What is Bitcoin?
The cryptocurrency market is considered one of the most promising and no longer causes skepticism and mistrust. The explosive growth of this market has led to the development of a wide variety of digital coins to choose from. Despite the fact that at the time of this writing, the Bitcoin price has dropped to $16,565,08, this coin is the most famous and popular cryptocurrency in the whole world. Moreover, according to the forecasts of many experts, interest in Bitcoin will grow in the future, as will its value.
Let’s see why this digital coin attracts attention, and whether it is worth investing in Bitcoin.
Definition of Bitcoin
Bitcoin (BTC) is the first cryptocurrency that is analogous to fiat money and gold. Unlike regular currency, bitcoin is not controlled by government authorities and the central bank. Instead, Bitcoin’s financial system is governed by thousands of computers located around the world. Thus, everyone can take part in the ecosystem of this cryptocurrency. To do this, you need to install the required open-source software.
Bitcoin is not subject to censorship, and payments can be made at any time of the day, wherever you are. Of course, all these advantages of Bitcoin make it a very attractive cryptocurrency to invest in.
The History of the Creation of Bitcoin
Bitcoin was launched in 2009. There is no exact information regarding the founders of this digital coin. Bitcoin was supposedly created by a person or group of people under the pseudonym Satoshi Nakamoto. There is also no reliable information on where the founders of BTC are. Despite the fact that the name of this person is Japanese, he has a very high level of English. Therefore, many people have speculated that he may be from an English-speaking country.
How does Bitcoin work?
Bitcoin operates on blockchain. Blockchain is a continuous chain of blocks that stores all information about transactions made in a certain period of time. This information is arranged in chronological order. Thanks to blockchain technology, personal information, and a crypto wallet are reliably protected from hacking and theft.
Thus, users can fully control the sending of BTC from their Bitcoin addresses, and the authenticity of any transaction can be confirmed using a digital signature that correlates with the sender’s address. In addition, users can process transactions using specialized computer hardware resources, in return, they will receive bitcoins as a reward. This process is called mining.
What are alternatives to Bitcoin?
After Bitcoin began to have success, many other digital coins appeared. Today, there are more than 5,000 types of cryptocurrencies, which indicates a high demand for digital currency.
In addition to BTC, the following types of digital coins can be distinguished:
- Altcoins
This is a type of cryptocurrency that was created as an analog of BTC. Today, there are over 500 types of such digital coins. Here are some examples of altcoins:
- Cardano (ADA)
- Chainlink (LINK)
- Cosmos (ATOM)
- EOS
- Ethereum (ETH)
- Litecoin (LTC)
- NEO
- Ripple (XRP)
- Tron (TRX)
- yEarn.Finance (YFI)
- Tokens
These coins are analog to “securities” in the digital world. That is, in other words, these are digital assets. Tokens differ from Bitcoin and Altcoin in that they do not have their own blockchain. Therefore, tokens are created on the blockchain of other digital currencies, such as Omni, Tron, Ethereum, and Neo. It is worth noting that most of the tokens work on the Ethereum blockchain.
- Stablecoins
This is a type of cryptocurrency, the value of which is tied to the value of traditional currencies or the value of goods. Here are several examples of stablecoins: Tether (USDT), True USD (TUSD), Paxos Standard (PAX), etc.
How to get Bitcoin?
There are various ways to acquire BTC. The most common among them are:
- Buying Bitcoin for fiat money or another cryptocurrency;
- Receiving rewards in the form of Bitcoins for completing various tasks;
- Mining.
Advantages and Disadvantages of Bitcoin
Advantages
- Small fees for BTC transfers (sometimes fees may be completely absent, but in this case, transfers may take longer).
- Anonymity.
- Decentralization.
- Deflationary nature of BTC.
- Transactions can be made from anywhere in the world at any time of the day.
- A simple procedure for creating a Bitcoin wallet, which does not require users to provide their personal data.
- Reliable system.
- It is not possible to cancel transactions (depending on the situation, this fact is also considered a disadvantage).
Disadvantages
- The risk of illegal transactions.
- Volatility.
- Potential tightening of cryptocurrency regulation by government agencies.
- Slow transfers. Sometimes, card-to-card transfers in banks can be carried out faster than bitcoin transfers. It all depends on the amount of money and the size of the fees.
Conclusion
Summing up, we can say that Bitcoin was created in order to provide users with safer and more profitable conditions for conducting various transactions. Despite all the shortcomings of this cryptocurrency, it is gradually gaining recognition and is being used in various fields of activity since many countries of the world have already created laws that regulate this cryptocurrency and imposed taxation. All these facts indicate that BTC is one of the promising cryptocurrencies that will not cease to be in great demand among investors for a long time.
READ MORE: Crypto trading bots: The Ultimate Guide 2023
