What is Bitcoin
Bitcoin is a digital peer-to-peer-decentralized cryptocurrency which uses encryption to produce and transfer money.
Transactions are listed in a public ledger called a blockchain through a procedure known as mining.
Bitcoins are stored in electronic wallets in Bitcoin addresses,
which are public strings of numbers together with fitting encrypted private keys used to verify ownership.
Bitcoin wallets also allow to send and receive Bitcoin.
There is a range of distinct wallets it’s possible to use, exchanges you can trade on, and other cryptocurrencies it is possible to purchase with Bitcoin.
One approach is to look at what it’s used for. Bitcoin’s use is as a decentralized digital payment method. The Bitcoin process is similar to Paypal where people can digitally send or receive payments over the internet.
The difference between Bitcoin and other digital payment systems is that Bitcoin is decentralized. Credit cards and Paypal, for example, are not. They have a central organization that manages and operates the system.
On the other hand, every Bitcoin payment is entered into a giant public ledger, called the Transaction Block Chain. This ledger is available and verifiable by everyone else in the community. Everybody can see who owns Bitcoins and how many. Anyone can prove the ownership of a certain amount of Bitcoins and transfer that ownership in exchange for products and services. Moreover, there is no need for a credit card or similar company to verify this transaction for the participants. This is an innovative way how to remove the middleman out of the payment process.
Speeds and transaction fees
We stated years ago that Bitcoin is a cheaper and faster alternative to traditional electronic payment systems. When we wrote this article back in 2014, the trade fees of Bitcoin were low, and trade speeds were fast.
People have realized that Bitcoin has many advantages over conventional electronic payment methods which helped to its popularity.
Because the Bitcoin network uses key cryptography, people can send and receive transactions without third parties. Third parties will be more prone to monitoring payments and purchases. This doesn’t happen on a Bitcoin network. However, Bitcoin is not completely anonymous, and with special research methods, users can be identified who they are in real life.
Available to everyone
Anybody with Internet access may utilize Bitcoin. There are no requirements to pass any background check, live in any specific area, or pay any fees.
Bitcoin treats every participant of the network equally. Furthermore, Bitcoin client applications make the technical aspects of Bitcoin transparent to the users. In contrary to the urban myth, there is no specialized technical knowledge required. Everyone who can use Paypal or credit cards to pay online can use Bitcoin.
Bitcoin lowers the cost of transactions
Using a credit card for payments always requires to pay a fee to perform the transaction. Banks usually charge very high commission fees to process transactions, especially international ones. On the other hand, Bitcoin transaction fees represent just a fraction of what user would pay using traditional payment systems.
UPDATE for 2018: The transactions on the Bitcoin network are now higher than were in the past, however still much lower compared to the traditional payment systems.
History of Bitcoin
Bitcoin was created in 2008 by a person or group of people under the name Satoshi Nakamoto. This is not a real person’s name and today is still not clear who this person or group was. The Bitcoin was first described in Nakamoto’s whitepaper named “Bitcoin: A Peer-to-Peer Electronic Cash System.”
Bitcoin was released for usage in 2009. Until it attracted enormous media attention in 2014, the coin slowly yet steadily grew in value.
During its peak in 2014, Bitcoin was valued for over $1,000 USD per coin.
A crash and then a lengthy bear market followed that summit. Bitcoin saw the highest price in the history in December 2017 with a price of 19,783.06 USD.
Despite its infancy and volatility, the Bitcoin cryptocurrency has increased in popularity, popularity, and sustainability.
Some people speculate that Bitcoin might not be around in the long term the fundamental principles behind Bitcoin will be likely to be significant and relevant for future development.
A quick history of Bitcoin prices
Here’s a brief history of the downs and ups of Bitcoin prices.
Bitcoin network was built by Satoshi Nakamoto in 2008 and has been officially released in 2009.
Bitcoin started trading for as little as a dollar cent in the early days.
Between 2010 and 2015 there have been many ups and downs. For example, Bitcoin price moved from 0.70 USD to 30 USD and then back to 2 USD in the period of just a few months in 2011. We could observe a massive price increase every time a new wave of people started using the platform. The main reason for such influxes was the launch of new cryptocurrency exchanges and viral media news.
As a tide of adoption happened in late 2013 Bitcoin reached a peak of over 1,200 USD. But, that excitement was short lived and the subsequent two years saw steady declines.
This remarkable growth has been excellent for long-term investors but has posed challenges for people who entered the marketplace at the wrong time (as true now as it was in 2010) or for those trying to use Bitcoin as money.