Cryptocurrency investing such as Bitcoin are digital currencies not supported by real assets or tangible securities! These are traded between like-minded people without broker and tracked on digital ledgers.
Bitcoin is one of the original cryptocurrency investing! There are few regulations and this becomes a threat factor for the transactions.
What Is Bitcoin?
Bitcoin is a decentralized digital currency created in January 2009. It follows the ideas set out in a white paper by the mysterious and pseudonymous Satoshi Nakamoto. The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms do, and unlike government-issued currencies, it is operated by a decentralized authority.
There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to (although each record is encrypted). All Bitcoin transactions are verified by a massive amount of computing power via a process known as “mining.”
Bitcoin is not issued or backed by any banks or governments, nor is an individual bitcoins valuable as a commodity. Despite it not being legal tender in most parts of the world, Bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as BTC when traded.
The Key Takeaways:
- Launched in 2009, Bitcoin is the world’s largest cryptocurrency by market capitalization.
- Unlike fiat currency, Bitcoin is created, distributed, traded, and stored with the use of a decentralized ledger system, known as a blockchain.
- Bit coin’s history as a store of value has been turbulent; it has gone through several cycles of boom and bust over its relatively short lifespan.
- As the earliest virtual currency to meet widespread popularity and success, Bitcoin has inspired a host of other cryptocurrencies in its wake.
The Methodology of Understanding Bitcoin:
The Bitcoin system is a collection of computers (also referred to as “nodes” or “miners”) that all run Bit coin’s code and store its block chain. Figuratively speaking, a blockchain can be thought of as a collection of blocks. In each block is a collection of transactions. Because all of the computers running the blockchain have the same list of blocks and transactions and can transparently see these new blocks as they’re filled with new Bitcoin transactions, no one can cheat the system.
Anyone, whether they run a Bitcoin “node” or not can see these transactions occurring in real-time. To achieve a nefarious act, a bad actor would need to operate 51% of the computing power that makes up Bitcoin. Bitcoin has around 13,768 full nodes, as of mid-November 2021, and this number is growing, making such an attack quite unlikely.
Balances of Bitcoin tokens are kept using public and private “keys,” which are long strings of numbers and letters linked through the mathematical encryption algorithm that creates them. The public key (comparable to a bank account number) serves as the address published to the world and to which others may send Bitcoin.