Bitcoin is capable of providing financial inclusivity, as anyone with an

What Is Bitcoin (BTC)? – Know about your BitCoin

 

Bitcoin — often referred to as ‘digital gold’ — has captivated the financial world and grown to become the world’s foremost digital currency, celebrated for its autonomy, security, and potential as a store of value. Bitcoin operates independently of any central authority, such as a government or bank, and is used to buy goods and services online or exchanged for other cryptocurrencies. It is based on a technology called blockchain, a decentralized ledger that records all transactions made within the network, and does not have physical properties, existing solely in digital form. Each Bitcoin transaction is recorded on the blockchain, making it transparent and auditable.

 

There are several benefits Bitcoin offers, including fast and low-cost transactions, especially for international transfers. As a large part of the global population remains unbanked — with no access to financial services or ability to qualify for bank accounts — Bitcoin is capable of providing financial inclusivity, as anyone with an internet connection can, in principle, access and use Bitcoin, regardless of their location.

 

 

Who Created Bitcoin?

 

In 2008, Satoshi Nakamoto introduced the world to Bitcoin and its underlying technology: Blockchain. But the true identity of Bitcoin’s creator remains a mystery to this day. While there have been speculations and proposed candidates, no concrete proof of Nakamoto’s identity has been uncovered.

Nakamoto’s impact and legacy in the cryptocurrency world are undeniable, and their identity continues to be a topic of interest and discussion within the cryptocurrency community. It is estimated that Nakamoto may possess around 1.1 million BTC, equivalent to 5% of all bitcoins to be created.

 

 

Why Was Bitcoin Created?

 

While Bitcoin’s creator remains anonymous, the reasons behind its creation remain speculation. However, it may have been driven by several factors, as gleaned from the white paper:

 

First, Bitcoin aimed to address the flaws of traditional financial (TradFi) systems based on trust, such as centralised control, high transaction fees, and limited accessibility.

 

Second, Bitcoin’s underlying principles include decentralisation, trustlessness, security, and privacy — all achieved through blockchain technology. By eliminating intermediaries, Bitcoin enables fast and low-cost transactions, financial inclusivity, and greater transparency.

 

 

Bitcoin Blockchain Technology

 

Bitcoin is based on a technology called blockchain, which is governed by a consensus mechanism. In simple terms, a blockchain notes down all transactions in a digital ledger, which can be publicly viewed by anyone online.

 

Bitcoin is not governed by one centralized institution; rather, a group of stakeholders maintain the ledger (the blockchain) together to reach agreement on which transactions are right or wrong. This is called a consensus mechanism. Bitcoin relies on the Proof of Work (PoW) consensus mechanism, the first blockchain consensus ever created.

 

 

How Is Bitcoin Used?

Bitcoin can be used in various ways:

 

• Bitcoin can be mined, where miners solve complex mathematical problems to validate transactions and secure the network. In return, they are rewarded with new bitcoins.
• Users can sell and buy Bitcoin on cryptocurrency exchanges, with the goal of taking advantage of price fluctuations to make profits.
• Bitcoin can also be used for online purchases and transactions, providing convenience and expanding its utility.

Moreover, some individuals hold Bitcoin, hoping its value will increase over time, allowing them to sell at a higher price. This is not guaranteed, however, as Bitcoin is a highly volatile asset; these individuals are at risk of losing part, or the entirety, of the value of their initial purchase monies.

 

 

Is Bitcoin Valuable?

 

Bitcoin is valued by members of the cryptocurrency community for several reasons.

• It is a decentralised currency, meaning its issuance is not controlled by any government or central authority.
• Bitcoin has a limited supply, with only 21 million coins ever to be mined. This scarcity is often compared to gold by the cryptocurrency community and makes Bitcoin an attractive asset for some. Unsurprisingly, Bitcoin has been dubbed ‘digital gold’.
• Bitcoin operates on a secure and transparent technology called blockchain. This ensures that transactions are recorded and verified by a network of computers, making it virtually impossible to alter or counterfeit transactions.

 

Some consider that these factors have combined to make Bitcoin a valuable and increasingly sought-after digital asset.

 

 

Who Owns the Bitcoin Network?

 

It is entirely independent of any one person or organization (miners work together to maintain the Bitcoin network). However, people and organizations can own BTC, the native currency of the Bitcoin network, and make software to buy, store, or transfer bitcoins.

 

 

How Many People Own Bitcoin?

 

The number of Bitcoin owners has continued to steadily grow. According to survey, 26% of millennials and 14% of all US adults own Bitcoin. Globally, it is estimated that by the end of 2023 there were 580 million crypto owners, with over 296 million Bitcoin owners.

 

 

Who Owns the Most Bitcoin?

 

The largest holder of Bitcoin is believed to be Satoshi Nakamoto, the pseudonymous founder of Bitcoin. Nakamoto is estimated to own over one million BTC. Additionally, there are other large holders of Bitcoin, known as ‘whales’.

 

 

Sending and Receiving Bitcoin

 

While miners mine to be rewarded and receive bitcoins, their mining fulfils another important task. It records Bitcoin transactions safely and immutably on the Bitcoin blockchain.

 

Both the sender and receiver need a Bitcoin wallet to complete a Bitcoin transaction with each other. The sender transmits the amount of Bitcoin and wallet address to the network, and within a few minutes, the transaction is verified by miners, included in the next block, and considered complete. The receiver can then log in to their wallet with their private key (i.e., the password to their wallet) and confirm the receipt of the transaction.

Everyone in the Bitcoin network can verify and accept the transaction as valid, as the wallet addresses are immutably recorded on the blockchain and can be viewed publicly with a block explorer.

 

 

What Are the Risks of Trading Bitcoin?

 

First, Bitcoin is a highly volatile asset, meaning its price can experience significant fluctuations in short periods. This volatility makes it challenging to accurately predict price movements, leading to potential losses. The cryptocurrency market operates 24/7, making it susceptible to sudden price swings even during off-hours. As with many assets, users are able to short Bitcoin like they would with other stocks.

 

Another risk is the potential for security breaches. As cryptocurrencies are stored in digital wallets, hackers can target these wallets to steal funds. Beginners should take proper security measures to protect their Bitcoin holdings, including using secure wallets like hardware wallets and enabling multi-factor authentication (MFA).

 

Lastly, scams and fraudulent activities are prevalent in the cryptocurrency space. Beginners should exercise caution when dealing with unfamiliar platforms or individuals offering guaranteed returns and/or investment opportunities that seem too good to be true.