The #1 Ranked Coin on CoinMarketCap.com
Bitcoin: The First Cryptocurrency
According to Bitcoin.org’s whitepaper, Bitcoin is “a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.” In simpler terms, Bitcoin is an online currency that can be used in transactions without any government or superior’s supervision. With a complex address of numbers and characters, each person has a unique wallet to both send and receive coins.
Bitcoin was created by an unknown person using the pseudonym Satoshi Nakamoto.
No one truly controls the network. With Nakamoto remaining in the shadows, no individual or company controls the functionality of Bitcoin. However, there are many developers working on improving Bitcoin, with some electing to create hard forks (ex. Bitcoin Cash), creating an alternative to Bitcoin.
Bitcoin, like all currencies, relies upon people’s interest and belief in the worth of the coin. Because it is an electronic currency, it has no real intrinsic value. However, its decentralization has generated great interest in the coin. Unlike some new coins, Bitcoin does not cover a specific niche or industry, but rather is simply a currency for transactions and exchanges.
Yes! Although mostly used by hackers in the beginning, Bitcoin has quickly become more popular with mainstream companies, like Expedia, Subway, Paypal, and so many more. Goldman Sachs has plans to to open a Bitcoin trading operation, furthering pushing Bitcoin to become a real factor in the economy.
All Bitcoins are mined, through computers or (now) specialized ASIC miners. In the past, the mathematical problem rewarding Bitcoins was easily solved. Now however, with a large supply of Bitcoins already generated, mining for Bitcoins with only computers is too costly and too limited. Mining farms have been introduced in low electricity cost areas, with technology specified for solving the SHA-256 mathematical problem. Now that Bitcoin has been more spread, there are other ways like faucets or giveaways to earn small amounts of Bitcoins.
For the most part, Bitcoin is anonymous. The only thing public about the transactions are the addresses sending the Bitcoin, the amount of Bitcoins sent in each transaction, and the receiving address.
21 million Bitcoins.
All that’s needed to complete a Bitcoin payment is a wallet and having Bitcoins. Similarly to paying with cash (in this example, I’ll use US Dollars), you would simply send your Bitcoins from your wallet to another person’s address (I’ll discuss wallets further below). Receiving Bitcoins is similar, just like how someone else would give you cash for you to put in your wallet, someone else will send Bitcoins from their wallet to your wallet’s public address.
The greatest value of cryptocurrency like Bitcoin is its decentralization. Because most currencies are dependent on a countries economy, currencies can quickly lose value due to a countries political unrest. Bitcoin however, escapes that trap with its no leader formula, and is dependent solely (besides the laws from each country) on the market value, the supply and demand of Bitcoin.
Furthermore, there are no scams using reverse payments. Once a payment is sent, the currency cannot be returned to the payer unless the receiver agrees to a refund. This means greater security of payments for the seller, increasing Bitcoin’s popularity in commerce. Because the Bitcoin network completely decentralized, any person of any race, culture, or age, can exchange Bitcoin. The hassle of paperwork that banks require are not existent in Bitcoin wallets. Additionally, even with Bitcoin’s pricing fluctuations, in general, Bitcoin is rapidly appreciating, which means that the value of Bitcoin is still going up, making each Bitcoin you receive now more valuable in the future.
Bitcoin, like all cryptocurrency is known in the market for its volatility. It has frequent highs and lows and it’s very difficult to say when the currency will reach stability (or if it ever will). Its volatility brings a red flag when it comes to investing in the currency. In addition, with Bitcoin’s high transaction rates and growth, scalability issues have arisen. Since the network limits transactions to about 3.3 to 7 per second, it creates a bottleneck situation, where many transactions are waiting to be sent out, but unable to be filled, drastically slowing processing rates.
With Bitcoin’s freedom from any government or ruling company, greater trust can be placed on Bitcoin. Its anonymity only improves its security, allowing individuals privacy incentivizing greater trust in the Bitcoin network.
The Ledger Wallet is definitely the safest bet, but it’s also one of the most expensive wallet out there. For beginners, Coinbase or Bittrex would work perfectly, to store smaller amounts of Bitcoin, with easy methods of exchanging for other cryptocurrencies.
Coinbase: Coinbase remains one of the largest Bitcoin exchanges in the world, a platform where users are able to buy and sell Bitcoin, as well as exchange Bitcoins for other coins, like Ethereum and Litecoin. However, the risks of storing large amounts of Bitcoins on Online Exchanges is the greatest, with possibilities of getting hacked.
Blockchain.com: Although online wallets are still under threat for hacks, it’s less severe than the huge cryptocurrency storages of exchanges. It has additional security compared to exchanges, providing a safer option for large amounts of Bitcoin.
Guarda is a multicoin wallet that also supports Bitcoin. It has options for an online website wallet (an even easier storage option but not nearly as safe) and a software download wallet that provides greater security.
Trezor Wallet: The Trezor Hardware Wallet is one of the safest storage methods for cryptocurrency. Cold Storage options reduces 3rd-party risks and cybersecurity risks by acting like a USB that is unable to be hacked from online or through the WIFI.
The way to lose Bitcoin is to forget your password to your virtual wallet or to get your account shut down/hacked. If you lose Bitcoin in these ways, there is unfortunately no way to recover it. Most of the times the Bitcoin that is lost remains lost and that amount is taken away from the world pot of Bitcoin. However, because there is a limit on the amount of Bitcoin to be produced, the price of each Bitcoin will rise.
It is tough to say currently since the digital currency movement is still young, but there is great potential in the field. Major companies like Microsoft and Subway have already stepped foot in the Bitcoin sphere, with many more on the way. However, the United States Securities and Exchange Commission will soon come out with a ruling on Bitcoin ETFs, and many more rulings and laws will be coming. Even Bitcoin, the oldest cryptocurrency, is still new compared to other industries, and only time will tell. With Bitcoin still at the apex of the cryptocurrency industry, and still with room to grow, Bitcoin definitely has a future.