The unprecedented collapse of FTX, one of the largest crypto exchange firms in the world, has left everyone in the crypto industry spellbound. The ripples will continue to impact the industry for some time to come in the future. Some have even described it as the worst mismanagement. Amid all this, crypto enthusiasts have been carefully watching Bitcoin, the world’s oldest cryptocurrency. This is because Bitcoin is one of the most valuable digital currencies. It is known for its wild fluctuations. For instance, in November 2021, Bitcoin hit an all-time high of $69,000. However, it revolves around $17,000 at present. So, what exactly is Bitcoin? How does it work? Here, we answer all your questions about Bitcoin.
Before we jump to understanding what Bitcoin is, we need to know what cryptocurrency is, a term that is often misunderstood by many.
What is cryptocurrency?
A cryptocurrency is a digital coin or token that runs on a blockchain and uses cryptography to help secure transactions. Unlike other currencies, which are issued and regulated by a central authority in each country, cryptocurrencies use a decentralised method to keep track of transactions and mint new coins.
Cryptocurrencies are essentially borderless. Since it is based on a peer-to-peer system, anyone sitting anywhere in the world can exchange crypto coins with another person as needed.
Cryptography is a process that helps secure data and protects it from unauthorised access, by using different kinds of encryption. Cryptography is the primary reason cryptocurrencies and crypto transactions are considered secure.
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What is Bitcoin?
To put it in simple words, Bitcoin (BTC) is a kind of cryptocurrency. It is a digital currency that is designed to act as an alternative to money in cash form. This is supposed to eliminate the requirement for third-party engagement in the financial transaction between two people or a group. It can not be controlled by any single person.
When was it founded? Who invented it?
The world’s oldest and first cryptocurrency was founded in 2008 by a pseudonym called Satoshi Nakamoto. However, it was introduced to the public in 2009 by an anonymous group of people or developers. They were all widely referred to as Satoshi Nakamoto. The domain name of Bitcoin was registered in August 2008. And a Bitcoin block was mined for the first time on January 3, 2009, which was called Block 0. It was also described as the “genesis block.”
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How does the world’s first cryptocurrency work?
Every Bitcoin is a computer file. It is stored in a digital wallet app on a smartphone or computer. The general public can engage in monetary transactions by sending Bitcoins to a digital wallet, which can also be sent to other parties involved in the transactions. Interestingly, each transaction is kept safe as public records in a public list, which is known as the blockchain. This unique feature of Bitcoin makes it impossible for parties involved in the transaction to erase any history or record of the coin. Here, transactions can not be undone.
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Anyone can access Bitcoins by engaging in the sale, purchase, and creation of Bitcoins. In some cases, it can be created as well. It is a tough and difficult process to make and generate Bitcoins. Generally, people set up powerful computers to achieve Bitcoins through mining. However, it usually takes years to start getting Bitcoins through the process of mining. In addition to such a long period of time, Bitcoin generation also consumes a lot of energy. Bitcoin continues to remain the most popular cryptocurrency, as it’s not controlled by any government or bank.
Is Bitcoin secure?
Copying Bitcoins is too difficult as all transactions are recorded publicly. However, there is a high chance that a Bitcoin can be lost forever. Bitcoins are also deleted and stolen from websites where they are stored. Moreover, like any other cryptocurrency token, it is very volatile in nature. It means that people using Bitcoins or investors could instantly lose a lot of money at any moment.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
