One blame it of being a speculative bubble, while the others call it a digital revolution – everybody has its own opinion about world’s first cryptocurrency — Bitcoin. Some people believe that cryptocurrency era that began with Bitcoin back in 2009 will become one of the greatest events in the history of economy, the others believe that digital bubble is likely to blow up soon. Anyway, everyone talks about Bitcoin and some even manage to make millions on it. The Coin Shark will explain, what Bitcoin is in simple terms.
Researches came up with different ideas to create a decentralized cryptographic currency already in the end of the 20th century. In 2008 a mysterious person or a group of people called Satoshi Nakamoto, that still remains unknown published the description of a peer-to-peer payment system. This means that each user of such a network has equal rights – there’s no center and periphery, server and client.
Bitcoin is a decentralized digital currency. Decentralized means that all transactions are made directly between users without any agents, like banks, payment systems, and without government control. Digital means that Bitcoin exists as a recording of transaction data. The data is recorded in blocks and the system of all blocks is called blockchain. This technology is the basis of Bitcoin, other digital currencies and blockchain-platforms. Each block is the result of calculations — a certain algorithm necessary to record information in the block. These calculations are carried out by miners, who create new blocks and receive a reward for that. The whole blockchain is located on every user device, So there’s no way someone can hack this distributed database unless they can access hundreds of thousands of devices at the same time. Safety and reliability are indeed Bitcoin’s major advantages. However, there is also the flip side of the coin. It is not possible to cancel or change transactions after they are made, so you’d better check everything very carefully in order not to send your cryptocurrency to somebody by mistake.
Bitcoin’s issue is limited — miners can generate as much as 21 million BTC. By the way, the more blocks are there, the more computing power is necessary to produce new ones.
Today many people use Bitcoin not only as an investment tool, but also as a mean of payment. According to Forbes, first Bitcoin transaction was made by an american Laszlo Hanyecz. Back in 2010 he offered 10,000 ВТС for a delivery of two pizzas. Today, as one digital coin costs around $11.5 thousand, it is possible to purchase real estate, pay for a hotel room or to pay in shops with Bitcoin.
Bitcoin’s greatest potential are independent transactions. Perhaps it will become a foundation of new and really free economy, that does not depend on central banks and state regulatory authorities. This currency exists as long as there is the Internet. On the other hand, Bitcoin does not have any physical value that it is based on, so Bitcoin rate can be rather volatile and depend on speculations. Anyway, today Bitcoin would be an appealing investment, that is definitely worth trying unless you sell all your property to buy BTC.