What is Bitcoin?
Not only is Bitcoin (BTC) the first cryptocurrency, but it’s also the best known of the more than
19,000 cryptocurrencies in existence today. Financial media eagerly covers each new dramatic
high and stomach-churning decline, making Bitcoin an inescapable part of the landscape.
Bitcoin was created in January 2009 as a decentralized digital currency that you can buy, sell and
exchange directly, without an intermediary like a bank.
Bitcoin is a new currency created by an unknown person using the name “Satoshi Nakamoto”.
Transactions are done without a middleman – meaning, no banks! Satoshi Nakamoto originally
described the need for “an electronic payment system based on cryptographic proof instead of
trust.”
Bitcoin works on a program called “Blockchain”, which is ultimately very alluring and interesting.
Blockchain is a secure database shared by all participating parties on established, distributed
computer networks.
Since its public launch in 2009, Bitcoin has risen dramatically in value. Although it once sold for
under $150 per coin and has since risen to $30,200 per coin, Currently Bitcoin boasts of $23,150
per coin. Because its supply is limited to 21 million coins, many expect its price to only keep
rising as time goes on, especially as more large institutional investors begin treating it as a sort of
digital gold to hedge against market volatility and inflation. Currently, there are more than 19
million coins in circulation.
How does Bitcoin work?
Bitcoin is built on a distributed digital record called a blockchain. As the name implies,
blockchain is a linked body of data, made up of units called blocks containing information about
each transaction, including date and time, total value, buyer and seller, and a unique identifying
code for each exchange. Entries are strung together in chronological order, creating a digital
chain of blocks.
Once a block is added to the blockchain, it becomes accessible to anyone who wishes to view it,
acting as a public ledger of cryptocurrency transactions.
Blockchain is decentralized, which means it’s not controlled by any organization. Nobody owns
it, but anyone who has a link can contribute to it. And as different people update it, your copy
also gets updated. While the idea that anyone can edit the blockchain might sound risky, it’s
actually what makes Bitcoin trustworthy and secure. For a transaction block to be added to the
Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders, and the unique
codes used to recognize users’ wallets and transactions must conform to the right encryption
pattern.
BTC transactions may take a few minutes to complete due to the verification process and depend
on the trading platform. The Bitcoin system is meant to take around 10 minutes to mine each
transaction.
Features of Bitcoin
1. Widespread
The network’s independence from any official body was one of Satoshi Nakamoto’s main goals
when he created Bitcoin. It is designed so that any individual or company can become a member
of a large network through the use of calculations in the process of mining and verifying
transactions. In addition, even if part of the network is offline, the payment will continue.
2. Confidentiality
Banks these days know everything about their customers, including their credit history,
addresses, phone numbers, and shopping habits. Also, Google and Facebook’s computer systems
are able to track all our behavior with just a few clicks. When we use Bitcoin, everything is
different since the wallet we use to save and use our money is not tied to personal information.
Because every BTC transaction that has ever taken place is recorded on the Blockchain, Bitcoin’s
privacy is only relative. In principle, by carefully examining the blockchain record, anyone can
find out how much money is in your wallet address if it is publicly disclosed. However, tracing a
Bitcoin address back to a person is still impossible.
Those who prefer to keep their business private can take precautions to remain undetected. There
are wallets that emphasize efficiency and security, but the most straightforward precaution is to
use multiple addresses and avoid transferring too much money to one wallet.
3. Openness
As mentioned earlier, transactions on the Bitcoin Blockchain network are stored in the Public
Ledger, which is recorded on the Blockchain and accessible to everyone. This means that all the
actions of the network are public, but the private characteristics of each user in the network
cannot be tracked.
4. Speed
The Bitcoin Blockchain network’s operations are designed to be carried out in a matter of
minutes, regardless of the location of the participants in the operation. Compared to national and
international financial services, Bitcoin has a very important place in terms of transaction
processing time.
5. Irrevocable
There is no way to reverse a transaction after it has been recorded on the Bitcoin Blockchain.
This power can be a double-edged sword, so we must use it carefully. On the other hand, it is
useful since we can be sure that every Bitcoin we receive will never be returned to the person
who sent it to us, but we must keep in mind that this process can also be harmful when we
transfer it to Bitcoin. other. address Before doing any kind of procedure, double-check that
everything is in order.
How To Trade Bitcoin?
To buy, sell, and trade Bitcoin – you will need to use a third-party platform. Depending on the
type of asset structure you want to invest in, this can be a specialized cryptocurrency exchange or
a regulated broker. Importantly, this will depend on whether you plan to trade Bitcoin on a short-
term/day trading basis or hold your investment for the long-term.
As the field of cryptocurrency investment has become more and more widespread, exchanges
and brokers are now offering modern financial tools. This includes the bilateral futures market
known as the CME (Chicago Mercantile Exchange) and the CBOE (Chicago Board Options
Exchange)- two of the largest exchanges in the world. That being said, while CME and CBOE
are dedicated to institutional investors, you can also find Bitcoin futures markets as a retail
investor.
Advantage of Bitcoin
1. Freedom
Freedom is described as a valued asset in today’s protected environment. We cannot claim to be
free from government control and surveillance if we are subject to hundreds of taxes and
restrictions on our ability to freely use our money.
Bitcoin is unaffected by these restrictions and offers us a level of freedom that no other asset can
match. We are not really controlled by strict monetary policies set by Governments, we don’t
need to worry about inflation or interest rates created by government organizations, so we can
use our money freely in Bitcoin. Bitcoin, only market rules.
2. Choose your Board
Another undeniable advantage of the Bitcoin network is the ability to determine the amount of
transaction commission paid, or to pay none at all. After a new block with a successful hash is
created, the miner receives the transaction board. In most cases, the sender pays the full cost;
however, the recipient’s deduction may be considered an underpayment.
Commissions are completely optional and serve as an incentive for miners to guarantee that a
particular transaction is quickly added to a new block. This incentive also serves as a source of
income for mining, which brings more money than normal mining, especially when we consider
that mining will completely stop in the future when the production of Bitcoin is completed.
As a result, customers have to choose between the cost and the waiting time in the bitcoin
market. A larger panel indicates faster processing, while a lower panel suggests the transaction
will take longer to complete.
3. Lack of PCI
The Payment Card Industry (PCI) consists of debit, prepaid credit, electronic wallet, ATM, and
purchase cards, as well as the companies that support them. It includes all companies that store,
handle, or transfer cardholder data and is subject to security and regulatory laws.
While the same rules and regulations are useful for large companies, they may fail to consider
the requirements of individual employees. By using Bitcoin, users can avoid having to comply
with PCI regulations, allowing them to expand into new regions where credit cards are not
accepted or fraud rates are high.
Users benefit from reduced commissions, lower administrative costs, and the ability to expand
their markets because they are not controlled by this organization.
4. Control and security
No one can manage Bitcoin transactions from us, which means no one can withdraw money from
our account without permission. Within the Bitcoin Blockchain Network, all our funds are secure
and cannot be stolen or tampered with.
In addition, our identity and personal details are completely protected in these places as we do
not need to provide any information to benefit from Bitcoin on the Blockchain network. What we
will have to do with our personal data is to go through the authentication process, which is
required by the exchange and other websites where Bitcoin is bought and sold in FIAT cash.
5. Transparency and neutrality
Every transaction on the Bitcoin Blockchain, as well as every piece of information related to it, is
constantly visible to everyone on the Blockchain and can be verified and leveraged in real-time.
Because the BTC protocol is anonymous, no person or organization can change or control it at
will. Since the network is decentralized, no single person can fully control it. For all these things,
Bitcoin will always be neutral, transparent, and predictable.
Disadvantages of Bitcoin
1. Legal Matters
We cannot argue that there really is one universal Bitcoin law; Every nation has its own, and
there is a big difference between them. The use and trading of Bitcoin is encouraged in certain
countries, but is prohibited and illegal in others.
Different countries have recognized that Bitcoin can be used for various illegal activities, so they
have tried to regulate it. Some people are concerned about its use of the dark web as a payment
option for criminal operations including drug trafficking and weapons purchases.
Other countries argue that the use of Bitcoin is used for money laundering and tax evasion,
resulting in a loss of cash for governments around the world.
2. Level of recognition
Bitcoin does not need a law to operate; whether it continues to be recognized as a financial asset
by the government; however, the absence of regulation and regulation of Bitcoin still creates
confusion in its use.
Companies around the world will not be able to establish their legitimacy or illegitimacy until
there is a clear law that controls their legitimacy or illegitimacy. In addition, many investment
funds are still undecided whether to engage in this market or not until governments make tough
choices about money.
3. Lost keys
A key is an alphanumeric password that allows you to access your Bitcoin wallet. If you lose
your key, you will also lose your wallet. Most modern wallets, on the other hand, contain storage
and retrieval systems, but must be configured before use.
4. Consolidation
The price of Bitcoin has been unpredictable, with big ups and downs, as well as many cycles of
ups and downs. Throughout history, BTC has risen to new highs only to drop to new lows
quickly. Its price is unpredictably changing, changing quickly and drastically, which can cause
serious financial losses to the risky investor who does not know how the market works.
5. Continuous improvement
Although Bitcoin technology is not yet fully established, it is growing as more developers join
the project. Also, cryptocurrency is not yet widely accepted, which means we still don’t know
how it will work after everyone adopts it. We have no idea if the network will be able to be
widely adopted or, on the contrary, will fail.
Want to know what Cryptocurrency is and how it works, you can read our article on
Cryptocurrency for beginners here.