journal Intersect, Vol 11, No. 2, Satoshi Nakamoto the creator of Bitcoin suddenly disappeared in 2011. In transaction data, it is estimated that Satoshi has one million Bitcoins.
How To Get Bitcoins?
Electronic money such as bitcoin can be stored in a digital wallet on a cloud server or the owner’s personal computer. The wallet in question is more like a virtual bank account that allows users to send and receive bitcoins, invest and transact. Apart from transactions, how do you get bitcoins?
The most popular thing that people often do is ‘mining’ bitcoin. People even compete with each other to mine bitcoins using their computers by solving very complex math puzzles.
This is how bitcoin was created.
What Affects The Bitcoin Price?
The demand for bitcoin continues to increase while the supply is limited. People all over the world will make price bargains through crypto exchanges for bitcoin thereby creating price volatility caused by the market operating 24 hours non-stop and making the price of this bitcoin continue to increase. Therefore, the price of bitcoin is determined by supply and demand. As demand continues to increase while supply continues to dwindle, people are ready to pay high prices to get bitcoins.