All about Bitcoin

Updated on: Jun 6th, 2023


5 min read

Without a doubt, Bitcoin has grown tremendously over the years and has gotten the immense potential to grow further. Hence, all crypto enthusiasts must be aware of the vital aspects related to this crypto.

Dive in to gain more insights.

What is Bitcoin?

Bitcoin is a decentralised digital currency that was launched anonymously in January 2009. It is abbreviated as BTC and is a peer-to-peer version of electronic cash. Online payments can be directly made from one party to another without going via a financial institution.

Unlike fiat currency, Bitcoin is stored, created, distributed and traded using a decentralised ledger system called a blockchain.

How does Bitcoin work?

Each BTC is a computer file stored in a ‘digital wallet’ app on a computer or smartphone. You can send Bitcoins (or part of one) to other individuals or your digital wallet. A public list known as the blockchain keeps a record of every single transaction.

The blockchain comprises blocks that store data about addresses, transactions, previous blocks, and the code which runs the blockchain and executes the transactions.

At the time of transactions, blockchain technology aids in eliminating intermediaries with the help of cryptographic proof by using CPU computing power. This cryptographic trust is integrated into BTC via a wallet, a private key and a public key in the programme.

All BTC transactions that occur are verified through telecommunication network nodes via cryptography.

Bitcoin History – Key Events

Listed below are some of the key events in the history of Bitcoin:

  • 31st October 2008 – Satoshi Nakamoto published a whitepaper.
  • 12th January 2009 – First BTC transaction between Satoshi Nakamoto and Hal Finney.
  • 22nd May 2010 – First official Bitcoin transaction for 10,000 BTC
  • 2nd October 2013 – FBI busts dark web marketplace ‘Silk Road’ where Bitcoin was the preferred payment method. 
  • 27th November 2013 – Bitcoin hits US$1,000
  • 28th February 2014 – Collapse of the first exchange platform to trade Bitcoin, Mt. Gox
  • 1st August 2017 – Birth of Bitcoin Cash (BCH)
  • 17 December 2017 – Bitcoin hits US$20,000
  • 17th March 2021 – Morgan Stanley becomes the first large investment bank to provide Bitcoin exposure to its clients.
  • 7th September 2021 – El Salvador becomes the first country to use BTC as legal tender.
  • 10th November 2021 – BTC price hit a new record high of $68,742.

Safety of Bitcoin

Although Bitcoin technology is safe, potential investors must be aware of some risks involved with it. BTC relies on passwords, and its price can be immensely volatile. On top of these, crypto wallets are not immune to theft. Also, it isn’t anonymous – it’s pseudonymous.

Legality of Bitcoin

While Bitcoin is legal in several countries, it is illegal in many as well. Bitcoin was legal in Japan, the United Kingdom, the United States, and many other nations as of June 2021. On the other hand, Egypt and China have made it illegal to use BTC.

Bitcoin Mining

Bitcoin mining is the procedure by which new Bitcoins enter into circulation. In simpler words, it refers to the process of generating new BTC via solving puzzles. The concerned miners are responsible for transaction confirmation and creating new coins. In return, they receive BTC rewards.

Bitcoin: Advantages

  • Secure and private transactions 

Bitcoin transactions do not contain personal details. This eliminates the risk of identity theft and fraudulent purchases because of stolen consumer information.

  • Decentralisation

Especially after the Great Recession and financial crisis, many investors are willing to accept a decentralised currency like Bitcoin.

Two pizzas for 10, 000 Bitcoins!

Yes, that was the first official Bitcoin transaction. The above amount is worth some million dollars today!

Bitcoin: Disadvantages

  • Possibility of hacking

The possibility of hacking cannot be entirely ruled out, even though several crypto experts state that Bitcoin blockchain technology is more secure than traditional electronic money transfers.

  • Price volatility

The value of Bitcoin often experiences volatility. Though last year was a solid one for this coin, it has plunged substantially from its ATHs. 

How to buy Bitcoin?

Follow these steps to buy BTC:

Step 1: Select a crypto trading venue or service like cryptocurrency exchanges.

Step 2: Connect the exchange to a payment option.

Step 3: Place an order.

Step 4: Store your BTC.

How to sell Bitcoin?

The steps to sell BTC are listed below:

Step 1: Set up an exchange account.

Step 2: Transfer your BTC to the exchange wallet.

Step 3: Place a sell order.

Future of Bitcoin

Bitcoin’s run so far has been quite striking. Of course, no one can state what the future has in store for any particular crypto. But many crypto experts believe that the coming decade can be a significant one for the evolution of the world’s largest cryptocurrency. Recently, JP Morgan stated that it is bullish on the prospects of cryptos, particularly Bitcoin. 

BTC wasn’t designed as a means to make money. Instead, it was engineered as a payment method accessible to everyone. But, several individuals see it as a lucrative investment option, although its volatile nature makes it risky. Besides researching Bitcoin’s value, crypto enthusiasts willing to invest in this cryptocurrency must also consider the details mentioned above.

Frequently Asked Questions

Q1. Is it possible to convert BTC to cash?

Ans. Yes, you can use some exchanges to convert BTC to cash. Also, Bitcoin Kiosks and ATMs enable you to withdraw cash in exchange for BTC.

Q2. Where does BTC come from?

Ans.  BTC is virtually mined by a massive, decentralised network of computers that constantly secure and verify the blockchain’s accuracy.

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Quick Summary

Bitcoin is a decentralized digital currency that functions through a blockchain system. It can be sent directly between parties, eliminating the need for financial institutions. The history, legality, mining process, advantages, and disadvantages of Bitcoin are discussed. Furthermore, buying and selling steps are outlined, as well as predictions for Bitcoin's future growth.

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